American Apparel Inc founder and chief executive Dov Charney is being sued for $250 million by a woman who said he treated her as a sex slave when she was a teenage sales employee at the clothing chain.
Irene Morales of Brooklyn, New York, has accused Charney, 42, of sexual harassment, creating a hostile workplace, gender discrimination and retaliation.
American Apparel and directors at the company have also been named as defendants in the lawsuit, filed in a New York state court on Friday. Morales accused them of failing to protect her, and said they knew or should have known that Charney was a sexual predator.
Charney has been repeatedly targeted in sexual harassment lawsuits. He owns about 51.8 percent of American Apparel, according to a regulatory filing.
Reached on his mobile phone, Charney declined to comment, referring a reporter to his lawyer. The lawyer, Peter Schey, did not immediately respond to requests for comment.
American Apparel did not respond to several requests for comment. Eric Baum, Morales' lawyer, did not immediately respond to requests for comment on Wednesday.
The lawsuit comes as American Apparel grapples with losses and falling sales. Known for provocative advertising, the company is trying to refinance its debt, and has said there is substantial doubt about its ability to stay in business.
In her complaint, Morales said she started working for American Apparel in 2007, when she was 17 and in high school.
She said Charney demanded that she visit his Manhattan apartment shortly after her 18th birthday, and he answered his door while wearing only underpants.
Morales said in the lawsuit that Charney then forced her to perform oral sex and other sexual acts over several hours, effectively holding her prisoner in his apartment.
She said that over the next eight months, she was forced to perform many more sex acts with Charney or else risk losing her job. Morales said she ultimately quit her $10.25-an-hour job and underwent extensive psychiatric treatment.
American Apparel shares were down 1 cent at $1.06 in afternoon trading on the American Stock Exchange.
The case is Morales v. American Apparel Inc et al, New York State Supreme Court, Kings County, No. 5018/2011.
(Reporting by Jonathan Stempel in New York, editing by Matthew Lewis)