Court Reveals Sham Arbitration Pact to Clear American Apparel CEO
A California appeals court opinion has revealed an unusual agreement for a sham arbitration proceeding that would clear the CEO of American Apparel of sexual harassment allegations.
The agreement called for a secret payment of $1.3 million to former sales manager Mary Nelson in exchange for her agreement to an arbitration in which a retired judge would rule for the company, Portfolio.com reported last week.
Nelson had accused American Apparel CEO Dov Charney of wearing a skimpy thong at the office and calling employees sluts in a job interview, Portfolio says. She agreed as part of the settlement that a press release would be issued saying that an arbitrator had found Charney never made any sexual advances, the Wall Street Journal reported in its story on the case. It would also say that much of the alleged conduct was found to be protected by the First Amendment.
The appellate opinion said Nelson’s Los Angeles lawyer, Keith Fink, later backed out of the deal saying he “did not want myself or my firm involved in this sham arbitration,” the Recorder reports.
The appeals court criticized the agreement, but said an arbitrator would have to decide whether Nelson had agreed to traditional arbitration, the Recorder says.
