Part 5: Suits (Season 4, Episode 8)
December 8, 2016
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In 2007, Dov Charney took American Apparel public, placing the company under heightened scrutiny. This meant Charney lost the privacy and autonomy he’d grown accustomed to. And, as more stories emerged from inside the company, some began to reevaluate the man they’d chosen to work with.
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LISA: From Gimlet Media, this is StartUp. I’m Lisa Chow.
A couple months into reporting on Dov Charney, I’d gotten into this routine. Every week I’d fly from New York to LA. The night before, after I put my kids to bed, I’d pack a backpack with my recorder, a change of clothes, and try to get a few hours of sleep before heading to the airport.
And that’s pretty much where the routine would end. When I’d get off the plane and meet Dov, I really had no idea what the day would be like. We could be driving to factories, or taking pictures of LA for Dov’s new marketing campaign.
Or, Dov could be in one of his moods, where he walls himself off like a surly teenager and tells me I’m asking foolish questions.
One day I’d just landed and I went to meet Dov at his new factory. At this point in our reporting, he’d hired a team of sewers, and was making t-shirts for a handful of customers. I saw him pacing the rows of sewing machines and approached him with my microphone. When he saw me, he looked annoyed and waved me away, storming off with his phone on his ear.
I stood off to the side of the factory. And waited. I’ll take this moment to warn you that there’s some strong language in this episode and also references to allegations of sexual assault.
I wasn’t exactly sure what to do. And so, I took a few steps toward him again.
DOV: I’m just putting some… when are you… like, try to know how to work with me.
LISA: I know, tell me! Talk to me.
DOV: Just… merge into me. I'm running a real business. This isn't a fake show where I'm like, pretending to start it up. I'm fucking holding a lot of people here.
LISA: I totally understand, so tell me—
DOV: Okay so don't like, poke into me so fast. You guys got months! Finesse it. You'll be much better off. You'll get a more authentic situation. You’re like "hey how are ya?" It's like you're on a date and you're trying to kiss me! Like, back off! I just sat down! Okay? Take it easy!
LISA: You came in… you came in—
DOV: This is your problem, not mine. I know how to do this, I can do it for you. You see your subject. Caress into it. Don't like, ah! No one needs that. It's wasting time. Give me a second. I just drove down, in traffic, two phones, call waiting, walk in, pulling things in, and you're like, ah! Give me… I'm on the phone. You know, like, let me finish, okay? Understand, when a man's on the phone, too, it's… it's… or a woman. You know, same thing. Hi—
LISA: Then, immediately after, Dov looked over his shoulder, gave me a smile, and said, c’mon, follow me.
Dov’s moods are very unpredictable. The more time I spend with him, the more different sides of his personality emerge, but the less I feel like I really know who he is.
I’m not the first person to have this experience. People have told me they spent years working with Dov thinking he was one kind of person and then something happened and their view of him changed. And if you had a bad experience with Dov, sometimes it was hard to convince others that Dov really had that side to him.
Dov was adored by thousands of his workers. But he was also accused of sexual harassment by several young women who worked at the company.
For a long time, that disconnect raised a lot of questions about what was really going on inside American Apparel.
Today on the show we're going to talk about a particular time in the company's life—when American Apparel went from being a privately held company to a public one. Dov started having to answer to a board of directors and was coming under greater scrutiny for his management style and behavior with employees—which included claims of sexual harassment. We're going to be talking about the board's concerns and also problems at the company between Dov and his employees—some of which have never been shared publicly before.
LISA: Before meeting Dov Charney what did you know of him?
ALLAN: I didn’t know a lot about Dov Charney before he actually came to
- And so I suppose I knew what most people knew which was he was this crazy Canadian who came to the US and built this t-shirt company and had a bit of a reputation as a, you know, a wild man. But he really wasn’t that much on my radar screen. And then one day he showed up in my office.
