American Apparel submitted a declaration in court last month that accuses former CEO Dov Charney of sexually harassing and assaulting multiple company employees and models and describes these accusations in graphic detail.
This declaration, which was filed on June 19, 2015 by American Apparel board chairperson Colleen Birdnow Brown, is the company’s response to a defamation lawsuit that Charney filed against the company. The following is a copy of Brown’s declaration:
I, Colleen Birdnow Brown, hereby declare and state as follows:
1. I am the Chairperson of the Board of Directors of American Apparel, Inc. (“American Apparel” or the “Company”) and have held that position since December 2014. I have sat on the Company’s Board of Directors (the “Board”) since August 2014. I was a member of the Company’s Suitability Committee (as discussed in detail below) and I also sit on the Company’s Nominating Committee and Corporate Governance Committee (which I previously chaired) and its Audit Committee. In addition to serving as the Chairperson of the Board of American Apparel, I am a board member of TrueBlue, Inc. and serve on that company’s nominating and corporate governance committee, as well as its compensation and technology committees. From 2005 through approximately August of 2013, I was a Director, President and Chief Executive Officer of Fisher Communications, Inc. Fisher Communications, Inc. was a leading provider of ABC, CBS, NBC and FOX affiliated television stations, radio stations and interactive networks. I have personal knowledge of the facts set forth below, and if called as a witness, I would and could testify competently thereto.
2. In my capacity as a Director of American Apparel and a member of the Audit Committee and the Suitability Committee, I have reviewed documents related to the investigation I of Plaintiff Dov Charney (“Charney”). I have reviewed and am familiar with minutes of Board meetings that occurred prior to my appointment. These minutes were taken in the ordinary course and scope of the meetings of the Board and its committees, were made at or near the time of the meetings re?ected therein, and are maintained in the records kept by the Board.
3. Based upon my review of the minutes of Board meetings, I understand that, in the spring of 2014, the Company’s Audit Committee launched an investigation into alleged misconduct by Mr. Charney. During the investigation, the facts uncovered by the Audit Committee concerning Mr. Charney led the Company’s independent directors to recommend that, interim action be taken against him before the investigation was completed.
4. Based upon my review of the minutes of the meeting of the Board that took place on June 18, 2014, I am aware that the independent directors of the Company presented Mr. Charney with two options: remain on as a paid consultant for the Company without any supervisory or financial authority, or be suspended pending completion of the ongoing investigation. When Mr. Charney and the Board were not able to reach an agreement regarding either option, the Board unanimously voted to suspend Mr. Charney pending completion of the investigation. I understand that the Board offered Mr. Charney a consulting role with American Apparel in the hopes of ensuring Mr. Charney’s departure from the Company would be smooth and uneventful.
5. Mr. Charney’s suspension was effective as of June 18, 2014, and formalized in a letter (the “Suspension Letter“), a true and correct copy of which is attached hereto as Exhibit A. The Suspension Letter identifed certain misconduct by Mr. Charney, including, but not limited to, the following:
(a) Mr. Charney was “aware of, but took no steps to prevent an employee under [his] direct supervision and control from creating and maintaining false, defamatory and impersonating blog posts about former American Apparel employees”;
(b) Mr. Charney “presented significant severance packages to numerous former employees,” (paid for by the Company itself and not Mr. Charney) in order to ensure that Mr. Charney’s “misconduct vis-a-vis these employees would not subject [him] to personal liability”;
(c) Mr. Charney “repeatedly engaged in conduct that violated the Company’s sexual harassment and anti-discrimination policy,” and “engaged in conduct that repeatedly put [himself] in a position to be sued by numerous former employees for claims that include harassment, discrimination and assault”;
(d) Mr. Charney “made derogatory and disparaging cements directed at persons of certain ethnicities or related to their gender, sexual orientation or religious persuasion that [were] discriminatory and offensive and . . . not in accordance with Company policies”; and
(e) Mr. Charney “used corporate assets in an inappropriate manner and for personal, non-business reasons without approval of the Board.”
