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American Apparel's Founder Loses Defamation Case in His Termination

A state appeals court said American Apparel's founder cannot sue for defamation based on a press release that announced his termination.

The California Second District Court of Appeal said Dov Charney's case, Charney v. Standard General, was barred as a Strategic Lawsuit Against Public Participation and affirmed a trial court's order dismissing the case. Judge Terry Green had thrown out the case because Charney could not show a likelihood of prevailing.

"I think there's more likelihood that I'd be the first American astronaut on Mars before this plaintiff wins this lawsuit," he said.

Press Release

Charney was terminated on Dec. 15, 2014, and the company issued a press release about it on Dec. 22, 2014. The release said:

As we have stated previously, our objective is to help American Apparel grow and succeed. We supported the independent, third-party and very thorough investigation into the allegations against Mr. Charney, and respect the Board of Directors decision to terminate him based on the results of that investigation.

Charney then sued Standard General, which took over American Apparel, alleging the press release contained false and defamatory statements about him. The trial judge dismissed the complaint, concluding that he could not prove anything false about the release.

"Improper and Immoral Conduct"

On appeal, Charney argued that the release charged him with "engaging in illegal and criminal misconduct" and "improper and immoral conduct." He tried to convince the appeals court to consider an investigation that preceded his firing.

The investigation, which was supervised by the company's lawyers at Jones Day, resulted in a suspension letter for various misdeeds. These included "repeated violations of the company's sexual harassment and anti-discrimination policies" and "directing derogatory and disparaging comments to others."

Judge Sanjay Kumar, writing for the unanimous appellate panel, said the release did not refer to the substance of the investigation.

"The statement cannot be proven false as it does not state that Charney engaged in criminal conduct or that his conduct violated certain standards, or even that there existed any particular conduct that caused his termination," the judge said.

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