LISA: This is Allan Mayer. For many years, Allan was a journalist. He wrote for the Wall Street Journal, was an editor at Newsweek. But by the time Allan met Dov, he was well into his career in PR as a crisis manager. Allan’s been described as one of Hollywood’s most prominent crisis specialists, and he’s worked with a lot of people: Britney Spears, Rush Limbaugh, Tom Cruise... and Dov Charney.
Dov showed up at Allan’s office in 2005, a year after an article was published in Jane Magazine—the article where a young reporter described how Dov masturbated in front of her several times. Allan remembers talking about it with Dov.
ALLAN: I said, "Well, what happened? I mean, you know, is it true?" And he told me a story about how, “Well, yes it was true, but what she left out of the story was that she was into it also, and all of this other stuff.” I said ... "Please, you're a grown up! When a reporter comes to see you, I don't care how interested she seems to be in you, or how consensual the situation is, you don't bleep the reporter." Um ... I didn't say bleep. But I've gotten older and more discreet. And he argued back, "Well no! Why should I have to?" And I finally said to him, “You know, that's the way, you know, the world is organized, and simply to ignore it is going to bring upon you the kind of trouble you have right now!” And he grudgingly conceded that that might be the case. And um… and he became a client of mine.
LISA: Over the months they worked together, Allan got to know Dov. They talked about Dov’s hopes to take the company public, growing the business, the craft of making a t-shirt...
ALLAN: He could talk for hours about weaving yarn. And he did. And he
knew the intimate details of his business from creating the garments to designing the fashions to you know selling to the wholesale distributors. And then, he was thoroughly engaged , you know, every cell of his being and it was very impressive to me. A little worrisome but—
LISA: What was worrisome about Dov?
ALLAN: Well just as I say His attitudes about women seem very adolescent. And I know that a lot of the women I knew at the time, including my wife, would give me a bit of a hard time, for defending Dov or being, you know, his guy if you will. But it was worth the effort, because everything else he was doing was so positive.
LISA: One day, a while into knowing Dov, Allan got a call from some lawyers.
ALLAN: They start asking me questions about my background. And I
finally said, “What is this? Why are you…?” And they said, “Oh well, we’re doing due diligence.” And I said, “For what?” And they said, “Well you know for you to be on the board of American Apparel.” And I said, “Excuse me?” And they said, “Well, didn’t Dov tell you?” And I said, “He had mentioned a year or two ago they might go public and he’d like me to be on the board.” And they said, “Oh yeah, that’s what happening.” And I thought it would have been nice for him to call me and let me know it’s going forward. That’s classic Dov. And it turned out that, yes the company was was was going public and the deal that Dov had with the backers was, I guess, he got to name four board members and I was one of them.
LISA: Allan will be the first to admit, he doesn't have the typical background for a board member of a public company. They're usually senior executives at large companies, or people in finance. But Dov figured the investment firm that was taking the company public would appoint a bunch of stiff suits to the board, guys who didn't really understand him. So he made sure to choose people with some personality.
We reached out to 11 former American Apparel board members. Only Allan Mayer and one other board member talked with us on the record.I should say upfront here that both of them are defendants in a lawsuit that Dov filed.
The other board member we spoke to was also appointed by Dov. He was one of Dov’s favorite writers, a guy named Robert Greene. And when the two first met, Robert felt an immediate kinship.
ROBERT: He’s a character and I like characters. I don’t know why. I just like weirdos, people who are different. And he fit the… the profile. And I think he liked me. And, you know, I must admit, it’s flattering. At that point, um, my book was doing pretty well, but I wasn’t that… but I wasn’t really well known. So it was quite, good… a stroke for my ego, because he was such a huge fan.
LISA: Robert Greene writes books with titles like, The 48 Laws of Power, The 33 Strategies of War, and The Art of Seduction.