The Audit Committee?s independent counsel, Jones Day (which never served as outside general counsel to the Company), retained FTI Consulting, Inc. to assist in the investigation into Mr. Charney’s alleged wrongdoing.
6. Based upon my review of documents maintained by the Board, I am aware that on or about July 9, 2014, Mr. Charney resigned as a director of the Company pursuant to an agreement among Mr. Charney, the Company, and Standard General LP. (and affiliated funds) (the “Standstill Agreement”). A true and correct copy of the Standstill Agreement is attached hereto as Exhibit B. Pursuant to that agreement, to which Mr. Charney was a party, a “Suitability Committee” of the Board, which was ultimately composed of myself and two other independent directors, assumed oversight and control of the ongoing investigation into Mr. Charney’s conduct that was being conducted by FTI.
7. On December 15, 2014, I attended a meeting at which the Suitability Committee voted unanimously that Mr. Charney was not suitable to return to the Company as CEO or serve as an officer or employee of the Company, and the Board voted that Mr. Charney should be terminated for cause. The Suitability Committee met several times between August 2014 and December 2014 for the purpose of reviewing the extensive evidence uncovered during the course of the investigation and considering whether Mr. Charney was fit to return to the Company. Pursuant to the terms of the Standstill Agreement, the Suitability Committee also invited Mr. Charney and his counsel to attend a preliminary meeting on September 29, 2014, at which time the Suitability Committee, Jones Day, and FTI reviewed with Mr. Charney and his counsel the evidence that had then been collected. The evidence reviewed therein was subsequently made available for Mr. Charney and his counsel to review further.
8. The evidence collected in the investigation concerned a number of topics including Mr. Charney’s involvement in the “Impersonation Blogs” described below, and the resulting litigation; Mr. Charney’s sexual liaisons with employees and models, and the resulting litigation; Mr. Charney’s verbal abuses and physical assaults on employees, and the resulting litigation; Mr. Charney’s use of Company funds to pay personal legal fees; Mr. Charney’s receipt of loans and advances without prior approval; and Mr. Charney’s practice of removing or directing the removal of cash from American Apparel retail stores without documenting the business use of such funds. In short, the evidence (which was voluminous) corroborated the key allegations of misconduct asserted against Mr. Charney in the Suspension Letter and revealed an abundance of newly discovered employee abuse and sexual and ?nancial misdeeds.
The “Impersonation Blogs”
9. As alleged in several legal proceedings against the Company, Mr. Charney encouraged American Apparel employee Kyung Chung to create internet blogs in the names of former Company employees and models. These blogs were created in an effort to retaliate against women who made accusations against Mr. Charney. The blogs purported to include statements from employees regarding their sexual harassment claims against the Company that made it look like the sexual harassment suits were baseless and extortionate. Additionally, the blogs featured nude or semi-nude photographs of the women being impersonated on the blogs’ photos obtained from Mr. Charney’s devices. Several of these blogs resulted in legal proceedings against the Company. In one such action, Mr. Charney provided testimony expressing his approval of the blogs. The Suitability Committee reviewed transcripts of Mr. Charney’s testimony in which he stated that he was “proud” of Ms. Chung for creating the Impersonation Blogs, noting “I am proud of [Chung]. Let’s be clear. Proud.” When asked why he failed to discipline Ms. Chung, Mr. Charney said that she “made an effort to protect my honor. The word discipline is not in the realm. What’s in the realm is a hug and a thank you.” The Impersonation Blogs resulted in multi-million dollar settlements and awards paid by the Company. The Impersonation Blogs that involved at least four former employees/models: Kimbra Lo, Tesa Lubans DeHaven, Irene Morales and Alyssa Ferguson. Each of these individuals brought claims against Mr. Charney, Ms. Chung and the Company.
