Ousted American Apparel founder and jaunty dick-swinger Dov Charney, as anyone would expect, is mounting a lawsuit against the board of directors who terminated him from his position as chairman. The American Apparel board terminated Charney "with cause" last week, and according to the letter they sent him ahead of his firing, Dov Charney is (surprise!) an expensive problem for a struggling clothing company to have.
According to the New York Times, Charney was first offered a quieter proposition of staying on with the company "as a consultant in a creative role" that would have paid about $4 million as long as he resigned from his chief executive post. He was made this offer and told that he had until the end of that day to make a decision.
But BuzzFeed nabbed Charney's termination letter in full, where the board's grievances with Charney sound exhausting and costly. Their main sticking points:
• He knew of a blog that skewered American Apparel and its culture and according to the New York Times, this blog included nude photos of Irene Morales, who unsuccessfully tried to sue Charney in 2012, alleging to having been his "sex slave."
You have violated the fiduciary obligations owed to the Company in several material ways. For example, you were aware of, but took no steps to prevent an employee under your direct supervision and control from creating and maintaining false, defamatory and impersonating blog posts about former American Apparel employees.
A sourced told BuzzFeed that American Apparel launched an internal investigation after learning "new information" about Charney. The Times, meanwhile, says that it was upon learning that Charney knew that the photographs were to be published, but decided not to doing anything about it, that they decided to launch their investigation.
• He's using company money to pay people off and to keep quiet about his unsavory behavior.
We also recently learned that you presented significant severance packages to numerous former employees (including packages to REDACTED) to ensure that your misconduct vis-a-vis these employees would not subject you to personal liability.
Additionally, you have used Company assets to make substantial severance payments to protect you from personal liability. You have provided to employees various salary increases, bonuses, and commission payments that were not meant to reward exemplary performance or further the Company's interests. Instead, you authorized these payments to induce employees to sign release agreements that were aimed at protecting you from personal liability for your misconduct.
Charney, according to Reuters, frequently used corporate funds to pay for personal expenses:
The probe revealed that Charney, who founded the hipster clothing brand, was using company funds to book flights for his parents, the person said. He also sometimes provided corporate apartments to friends and stayed in them himself when he wasn't on company business, according to this person.
• He refuses to take sexual harassment training, or let others, apparently.
In the recent past, you refused to participate in mandatory sexual harassment training and undermined the Company's policies by interrupting employee sexual harassment training mandated under California law.
• He's a bigoted asshole to the people who work for him.
Furthermore, on several occasions you have made derogatory and disparaging remarks directed at persons of certain ethnicities or related to their gender, sexual orientation or religious persuasions that are discriminatory and offensive and are not in accordance with Company policies.
• His very public, well-documented skeeviness, is, wouldn't you know it, expensive to deal with and clean up.
The resources American Apparel had to dedicate to defend the numerous lawsuits resulting from your conduct, and the loss of critical, qualified Company employees as a result of your misconduct are also costs that cannot be overlooked.
And then the board goes ahead and makes it plain: "Indeed, many financing sources have refused to become involved with American Apparel as long as you remain involved with the Company. "
Meanwhile, Charney's lawyer Patricia Glaser has fired back, the Los Angeles Times reports:
"We question the legitimacy and thoroughness of any investigation that did not involve any discussion whatsoever with Mr. Charney," Glaser wrote. The charges mostly "involve activities that occurred long ago (if at all) and about which the Board and the Company had knowledge for years."
Charney's lawyer said the firing violated the Age Discrimination in Employment Act, which required American Apparel to provide 21 days to consider any proposed severance agreement.
Charney's lawyers have given American Apparel until Monday to reinstate him or he'll sue.
[Image via Getty]