But he doesn’t seem like a particularly macho guy. I met him at his home in Los Angeles. He’s a little scruffy, tall with glasses. Spends most of his days writing and hanging out with his cat Brutus. Not exactly someone groomed for the boardroom. Something he was well aware of.
ROBERT: I made it clear, “Dov, I don’t know anything about business. I can help you with strategy. I know people. I know how awful people can be. I can help you with awful people. That’s my specialty. Um, but I don’t know my head from my ass when it comes to numbers.”
LISA: Robert’s been a screenwriter, a hotel receptionist, a translator. And he had noticed these jobs had one thing in common. There were always weird power dynamics at work. And so, to help people navigate those dynamics, Robert write a book called The 48 Laws of Power. Dov will often recite quotes from this book, at board meetings, to friends, to us. We asked Robert to read from it. He flips to Law 27.
ROBERT: “Play on people’s need to believe to create a cult-like following. People have an overwhelming desire to believe in something. Become the Focal point of such desire by offering them a cause, a new faith to follow. Keep your Words vague but full of promise; emphasize enthusiasm over rationality and clear thinking. Give your new disciples rituals to perform, ask them to make sacrifices on your behalf. In the absence of organized religion and grand causes, your new belief system will bring you untold power.”
LISA: There are other laws. Law 11: Learn to Keep People Dependent On You. Law 32: Play To People’s Fantasies, and Law Number 5.
ROBERT: Okay, Law Number 5. “So much depends on reputation; guard it with your life. Reputation is the cornerstone of power. Through reputation alone, you can intimidate and win. Once it slips, however, you are vulnerable, and will be attacked on all sides. Make your reputation unassailable, always be alert to potential attacks and thwart them before they happen. Meanwhile learn to destroy your enemies by opening holes in their reputations. Then stand aside and let public opinion hang them.”
LISA: By the time Robert joined the board of American Apparel, he’d known Dov for a few years. He’d become a kind of informal consultant, and was used to Dov’s calls about issues at the company, about conflicts he might be having.
ROBERT: And then the other thing of course, because I wrote The Art of Seduction, and Dov is who he is. He wanted to talk a lot about that. He wanted to talk about women and seducing and things like that. Um, I wasn’t so gung ho about talking to him about that because… I don’t why, I was a little bit skittish. He would call me late at night, and I would think he was calling me for advice. And it would end up he’s talking about you know women problems and stuff. As if, I’m gonna help him with that.
LISA: So, initially, so he was talking about people who were causing grief and he was talking about women?
ROBERT: Yeah. Yeah, I mean, really, what else is there to talk about for Dov, you know? I mean, he’s obsessed with his business, that’s all he lives for, 24/7, and sex. You know, so that was pretty much his life back then.
LISA: Dov denied these conversations happened.
Back in 2007, when Robert and Allan joined the board of the newly public American Apparel Inc., there were a lot of issues to manage.
Within a year, American Apparel had opened 80 new stores. The company was now operating 260 stores around the world.
All that growth happened at a bad time. The financial crisis hit in 2008. A year later, immigration authorities audited the company, and American Apparel lost thousands of undocumented employees who had been working at the factory. Its workforce was decimated, and it took the company several months to rebuild and train new garment workers. Costing hundreds of millions of dollars in the process.
The company’s stock price, at its peak in 2007, was 15 dollars. By 2010, it had sunk to 75 cents.
One problem the board noticed was that there weren't a lot of experienced people high up at the company. Board member Allan Mayer said Dov wanted to do everything on his own without bringing in people with more expertise.
According to Allan, Dov had set up a structure where he was indispensable. He made all the decisions and surrounded himself with all these young people who couldn’t really question him.
ALLAN: There was Dov… and there were a bunch of kids, basically. And, you know, we would pressure him to bring in “grown-ups,” as we said. And under protest he would do it and then he would make life miserable for them and they would leave.
LISA: In an interview with the Wall Street Journal, Dov called one of these grown ups—a newly installed CFO—a quote “complete loser.” The CFO resigned.