10. Kimbra Lo was an employee of the Company and also worked as a model. The Kimbra Lo Impersonation Blog, which featured nude photographs of Ms. Lo, was created in an attempt to retaliate against Ms. Lo for reporting Mr. Charney’s inappropriate behavior including, but not limited to, Mr. Charney’s sexual assault of Ms. Lo. Incredibly, this was done even though Ms. L0 had contacted the police, and informed them (as later recorded in a police report) that Mr. Charney sexually assaulted her. The assault occurred after she had left the Company and Mr. Charney summoned her to his residence to discuss her return to the Company. Ms. Lo described the assault in a detailed report filed with the Los Angeles Police Department.
11. Kimbra Lo pursued claims in an arbitration proceeding against Mr. Charney, Ms. Chung and the Company, L0 v. American Apparel, Inc., JAMS Case No. 1220042475, Los Angeles Superior Court Case No. BC457920. As a result of the potential exposure to the Company, the case settled prior to the arbitration hearing for a confidential amount.
12. Tesa Lubans-DeHaven was a former employee of the Company who initiated a sexual harassment suit against Mr. Charney and the Company. Following the filing of that lawsuit, Ms. Chung created an Impersonation Blog, which featured suggestive pictures of Ms. Lubans-DeHaven. Additionally, it set forth comments suggesting that Ms. Lubans-DeHaven’s lawsuit was without merit. Ms. Lubans-DeHaven made claims regarding the Impersonation Blog in the arbitration proceeding commenced in April 2014, Lubans-DeHaven v. American Apparel, Inc., JAMS Case No. 1220043539, Los Angeles Superior Court Case No. BC457920. As a result of the potential exposure to the Company, the case was settled by the Company’s insurance carrier prior to the arbitration hearing for a confidential amount.
13. Irene Morales’s initial sexual harassment lawsuit received widespread media coverage. She alleged that Mr. Charney began sexually harassing her when she was 17 and that Mr. Charney kept her locked in his apartment and forced her to have sex with him under threat of being fired. Following the filing of Ms. Morales’s lawsuit, Ms. Chung created an Impersonation Blog that included false statements suggesting that Ms. Morales’s lawsuit was meritless and extortionate. The blog featured nude or semi-nude photographs of Ms. Morales.
14. Ms. Morales pursued claims in an arbitration proceeding against Ms. Chung, Mr. Charney and the Company, Morales v. American Apparel, Inc. JAMS Case No. 1220042473, New York Supreme Court, County of Kings Index Nos. 5018/2011 and 5122/2011 for, among other things, creation of the Impersonation Blogs. An arbitration hearing was held and the arbitrator found that Ms. Chung and the Company were liable because Ms. Chung’s Impersonation Blogs contained false statements of fact and were created with actual malice. As a result, the arbitrator found that Ms. Chung violated California Penal Code Section 528.5, and was liable for that violation as well as for defamation, invasion of privacy and intentional infliction of emotional distress. The arbitrator found that the Company was vicariously liable for Ms. Chung’s actions in creating the Morales Impersonation Blog based largely on Mr. Charney’s testimony that he approved of and appreciated Ms. Chung’s actions. The arbitrator also found that the Company had ratified Ms. Chung’s conduct based on Charney’s prior knowledge of the blogs and failure to stop Ms. Chung. The arbitrator awarded Ms. Morales $1,559,159.87.
15. Alyssa Ferguson began as an employee in one of the Company’s retail stores and was later recruited by Ms. Chung to do modeling work. While working as a model, Ms. Ferguson alleged that Ms. Chung asked her to pose nude and “do raunchy things” with mannequins during a photo shoot. Following that photo shoot, she claimed that she was sexually assaulted by Mr. Charney while staying at Ms. Chung’s loft. Ms. Ferguson’s allegations are set forth in a chilling report that was filed with the Los Angeles Police Department.
