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and I agree if the reporting on a sexual harassment case, Mary Nelson v. American Apparel, rings true (the opinion is unpublished, and I haven’t obtained a copy yet).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.