Ex-fashion magnate to sue over ‘sex slave’ case

Ex CEO and founder of American Apparel Dov Charney is set to sue the company after being ousted. Source: Supplied

CALL IT "The Case of the Smutty Blog: Part 2."

A short-lived blog from spring 2011 that showed naked pictures of an ex-American Apparel employee is at the centre of another looming lawsuit — this time from Dov Charney, who is fighting back against his sudden ouster as CEO by the board.

The controversial founder is expected to sue the retailer in the coming days, charging he was wrongfully terminated last week over trumped-up charges related to the blog, sources told The Post.

His ousting is related to the case of Irene Morales, who had unsuccessfully accused Charney of making her his "sex slave."

The board cited allegations that Charney had allowed a former employee to create a 2011 blog with nude pictures of Morales purported to be authored by her, sources said.

American Apparel has made a name for itself with racy advertising. Source: AFP

But Charney is expected to argue that he had no knowledge of the blog before it was published, and therefore isn't responsible for legal liability cited by the company, insiders said.

Moreover, Charney's lawyers note that the board renewed his employment contract in April 2012, more than a year after the allegations surfaced.

As reported by The Post, American Apparel's liability in the Morales case has been well short of the $260 million she had originally sought in her sensational lawsuit.

In fact, it was Morales this spring who was ordered by an arbitration judge to pay American Apparel $800,000 in damages for appearing on NBC's "Today" to accuse him of sexual harassment, sources said.

Morales' case appeared to get complicated after The Post revealed that she had been sending filthy photos of herself to Charney long after she left the company, coupling them with saucy come-ons, according to company lawyers.

Clothing on display inside a store in New York. Source: AFP

At the same time, however, American Apparel this spring was ordered to pay $1 million to Morales on charges that the blog had violated a 2010 California law that prohibits the public impersonation of another person, sources said.

Charney's lawyers are expected to argue the $200,000 difference falls well short of the "material" liability that the board has claimed, although insiders said American Apparel may also be liable for about $500,000 in legal fees.

Charney's lawyers also will likely counter that several board members as well as the company's legal counsel had been aware of the strategy to fight Morales' case by publishing the provocative photos she had e-mailed to Charney, undermining her allegations of harassment.

In this 2003 file photo, Dov Charney announces he will shutter his manufacturing plant to observe an economic strike by Latinos. Source: AP

One source close to Charney said the T-shirt magnate has characterised his surprise ouster as a "power grab" in which the board has attempted to cheat him out of a $23.8 million severance called for under his contract.

Last week, sources said the board instead offered him a four-year consulting gig worth $1 million a year — an offer that Charney refused.

Reached Sunday, co-chairman Allan Mayer said, "We remain confident that we did the right thing, for the right reasons, in the right way."

This article originally appeared on The New York Post and is republished here with permission.

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