16. Following Ms. Ferguson’s filing of a sexual harassment lawsuit against Mr. Charney, Ms. Chung created an Impersonation Blog that included false statements suggesting that Ms. Ferguson’s lawsuit was meritless and extortionate. The blog featured nude or semi-nude photographs of Ms. Ferguson.
17. Ms. Ferguson ultimately made claims against Ms. Chung, Mr. Charney and the Company related to the Impersonation Blog in an arbitration proceeding, Ferguson v. American Apparel, Inc., JAMS Case No. 1220042480, Los Angeles Superior Court Case No. BC457920. A hearing was held and the arbitrator determined that Ms. Chung violated California Penal Code Section 528.5 by “knowingly creating” blog posts impersonating Ms. Ferguson for a “harmful purpose” and “at a minimum” to intimidate Ms. Ferguson. The arbitrator also found that Ms. Chung was liable for defamation and invasion of privacy. The arbitrator also found that Mr. Charney and the Company ratified Ms. Chung’s conduct based on Mr. Charney’s knowledge that Ms. Chung was working on the Impersonation Blogs and his failure to do anything about it. The arbitrator awarded Ms. Ferguson $1,819,178.89.
18. The Company discovered voluminous evidence of Mr. Charney’s sexual liaisons with employees and models. This evidence included explicit emails, text messages, videos and still photographs. These materials were all recovered from Company computers and/or devices, and there is evidence that Company devices were used to (1) send illicit emails and text messages, (2) take illicit photographs, and (3) record illicit videos.
19. These emails and text messages reveal that Mr. Charney repeatedly sent illicit messages to employees. He sent messages that included pornographic videos (or links thereto), pornographic photographs and other nude pictures. Additionally, he frequently engaged in inappropriate sexual banter, infantilizing women and referring to himself as “Daddy.” Some examples of the many illicit email and text messages sent by Mr. Charney to employees included in the evidence reviewed by the Suitability Committee include the following:
- “Your ass in that photo is the perfect cum target!”
- “Jack off fun for a bad daddy”
- “Daddy is so excited to play with the most little tiny blonde cum kitten in the whole school”
- “Should I unload my cock now??? Like a filthy pig?”
- “The feeling of your spit dripping down my ass crack would drive me crazy”
- “I fucking need a phone fuck”
- “I am jerking my dick for you and telling you how awful and disgusting I am”
- “I like the idea of pulling your hair and fucking the shit out of you as I ride your body like you were a perfect blond pony”
- “I want baby girl droooool all over my cock”
20. The Company also discovered videos and photographs of Mr. Charney engaged in all manner of sexual behavior with numerous models and employees, which for some incredible reason had been saved by Mr. Charney to the Company’s network server by him with the use of his Company computer. For example, the evidence included videos and images of a model orally copulating Mr. Charney’s penis, testicles and anus during a photo shoot; images of another model orally copulating Mr. Charney’s penis, testicles and anus and engaging in sexual intercourse with Mr. Charney; images and videos of another model engaging in mutual masturbation with Mr. Charney, orally copulating Mr. Charney’s penis and engaging in sexual intercourse with Mr. Charney; and images and video of another model engaging in mutual masturbation with Mr. Charney and orally copulating his penis. At least one of these encounters appears, based on the pictures and videos, to have taken place in Mr. Charney’s office at the Company’s headquarters.
21. The Suitability Committee reviewed evidence that Mr. Charney attempted to destroy evidence of his sexual liaisons, sending emails to employees asking them to “delete naughty emails!”
22. The Company, as a result of Mr. Charney’s sexual liaisons, incurred $8.2 million in insured litigation costs and $1.2 million in uninsured litigation costs through September 2014.
Verbal and Physical Abuse
23. In addition to his sexual harassment and abuse, Mr. Charney also engaged in verbal and physical abuse of employees and others that resulted in litigation. Numerous pleadings have been filed by employees alleging verbal and physical abuse. The pleadings described below, as is the case with the sexual liaisons described above, represent only a small sampling of this verbal and physical abuse.
