Artificial Arbitration at American Apparel?

Jezebel proclaims: Dov Charney May Be More of a Scumbag than Anyone Realized, and I agree if the reporting on a sexual harassment case, Mary Nelson v. American Apparel, rings true (the opinion is unpublished, and I haven’t obtained a copy yet). Charney is the founder of American Apparel, and has been the focus of several sexual harassment suits over the years for allegedly maintaining a sexually-charged work atmosphere.

Over at Conde Nast, Karen Donovan reports:

Female employees have filed three sexual harassment lawsuits against Charney. The last active suit was settled earlier this year, but details about it had not been disclosed until a California appellate court released a decision this week.

The decision, however, also describes a bizarre piece of theater concocted as part of the settlement proposal. In exchange for paying the former employee $1.3 million, she and her lawyers agreed to a sham “arbitration.” A retired judge picked by American Apparel would agree to stipulated facts and make a finding in the company’s favor.


The appellate decision lays out the sham arbitration of the settlement. It stipulated that the arbitrator would absolve Charney of the sexual harassment claims…[on First Amendment grounds]


Charney, to be sure, is all for the First Amendment. So much so that the settlement would have included this press release to be issued: “The arbitrator ruled that the marketing materials, sexual speech and much of the conduct about which Nelson complained are protected under the First Amendment’s guarantee of free speech and would not form the basis for any claim.”

Wow! We all knew that arbitration runs the risk of being tilted toward business interests, but to agree in advance to have an entirely artificial arbitration process in order to whitewash an executive’s behavior? That’s priceless. What would one call this? AstroArbitration? It makes a mockery of a mockery.

If the arbitrators have any ethics, they’ll quickly adopt rules finding that such arrangements are unethical. We’ll see.


  1. Anonymous

    Perhaps a retired judge wouldn’t care about his future ability to practice law, but this kind of behavior is unethical and violative of the rules of professional responsibility anyone admitted to the bar must follow (with minor variations based on the particular rules adopted by the state bar). If this “sham” arbitration proceeds as described, an official complaint should be filed against the judge who, at minimum, should be censured for such outrageous conduct. This undermines every single reason for my choice of a legal profession.

  2. That Sham arbitration was actually cooked up by American Apparel, Dov Charney, The same person that likes to cook the company books and lie to his investors also. You think an innocent person would pay out 1.3 million dollars if Nelson actually had a bogus claim? you think her lawyers would fight this for 3 years if this was a bogus claim? I dont.

  3. Marilyn Mann

    I hate to spoil everyone’s lunch, but I can’t resist posting the following, from the WSJ Law Blog:

    “The LAT, via Overlawyered, reported on the latest sexual-harassment suit set to go to trial next week against Dov Charney (pictured), the controversial wunderkind owner of clothing chain American Apparel. (Click here for a New Yorker article on Charney by Malcolm Gladwell.) Charney has been sued four times for sexual harassment (one dismissal, two settled) for, er, unusual behavior.

    Like wearing underwear around the office. Or walking around naked wearing only a sock to cover his genitals. He denies creating a hostile work environment and in depositions he has explained away his behavior, saying that during the plaintiff’s employment he “frequently had been in my underpants . . . because I was designing an underwear line.” He added: “I’m very proud of the underwear.” As for the sock, he says that he was considering it as a product and he “was in fit condition for it.”

  4. Graculus

    As for the sock, he says that he was considering it as a product and he “was in fit condition for it.”

    Going into infant wear?

  5. This is the same guy who apparently masturbated in front of a reporter in 2004. He seems to find it difficult to distinguish between appropriate and inappropriate behavior.

  6. Marilyn Mann

    According to the opinion, when the retired judge realized that the arbitration was totally bogus, he refused to participate.

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