ALLAN: So beyond the general counsel and the chief financial officer, and the head of manufacturing, all of whom were experienced, just about everyone else at the company was younger and less experienced than Dov. So if he got hit by a bus, the company would be in serious, serious trouble. And so it made the board, I think, reluctant to move against him without very, very good reason.
LISA: Board members like Allan and Robert viewed the ‘kids’ culture as a bad thing, but the kids, employees in their 20s, didn’t see it that way. Many of them felt they owed their careers to Dov. They were learning, taking on responsibility they wouldn’t have had at most other companies.
One of those people was Ryan Holiday. He’s an author and a PR guy. One of his clients is former board member Robert Greene. He was 20-years-old when he started working for Dov, and he eventually became director of marketing at American Apparel. The way Ryan saw it, Dov bringing in young talent, at lower salaries, was a way to save money and pay garment workers higher-than-market wages.
RYAN: American Apparel, given that it refused to sort of exploit its factory
workers, had get to really creative with everyone else it hired. So when you pay the workers 25 cents an hour, you can afford to hire… you know, a marketing director for 300-400 thousand dollars a year. When you’re paying them $13 or $14 an hour, and you have them on full time payroll, I think you have to have a more open-minded, unique approach to recruiting talent. And so, you know, most of the people at American Apparel were much younger. Many of us were much less qualified than maybe someone who would’ve gotten hired at a similar company. But a lot of those people ended up being great. Not. clearly not all of them. But a lot of them did. American Apparel on its face is an insane idea. Right? It’s a… we’re going to make our own clothes, it’s not going to have a logo on it, we’re going pay our workers a fair wage. We’re going to do our own marketing and advertising. And we’re gonna be based in Downtown Los Angeles. We’re going to do all these things. And we’re gonna run our own stores and sell our own products there. This is crazy, right? But it worked, and it worked at progressively larger levels for you know almost two decades.
LISA: If anyone could pull off running a company staffed almost exclusively by young, eager beginners—it was Dov. Because he was involved in almost every decision, at every level. He decided what images went on the website. How the cut of a t-shirt should look. He’d walk through the factory and make quality corrections, snipping away stray threads, checking the stitching on a seam. He posted his cell phone number online and would take any call from anyone, anytime. And he was the person many employees went to when they needed help with work problems and personal issues. We talked to one woman who called Dov for help when a circuit broke in her house. Ryan told me when he got into a car crash, Dov told him, “you were probably thinking about work. I’ll pay for the repairs.” Creative Director Marsha Brady told me… if you’re in jail, and you’ve got only one call to make, call Dov Charney, because he’ll pick up and help you.
For Dov, there was almost no distinction between his personal life and the company.
Again, Ryan Holiday.
RYAN: I remember there was one moment um – I’d been there a couple years. And he would call me. And then fall asleep on the phone. And we would be talking and he would talk until he fell asleep. And I realized that he didn’t actually need to talk. It wasn’t that it was so busy and then he was talking and he fell asleep. Although, I’m sure he’s worked himself so hard he would do that. It was more that, I think he just didn’t want a few minutes of silence. And I remember that sort of helped me understand who he was.
LISA: Yeah. I mean, when you say, “understand who he was,” what was
RYAN: Well that it’s, it’s—it’s lonely. I think he just called me so I would talk him to sleep. What does that mean? You know? You know what I mean? It’s just, it’s… I’d never dealt with anything like that before. And it was like, “Oh, this is a business, sure. But it’s something more than a business. It’s filling more than just a business place in your life.
LISA: The first time I met Dov, he said, “I was American Apparel. I am American Apparel.” That’s how he saw it when he was CEO. And that’s how he saw it in March of this year, more than a year after he’d been fired from American Apparel and was starting up a new company.
Dov didn't want anyone to tell him how to run his business, or how to live his life. But his habit of sleeping with employees was causing another problem for the company in the years before and after going public: lawsuits.