24. Former American Apparel employee eneleen Floyd initiated litigation alleging that Mr. Charney stormed into her office screaming and yelling and threatened repeatedly to “kick her ass.” Ms. Floyd alleged that she was “so terrorized by [Mr. Charney’s] verbal and physical threats that she believed that she was in imminent harm of being physically struck and harmed.”
25. Former American Apparel employee Laura Barry initiated litigation alleging that Mr. Charney berated her and “became increasingly threatening and violent.” She alleged that Mr. Charney called her a “fucking moron,” and asked whether she “fucking graduated from high school.” Ms. Barry also alleged that Mr. Charney “stood inches from [her] and mimed holding a shotgun to her forehead, cocking the shotgun and pulling the trigger.” Ms. Barry alleged that this made her fear for her life.
26. . Former American Apparel employee Michael Bumblis, who managed the Malibu retail store, initiated litigation alleging that Mr. Charney berated him for the store’s poor performance, screaming, “You should have been fucking fired months ago . . . You’re a fucking Jew! You should know, you are a fucking long haired wanna be Jew. Get your fucking shit together fag.” Mr. Bumblis alleged that Mr. Charney went on to say, “Where is your fucking creativity? Get some fucking girls in bikinis to stand on PCH and have them waive a fucking American flag. Are you a fag?” Mr. Bumblis further alleged that after this exchange Mr. Charney “dove at [him], grabbed [his] throat with both hands and began to forcibly squeeze [his] throat in an attempt to choke and strangle [him].” After choking him, Mr. Charney “proceeded to scoop up the dirt and forcibly attempt to rub the dirt on [Mr. Bumblis’s] face.”
27. Employees at the Company’s La Mirada facility lodged complaints after a meeting attended by Mr. Charney with the manufacturing accounting department. Mr. Charney began the meeting by shouting at the accounting staff, “you’re all fucking me.” Mr. Charney then verbally abused Filipino employees calling them “Filipino pigs . . . with your faces in the trough,” and telling them he would be their “[Ferdinand] Marcos. I will tell you what to do.” Mr. Charney repeatedly referred to the Filipino employees as “Filipino pigs” and threatened to fire them.
28. A female employee sent an email to Mr. Charney complaining about the work environment at American Apparel and about Mr. Charney’s conduct in particular. In that email, the employee states, “First, don’t ever, ever hit or slap me in the face again. Don’t call me a slut, whore, slave or bitch. Don’t call me stupid.” The employee also laments what she believes to be perception of female employees at American Apparel: “[T]o be associated with American Apparel, especially as a woman, was once a bit of a status symbol–something to be proud of. Now it means you’re a whore. . . . People think we’re a bunch of empty ‘sluts’ because a man we call our ‘daddy’ [Mr. Charney] has to cum all over our faces 5 times a day.”
29. A female employee sent an email describing an incident in which Mr. Charney grabbed her hand and placed it on another woman’s breast on the factory floor as workers passed by. The employee states that she pulled her hand away and told Mr. Charney to stop, but Mr. Charney “just laughed.” The employee stated in her email, “I’m confused and scared[.] Dov has always said I was a dumb Mexican. Maybe I am??” The employee also states that she was concerned about her future with the Company because Mr. Charney “told [the employee] he can get a younger girl that can suck him and fuck him and pay her a lot less than [the employee].”
30. In October 2013, at the Company’s La Mirada facility, Mr. Charney became enraged and shouted at an employee, “You weakling! . . . There’s not enough Spartans in here! And you’re the weakest of the group! . . . You pathetic loser! Loser! Ten miles of fucking piece of shit loser!” Mr. Charney then exclaimed, “Fuck!” and threw a full bottle of ibuprofen, striking an employee in the face. Mr. Charney then stated, “I didn’t mean to do that, but I’ll tell you one thing, . . . you fucking pushed me!”
