Lawsuit Claims American Apparel Shareholders Were Misled By Company Statements

Another lawsuit against troubled clothing maker American Apparel was filed this week, this one in U.S. District Court downtown.

The suit seeks class action status for shareholders and claims the downtown Los Angeles-based fashion brand mislead investors about the effect an immigration crackdown last year would have on its financial performance.

The immigration crackdown last summer led to the company losing up to 1,800 of its workers because they could not prove they were in the United States legally. The suit claims that American Apparel downplayed the loss but then blamed the lack of workers and a subsequent "lower labor efficiency" on its current financial troubles in a statement issued last week.

In a conference call this week American Apparel CEO Dov Charney reportedly said that, indeed, the immigration crackdown was to blame for the company's financial woes, which include $120 million in debt, a 16 percent decrease in sales and a stock price that was recently at .70 cents per share.

The latest suit, represented by Robbins Geller Rudman & Dowd, seeks unknown damages for stockholders.

Last week we told you about another shareholder suit.

-With reporting from City News Service. Got news? Email us. Follow us on Twitter, too: @dennisjromero.


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