Troubled clothing firm American Apparel Inc says it intends to file a formal complaint with the New York State Bar Association after a former employee filed a sexual harassment lawsuit against the company’s founder and CEO Dov Charney.
The firm is being sued for $250 million in damages by Irene Morales, who worked as a sales assistant for two years from 2007 to 2009.
But American Apparel claims her lawyers “are engaged in an illegal conspiracy to extort money” from the manufacturer and retailer, and that the claims are “entirely baseless.”
In a statement it said Morales had signed a severance agreement saying she had no pending claims against the company and agreed “to submit any future claims to confidential binding arbitration.”
“We are very confident that…the company’s counter-claims will be resolved, we believe, fully in favor of the company,” American Apparel said.
The Los Angeles-based firm is no stranger to controversy. Not only has Charney already faced several sexual harassment suits, but the retailer has also faced outcry over its racy advertising, and was forced to dismiss thousands of illegal workers.
It has also recently amended a credit agreement with one of its key lenders after repeated warnings that it might not be able to continue as a going concern if its debt agreements were contravened.
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