Improper Use of Corporate Assets
31. As set out in the Suspension Letter, Mr. Charney “used corporate assets in an inappropriate manner and for personal, non-business reasons without approval of the Board.” This included, but is not limited to, causing the Company to pay his personal legal expenses, receiving cash advances and loans from the Company without Board or Audit Committee approval, and removing, or directing the removal of, cash from retail stores.
Operative Company Policies
32. American Apparel has numerous policies and procedures that Mr. Charney, as CEO, was responsible for implementing and complying with. Those policies include, but are not limited to:
- A non-discrimination policy pursuant to which “American Apparel seeks to hire, retain, promote, and otherwise treat all applicants and employees without regard to race, color, religion, age, sex, gender or gender identity, sexual preference, marital status, national origin, ancestry, citizenship, . . . or any other characteristic protected by law.”
- An anti-retaliation policy pursuant to which “[n]o employee will be retaliated against for making a complaint or bringing inappropriate conduct to the Company’s attention, for preventing unlawful practices, or for participating in an investigation . . .”
- An anti-harassment policy prohibiting harassment on the basis of race, religion, sex, national origin or other legally protected status.
- A policy against sexual harassment including unwelcome or unsolicited sexual advances.
- An electronic information and web resources policy prohibiting inappropriate use of electronic resources including phones, cameras, computers, computer accounts, email accounts and networks.
33. In December 2014, following a six-month investigation into Mr. Charney’s conduct, the Suitability Committee voted unanimously that Mr. Charney was not suitable to return to the Company as CEO or serve as an officer or employee of the Company, and the Board voted that Mr. Charney should be terminated for cause under the terms of his employment agreement.
34. Immediately thereafter, Mr. Charney began a campaign to attack the Company and its reputation, and the reputation of its Directors and new CEO, Paula Schneider, by communicating with employees, investors and the press. As part of his recent attempts to disparage the Company, Mr. Charney has attempted to incite labor unrest and has orchestrated the filing of dozens of claims against the Company in various lawsuits and with the National Labor Relations Board (“NRLB”). Mr. Charney’s attorney, Keith Fink, recently admitted to the press that Mr. Charney is “directly involved” in the NLRB charges and other lawsuits against the Company. Mr. Fink also promised a “tidal wave” of new lawsuits against the Company. A Delaware Chancery Court recently issued a temporary restraining order against Mr. Charney that prevents him from continuing in his efforts to publicly malign the Company and its Directors.
35. Mr. Charney’s recent communications regarding the Company are false and were made with the intent to disrupt the day-to-day operations of the Company. For example, a number of emails were sent to American Apparel employees by Mr. Charney through intermediaries disparaging the Board and the Company. One such email contained the subject line “If You Care About Your Job With American Apparel Please Read.” The email contained a link to a petition supporting Mr. Charney and stated as follows about the Company’s new leadership: “We have a bunch of consultants draining our company sitting in a room all day making 6 figures a month. THAT IS NOT AMERICAN APPAREL.” The email referenced me by name and suggested that American Apparel employees should not be comfortable with the Company “in [my] hands.” Email forensics indicates that these emails were sent from Mr. Charney’s house.
36. A number of employees made inquiries of their supervisors regarding Mr. Charney’s status with American Apparel. In response to these inquiries, and in an attempt to allay the concerns of Company employees, I sent a letter dated April 24, 2015, a copy of which is attached to Mr. Charney’s Complaint in this Action as Exhibit E. Attached to that letter was a copy of the Suspension Letter sent on June 18, 2014, which has been publicly available on the internet since that date. My sole purpose in sending this letter was to provide American Apparel employees with an update regarding Mr. Charney’s future with the Company, which I believe I they needed and deserved in light of the concerns expressed by many employees regarding the same.
