A former employee of the troubled Los Angeles clothing firm American Apparel Inc. accused the company's chairman and chief executive, Dov Charney, in a lawsuit of holding her captive and forcing her to perform sexual acts.
The suit, filed in a New York trial court in Brooklyn, seeks $250 million in damages. It accuses Charney of sexual harassment, retaliation, gender discrimination and creating a hostile workplace.
The suit also accuses the company's other eight board members of failing to protect the employee, Irene Morales, from an executive they should have known was a "sexual predator."
Reached on his cellphone, Charney, 42, declined to comment on the suit and referred calls to a lawyer.
Morales worked as a sales associate in New York from 2007 until she quit in January 2009.
According to the lawsuit, Charney — who has faced several sexual harassment suits, none of which has gone to trial — invited Morales to his Manhattan apartment in April 2008, soon after her 18th birthday.
He was wearing nothing but underwear when she arrived and made her perform oral sex on him near the entranceway as soon as she walked in, the lawsuit alleged. He then "dragged her into his bedroom, threw her on the bed, got on top of her and forced her to perform" another sex act, the suit alleged.
"She was then, to all intents and purposes, held prisoner in the apartment for several hours and forced to perform additional sexual acts," the suit stated.
For the next eight months, Morales alleged, she was forced to have more sex with Charney, according to the lawsuit, which was filed Friday.
In an interview Tuesday, Morales said she returned to the company in late June 2010 and worked in Los Angeles for two weeks. She declined to say whether she had any contact with Charney during that time and would not say why she quit.
In a statement, American Apparel said Morales "left the company without complaint and resigned with a letter of gratitude regarding her positive experience at the company."
American Apparel said Morales had signed a severance agreement saying she had no pending claims against the company and would submit any future claims to "confidential binding arbitration," a process the company said it started "several weeks ago." It said it would ask the court to refer the case to arbitration and would seek disciplinary action against her lawyers.
It called her allegations "entirely baseless." "CEO Dov Charney's celebrity status in the fashion industry is being publicly exploited," the statement said.
Morales said in the interview that she became depressed and was "unable to stand up for my rights." Since quitting, she said, she has been helped by doctors and lawyers to regain her strength to assert herself.
Soon after she joined American Apparel, Charney visited the retail location where she worked, obtained her contact information and began telephoning her "at all hours, while at work and when at home," even though she was still a high school student, the suit alleged. He also "demanded details about her sexual history and interest," according to the complaint.
The suit alleged that Charney made it clear that Morales would be fired if she did not comply and also demanded that she send him sexually explicit photographs, text messages and e-mails.
"He informed her that if she wanted to remain employed and be advanced by the company, she would have to engage in sexual acts with him as soon as she turned 18 years old," the suit said.
The harassment caused Morales to have an emotional breakdown and she was hospitalized for several days, according to her lawyer, Eric Baum of Simon, Eisenberg & Baum in New York.
Morales was "emotionally and physically brutalized by a sexual predator whose misconduct was known to the company well before he met our client," he said. She hasn't been able to find work since and needs "extensive psychiatric treatment," Baum said.
Baum said Morales didn't quit sooner because she needed the job and was too ashamed about the situation to defend herself. He said she has not filed any criminal complaint against Charney to date.
The suit is another black cloud for beleaguered American Apparel, which is struggling to stay afloat amid slumping sales and losses. It has repeatedly warned in recent filings with the Securities and Exchange Commission of "substantial doubt" about its viability going forward.
The company has made several management changes in recent months.
Shares of American Apparel were unchanged Tuesday, closing at $1.07.