Back in April, I wrote about Wood Allen's decision to file a lawsuit against American Apparel (AMEX: APP). Woody was upset because his image appeared on company billboard that were up for less than one week, and he wanted $10 million in damages. I thought the figure was laughably high and American Apparel lawyers said they did too -- but today The New York Times reports that the matter has been resolved:On Monday morning, as a trial was set to begin in Federal District Court in Lower Manhattan, Mr. Allen announced that he had accepted a $5 million settlement in his lawsuit against American Apparel and Dov Charney, its founder and chief executive. The settlement means that Mr. Allen, who had initially sought $10 million in the trial, can avoid a trial that could have dredged up potentially salacious details about the filmmaker and his wife, Soon-Yi Previn.
It's half of what he wanted but still: It's a hell of a lot more than he's worth. In a prepared statement, Allen said that "Threats and press leaks by American Apparel designed to smear me did not work and a scheme to call a long list of witnesses who had absolutely nothing to do with the case was also disallowed by the court."
American Apparel's equally feisty CEO said that he had settled because the company's insurer had forced him to. But the most interesting part came later in his statement: "My intention was to call upon people to see beyond media- and lawsuit-inspired scandal, and to consider people for their true value and for their contribution to society," He said the ads were "designed to inspire dialogue," not sell clothes.
Here's the problem: Buying ads to inspire dialogue instead of selling clothes is great when you're a private company -- it's your decision, who cares? But American Apparel is a publicly-traded company and Dov Charney is an employee, and it's inappropriate for him to use the company's marketing budget for political messages that have nothing to do with selling clothes.
American Apparel shares are up more than 6% on the news of the settlement.
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Reader Comments (Page 1 of 1)
5-18-2009 @ 9:08PM
Tom Barlow said...
What was the marketing pitch? Dress like a pedophile?
5-19-2009 @ 12:31PM
Filo said...
Zac,
Did you bother to check that in 2007 American Apparel was private? How could you not include the fact that this was also ultimately covered by an insurance company?
I wish you would be more careful when covering APP.
5-20-2009 @ 3:37PM
Jonathan said...
The market didn't care that they were private in 2007 or that the costs were covered by insurance (premiums probably increased or their coverage will not be renewed). Stock took a big hit on the news .