37. In the letter, I set forth the basis for Mr. Charney’s termination for cause as I understood it in my role as Chairperson of the Board and a member of the Suitability Committee–that is, that Mr. Charney was terminated f0r the reasons set out in the Suspension Letter and otherwise publicly disclosed by the Company. The letter also set forth my opinion that Mr. Charney will not return to American Apparel in any capacity. Based on the information known to the Board of Directors about Mr. Charney’s involvement with the Impersonation Blogs, his abusive and discriminatory manner of dealing with American Apparel employees, his threats of violence, and his long history of inappropriate sexual relationships with Company employees and models, I believe the risk Mr. Charney poses to American Apparel and its employees is far too significant for the Company to entertain the possibility of maintaining any future working relationship with him.
38. Specific statements in my April 24, 2015 letter were all supported by, inter alia, independent evidence revealed. For example:
- The letter states “Many of you have expressed concern that Mr. Charney continues to claim he is returning to American Apparel. He is not.” This statement is supported by the Standstill Agreement attached hereto as Exhibit pursuant to which Mr. Charney agreed to abide by the findings of the Suitability Committee and, as noted below, not to return as an executive or employee of the Company. Additionally, this statement is supported by Mr. Charney’s misconduct including, but not limited to, the misconduct described above which supported the determination of the Suitability Committee.
- The letter states that “Mr. Charney repeatedly violated the Company’s sexual harassment and anti-discrimination policy and used corporate assets for personal, non-business reasons.” Each of these statements is supported by the evidence uncovered in the investigation. Mr. Charney sent illicit text messages and emails, engaged in sexual liaisons, some of which were allegedly not consensual, and used Company electronic resources to engage in this, behavior. These actions violate Company policy as set forth above. Likewise, Mr. Charney’s verbal and physical abuse of employees, including using racial, ethnic and religious slurs such as “wannabe Jew,” Asian and African American slurs, “Filipino pigs,” and other such slurs and insults violated Company policy as set forth above. Mr. Charney obtained loans and advances without Board or Audit Committee approval and removed, or directed the removal of, a substantial amount of cash from American Apparel retail stores without documenting the business use of such ?inds. Additionally, he used Company funds to pay his personal legal fees. Mr. Charney’s actions in this regard, without prior Board or Audit Committee approval, were a misuse of corporate assets.
- The letter states that Mr. Charney “agreed in writing, in a contract on file with the Securities and Exchange Commission (SEC), that if he was found to be not suitable . . . he would not return as CEO, an executive or as an employee of the Company.” This statement is entirely true as evidenced by the Standstill Agreement attached hereto as Exhibit B.
- The letter states “Mr. Charney was found not suitable and the Board fired him for cause.” As set forth above, on December 15, 2014, the Suitability Committee voted unanimously that Mr. Charney was not suitable to return to the Company as CEO or serve as an officer or employee of the Company, and the Board voted to terminate Mr. Charney for cause under the terms of his employment agreement.
- The letter states “the SEC has notified the Company that they have launched a formal investigation into possible violations of the securities regulations during the time that Mr. Charney was CEO.” This statement is accurate.
- The letter states “given this set of facts . . . it would be hard to find any Board of any company (public or private) that would be willing to hire Mr. Charney as its CEO, executive, or employee. The risk to the Company and its shareholders would just be too great.” In my opinion as a longtime executive with extensive experience in the management of public and private companies, with a particular focus on corporate governance (including as a director of three public companies), this is an accurate statement. Notwithstanding all of the above, just days after my April 24, 2015 letter was sent, Mr. Charney initiated this Action on May 12, 2015, in my opinion to silence me from communicating to the American Apparel employees who have inquired regarding Mr. Charney’s status with the Company.
39. In addition to his antics, Mr. Charney has initiated an arbitration proceeding related to his perceived wrongful termination. That proceeding is ongoing.
I declare under penalty of perjury of the laws of the State of California that the foregoing is true and correct.
Executed this 19th day of June, 2015 at Los Angeles, California.
By: Colleen Birdnow Brown