American Apparel arbitration, cont’d

A couple of weeks ago I did a brief post, and guestblogger Victoria Pynchon did a longer one, on the unusual sequence of events by which American Apparel and its founder Dov Charney settled a sexual harassment lawsuit for an agreement to pay $1.3 million tied to an (abortive) agreement to send the case to what a judge characterized as a sham arbitration designed to end favorably to the company. The company hadn’t at that point (so far as I know) responded publicly to the controversy, but shortly thereafter got its side of the dispute more or less on the record as part of a lengthy post at the blog Jezebel (Oct. 31). There’s also a related Oct. 30 item on the case at Portfolio. It quotes ubiquitous NYU legal ethicist Stephen Gillers, with whose views this blog is frequently out of step, who “said he found no real ethical problems with the ginning up of a sham arbitration to issue a press release. ‘The lawyers had no duty to insure that the public got the facts or that the issues were resolved based on a real trial before a real tribunal with real evidence.'”


  • […] of the IP ADR Blog, has now posted a more extensive and detailed report on the case, & see Nov. 16 update with company’s side of the […]

  • […] note: see also Nov. 16 (American Apparel’s view of […]

  • Quite the unique arbitration agreement gone awry and astray.
    But I still don’t understand why the plaintiff’s attorney Fink, supposedly contacted American Apparel on the eve of the trial “practically begging to settle the case and not proceed to trial”.
    And the same piece, has American Apparel claiming the scheme was “Fink’s idea in the first place”.

    So its still not clear why Fink initially wanted to settle on the eve of the trial, and or why he changed his mind?
    If the sham arbitration was actually American Apparel’s idea and exclusively for their benefit and cover up would complaining to the California appeals court about a possible breach of the original agreement be the best way to fix stuff or even make sense logically ?

    Was the pseudo arbitration agreement and faux facts press release actually Fink’s idea? Has he responded anywhere to these claims ?
    Are there any facts missing from the story ?
    WSJ subscribers can read a more in depth piece by Nicholas Casey here

  • Gillers is a tool. One of the reasons people hate lawyers (us) is the fact we cannot be counted on to tell the truth about anything. Lowering the “truth” bar is a monumentally bad idea.

  • From the Jezebel piece, it looks like Fink wanted to settle before the trial because the accusations were “bogus” (his words.) If the whole case was a settlement ploy, it’s reasonable that he’d get some nerves before the trial and try to see if there was a way out. Then he realizes it actually played out better than he could have imagined, backs out, leaks it all to the media and bam – American Apparel looks ridiculous again.

    Nonetheless, this whole thing has to be a massive, massive slam dunk damages case for AA re: Keith Fink. I’m not even sure you can quantify what the negative media attention would be but millions of millions of dollars is a good guess.

  • Also, I agree Gillers’ wording is alarming. That’s strange because he’s sort of right. If you have a plaintiff willing to drop charges after admitting they don’t have merit, the results of the arbitration would be be known well before it actually happened. You still have to go though or else it looks like the settlement is a pay off.

  • “The lawyers had no duty to insure that the public got the facts or that the issues were resolved based on a real trial before a real tribunal with real evidence.’””

    Interesting that a so-called ethicist would find no fault in a conspiracy to create a materially false public record of fact regarding the case.

  • […] into the papers. (Alex Ebner, Hollywood Interrupted, Nov. 30; WSJ law blog, Nov. 12). Earlier here, […]