Legal News

Keith A. Fink Hearts American Apparel

By Dan Slater

American Apparel and its leader, Dov Charney, represent many things to many people. Investors see retail innovation (though APP’s share price has lost nearly 60% in the last year). Moralists see inappropriate advertising. And immigration reformers see a champion in Charney.

But when labor lawyer Keith Fink looks at the company, he sees a fount of legal work. Fink (pictured), whom we mentioned last week, represented Mary Nelson, a former American Apparel sales manager who sued Charney for sexual harassment. A California appeals court wound up criticizing the company for orchestrating a sham arbitration with Nelson. American Apparel, according to the court, planned to issue what it called a “materially misleading” press release claiming victory in an arbitration with Nelson, when, in fact, before the arbitration was to begin, American Apparel had already signed a settlement agreeing to pay her $1.3 million in exchange for a statement exonerating Charney. American Apparel said the scheme was Fink’s idea in the first place.

Now Fink, of Keith A. Fink & Associates, is back, bringing a new genre of lawsuit against American Apparel. Roberto Hernandez, who handled accounts payable and computer issues for the company, sued the company in Los Angeles County Superior Court last week alleging that he was fired after refusing requests from Charney to inflate figures on the company’s balance sheet. Here’s the story from the WSJ’s Nicholas Casey. (For more on Fink’s client list, which includes a woman who’s suing an agent for Brangelina, see the press section of his Web site.)

Fink alleges that in 2006 Charney repeatedly “demanded that Mr. Hernandez pad the inventory” of the company in an effort to lure investors. American Apparel, then a private company, was seeking outside investment, according to the complaint. Hernandez says he “refused to participate in any scheme to potentially defraud the investors,” a position that he believes led to his alleged termination.

Charney declined to comment to the WSJ. A spokesman for Charney did not immediately respond to the Law Blog’s call for comment. But in a press release put out today, American Apparel denies the allegations in Hernandez’s suit and says he was terminated for legitimate reasons. “The allegations in this lawsuit are fictional, which the company believes represents a cynical attempt to extract phony leverage by Mr. Hernandez’s counsel, Keith Fink, who has been engaged with the company in other litigation for over three years,” says the release.

(UPDATE: We just heard back from Fink. “So what are the reasons for Hernandez’s firing?” he asked. “It’s not rocket science. What was he fired for? They’re free to post to the world any personnel documents that were made before his firing, but they haven’t.”)

Hernandez’s complaint also alleges that Charney discussed business with the plaintiff while in the shower, kept naked pictures of female workers on the company’s computer server, and took employees to “strip clubs under the guise of showing off T-shirts.”

Full post as published by Law Blog - WSJ.com on November 12, 2008 (boomark / email).