The dismissed chief executive of American Apparel Inc (NYSEMKT:APP), Dov Charney has filed a defamation suit for $30 million against a hedge fund based in New York. Jones Day and American Apparel are excluded from the lawsuit.
According to Dov Charney’s lawsuit in the Superior Court, Los Angeles, the hedge fund, which holds a large stake in the American Apparel, has not supported his reinstatement.
American Apparel justified the ouster following the misuse of its funds. He also failed to restrain his subordinate in the publication of inappropriate blogs against the former employees.
He alleged that Standard General has hired Jones Day, an outside law firm, for millions of dollars to frame false allegations into his conduct and to show that he was unfit for the CEO position.
According to Dov Charney, the Standard General has told the media that he was removed respecting the decision of the board. It was simply a white wash by hiring a third party to frame the allegations to dismiss him from the company he founded.
However, Standard General termed the lawsuit as frolicsome. According to a statement released by the New York hedge fund, the facts will tell the truth. The court will take into cognizance the acts of Dov Charney in abusing the legal system intentionally.
Standard General nominated three persons to the nine-member director board of American Apparel as per the signed accord in July last year.
According to a statement released by a spokesperson, American Apparel, the defamation suit is without any basis.
Dov Charney and Standard General together controls 42% stake of the former in American Apparel Inc (NYSEMKT:APP). He was helped by the hedge fund to increase his stake in the company after his suspension in a bid to reclaim the post.
According to Keith Fink, his attorney, Dov Charney claims $40 million towards the emotional distress suffered by him and the breach of contract for his dismissal.