American Apparel hit with $343K settlement

Ameena Schelling Freelance Writer
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The struggling clothing company American Apparel has been hit with a $343,000 fine in a racial slur suit brought by a former employee.

An African-American worker named Christopher Renfro sued the retailer in 2008 over accusations that his supervisor, Sean Alonzo, who is one step down from controversial Canadian CEO Dov Charney, had repeatedly called him the n-word.

“Mr. Alonzo repeatedly referred to Mr. Renfro as a ‘nigger’ in front of other employees,” Renfro’s attorney Barbara Figari said in a statement posted on Gawker. “The arbitrator found that Mr. Alonzo subjected Mr. Renfro to severe racial harassment and ordered American Apparel to pay a total of $342,919.95 for damages, costs and attorney’s fees.”

Alonzo admitted to using the word, but he and the company’s lawyers insisted that he was only singing the lyrics to a rap song, though the judge ruled against both Alonzo and American Apparel.

In a similar statement, American Apparel’s chief counsel Joyce Crucillo undermined the significance of the ruling by noting that, while Renfro originally sued the company for over $1,000,000 in damages, he was granted only $32,500 with the rest of the award going to Renfro’s lawyers.

Crucillo noted that Renfro’s was the first racial discrimination suit in the company’s history. But, long known for its provocative ads and progressive agenda, American Apparel has also faced a series of sexual harassment suits targeted against Charney, who has been accused of walking around company headquarters without pants and harassing an underage employee and forcing sex on her on her 18th birthday, among a slew of other sexual misdemeanors.

The claims are no surprise considering the notoriety of the American Apparel CEO, who has an unacknowledged history of firing employees who are too ugly for the retailer’s aesthetic after requiring stores to send in head-to-toe pictures of their salespeople.

Yet lawsuits are only the latest trouble for the edgy retailer, which has been fighting bankruptcy since early last year when its finances began to take a sharp dive. It was in debt for $133.6 million as of last fall and reported an $86 million loss for 2010, and last month 24/7 Wall St. named it one of the 10 brands that won’t be around for 2012.

Responding to downturns in sales, American Apparel began dumping shares in February, but the company was temporarily saved in April when Canadian investors provided almost $14 million to the retailer after it announced that it was on the verge of bankruptcy. Company officials have indicated that they expect more investments in the next few weeks in order to stave off impending financial ruin.

Adding to the troubles, Charney announced earlier this week that two members of the company’s board had resigned, denying rumors that they departed after disagreeing with the company’s decision not to file for Chapter 11 bankruptcy protection this spring.

Ameena Schelling