American Apparel CEO on Trial Dov Charney, the chief of American Apparel, is in court this week facing allegations of sexual harassment from one of his former employees. Carla Hall of the Los Angeles Times reports on the case of a strange business figure.


American Apparel CEO on Trial

American Apparel CEO on Trial

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Dov Charney, the chief of American Apparel, is in court this week facing allegations of sexual harassment from one of his former employees. Carla Hall of the Los Angeles Times reports on the case of a strange business figure.


Thanks so much, Rachel. Okay. This is one of the stories that if you have little kids who like to repeat things, you might want to plug them in to a "Dora the Explorer" video…

(Soundbite of laughter)

MARTIN: …because of the subject of our next interview.

TOURE, host:

Yeah. My son can wear earmuffs now.

(Soundbite of laughter)

TOURE: The agile question: Is it appropriate to walk around the office in your underwear or less? See, we are already delivering. Some people have to find the hard way that unless your office is the strip club, the answer is probably no. But what if you work in an underwear maker?

Dov Charney, the CEO of American Apparel, is in court this week, facing allegations of sexual harassment from one of his former employees. The employee alleges Charney created a hostile work environment by using sexually explicit language and walking around the office dressed only in his underwear or less. Charney doesn't deny the allegations. He says this is the norm in the fashion industry and shouldn't be considered harassment. This is the fourth such lawsuit Charney has faced. One was dismissed. The other two were combined and settled.

Despite the scandal around him, Charney insists the lawsuits are not hurting his business as he recently told CNBC reporter Margaret Brennan.

(Soundbite of recorded interview)

Mr. DOV CHARNEY (CEO, American Apparel): I think we have a fantastic ad campaign and I don't see any problems there. And I don't - you're asking me about lawsuits. I don't want to comment on them right now. There are not a multiple of lawsuits, there is one.

Ms. MARGARET BRENNAN (Reporter, CNBC): Mm-hmm.

Mr. CHARNEY: But I don't see that this as an ongoing risk for us. I think we have a very tight business and we have a lot to offer shareholders.

TOURE: That ad campaign reminds some of immature porn. But, you know, the company recently went public and reported a gain of over $20 million in the third quarter.

Carla Hall is a reporter for the L.A. Times. She's been following the case.


Ms. CARLA HALL (Reporter, Los Angeles Times): Hello.

TOURE: …can you wear underwear at work?

Ms. HALL: Well, according to Dov Charney, if you are the CEO of a company that makes underwear among other cotton items - T-shirts, tights, shorts, things like that - you can. He justifies it by saying that he is the company's fit model and that he is in great shape, and he's also the creative director of the company. And as he said, is there any job that's not appropriate for me to do? He says all of the big designers who were men, who are in good shape have worn their own clothes and have probably changed into their own clothes in their office.

What he really says that the real reason why he was wearing the underwear was to show it to his different colleagues to get a read from them on how it looked. And also, he says that as the CEO, he has to essentially test drive the underwear. He has to see how it fits in field.

TOURE: Does he really want to get on the stand and tell this to a jury of his peers? Do you really think that 12 people will buy that this is okay?

Ms. HALL: Well, he will - I'm sure, he will say it's against to the point where he's on a stand, talking to 12 members of the jury. I think he will say that, first of all, he didn't parade around the office. I don't what the plaintiff will say. But I think that he will say that he wore the underwear mainly in his office and in business meetings with colleagues. He didn't actually run around, although there is one incident where he did run through the factory in his underwear, and it was for a joke video that American Apparel was wearing. He said there was one time he really went running through the factory in his underwear and it was to entertain the staff.

TOURE: Are you not entertained? You spoke…

Ms. HALL: Many people are not.

TOURE: And you've spoken with him. What do you think of him? Did he make a pass at you?

Ms. HALL: No, he did not. He did not. He was completely professional. He was charming, actually, to a certain extent. He was very personable. I met him for 15 minutes in his office. And in addition to that, I've spent at least a couple of hours, if not more, on the phone talking to him. He feels very passionately about this issue. He feels that he was not sexually harassing people in his office. He feels that he has been wronged.

What he told me a week and a half ago was that he didn't want to settle. It wasn't a matter of money. He wanted to go to trial. He feels, to a certain extent, his personal reputation has been damaged by this.

Whether or not they will go to trial, whether or not American Apparel will go to trial, I really can't say. The lawyers of both sides, yesterday, spent six hours closeted in a room off the court room, trying to settle. And it looked like they had reached the settlement. They went into the judge's chambers and then they all came out and said, we haven't settled and we'll be back in court tomorrow, which is, they will be back in court today.

TOURE: A lot of American Apparel customers are women and young women. Do you think these accusations are going to have an impact on American Apparel, and noting this is the fourth time he's been sued?

Ms. HALL: I think that they might. I think now, when a consumer goes into one of the stores, which have these interesting but provocative pictures on the walls, I think they're just thinking, wow, this is a great T-shirt and it fits me well. I think when they go on the Web site, they're thinking about the same thing.

But I think that if they're in trial for a month and the plaintiff's attorney, Keith Finks, says they will be in trial for a month, I think if that happens, then almost everyone, at least in the city of L.A., will know about this accusation. And it may have some effect on those shoppers.

TOURE: Carla Hall with the L.A. Times. Thank you very much.

Ms. HALL: You're welcome.

STEWART: I think it's one of those interesting stories because American Apparel has that no-sweat shop philosophy and a lot of people thought, you know, this is sort of hey, this is really a company that does good and has a certain ethic about the way they make their clothes and then you hear about what their CEO potentially has done, he used explicit language, called ladies names.

TOURE: That's no good.

STEWART: Strutting around in his underpants. Well, we know he did the underpants thing, he says he did, but.

TOURE: He admitted it. That's no good for, you know, men to do. But I just want to say any of you ladies - I'm not going to be complaining at all. I'm just going to throw that out there.

STEWART: Next up on the show, national hobby month, we'll take you to the extreme - extreme yo-yoing.


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