American Apparel Inc (NYSEMKT:APP) has filed a lawsuit against its former CEO Dov Charney because of the “Scorched Earth Campaign.”
The company sued Charney with accusations that he launched the campaign to take back control of the company. The company accused him of going against one of the agreements that he made with the company during his exit.
Charney left his executive position towards the end of 2014 after he was accused of inappropriate behavior and embezzlement of company funds. American Apparel claims that the ex-CEO’s actions have been directly colliding with the company and disrupting the company’s relationships with merchants and creditors. This was the argument presented by the company’s representatives during in the Delaware Chancery Court lawsuit.
The officials claimed that Charney has been intentionally sabotaging the company’s efforts to get back on its feet after his negative actions took up so much of the company’s good image. The new lawsuit comes not long after Charney had accused the company of wrongly firing him. He had been fighting the allegations that had him ousted from the company just six months ago.
American Apparel had initially suspended him pending investigations upon the rise of numerous cases of mistreatment and misconduct. The firm later resulted to removing him from his position. The former CEO had taken the company to court to fight these allegations as well as fighting to be reinstated back to his former position.
His case did not manage to hold as the company fought back claiming that his defense was baseless. More to that, American Apparel Inc (NYSEMKT:APP) had the file recordings and emails from the employees affected, documenting their complaints.
Charney has been fighting back with a lot of efforts but perhaps he has taken it to the extremes. Based on his actions, his chances of getting back his former position are very minimal. He has remained active outside the scope of the company, but his interference with the company’s activities might cost him a great deal if the lawsuit goes through.