In 2011, five more women sued Dov for sexual harassment. Robert Greene remembers going to the factory to talk with Dov about the lawsuits. He said Dov showed him email exchanges he’d had with one of the woman suing him.
ROBERT: He showed me documents that clearly revealed to me that this was bogus. So that—
LISA: What was the evidence that, like—
ROBERT: Emails, and things like that. I don’t really remember exactly what it was. But it really convinced me and other people who were there. So, you know, I kind of go, “Well, you know maybe he is right. Maybe he is the target unfairly for people who’re just trying to make a lot of money off of him.”
LISA: I… I’m wonder—
ROBERT: I mean the other thing you have to understand about the women is...I’m sorry, about the women is—
LISA: Yeah, go ahead.
ROBERT: It’s very difficult because he was surrounded by a lot of women who adored him and were very positive about him. So, you know, that skews your impression of a person. And it did. It influenced me.
LISA: Were they defending him against the lawsuits?
ROBERT: Some of them were. Yeah.
LISA: But even if Dov’s relationships with employees were consensual, as Dov claimed, Robert Greene felt like he needed to say something as a board member and also as a friend.
ROBERT: I told him on several occasions, numerous occasions, “You gotta back off on this. You’ve gotta, like, go have—you know, I’m not the police. You go have as much sex as you want. No one’s gonna stop you. But don’t do it with people in the company, you know? Just—if you're that horny, hire, you know, call girls, or just go meet women on whatever. But stop in the company.”
LISA: And what—how did he respond?
ROBERT: “Yeah yeah yeah, yeah yeah yeah.” But also, “I don’t have any life outside of American Apparel, where else am I gonna meet anybody?”
LISA: Again, Dov denied this conversation happen.
Allan says the board started to lose confidence in Dov’s management.
ALLAN: I mean there was a move by a number of the board members in 2011 to um investigate more. And ... I blocked it. And the reason I blocked it was, it wouldn't make anything better. And, if we were successful in discovering something that would push him out of the company, at that point, I don't think the company could've survived his departure.
LISA: But Dov’s presence was creating problems as well.
Allan Mayer said when the company wanted to borrow money, lenders were wary.
ALLAN: Very few reputable financial institutions wanted to lend money to the company. In large part because of Dov's reputation. And it's interesting, how, even at the highest levels of finance, stuff they read on Gawker will affect, you know, as much as a Dun & Bradstreet credit report, affect that this guy had this reputation as this pervy, skeevy guy, meant that the JP Morgan Chase's of the world didn't want to do business with him. And so we wound up having to borrow money at credit card rates. And that was killing the company.
LISA: I told Dov about what Allan Mayer said about American Apparel’s borrowing costs being at credit card levels.
LISA: What do you make of the high interest rates?
DOV: Who cares? 10, 11%? With all of that, or just some of them?
LISA: Well, I mean—
DOV: The average borrowing was… it was with single digits. Who cares? Who cares? The business is successful, you refinance it. You take the loans. You're coming out of the recession. Shame on you, you sanctimonious person. Everybody was paying—
LISA: I was just asking!
DOV: Any business that had debt coming out of that, any business that came out of the recessionary period, that wasn't Blue Chip. McDonald's couldn't finance coffee machines.
LISA: Yes, the financial crisis did make it hard for American Apparel to borrow. But years later, the company’s borrowing costs were still through the roof. In 2014, the interest rate American Apparel was paying on its long-term debt was 15 percent, while competitors like Gap and Hanes were paying closer to 6 percent. But Dov says, it doesn’t matter.
DOV: I was running a $600 million dollar business successfully, with positive cash flow. Hands off, morons! Hands off! The EBITDA, the earnings in 2013, they were at 36 in 2012 went down to 10 and 13, went back up to 40.
LISA: Okay, to dive in here. EBITDA stands for earnings before interest, taxes, depreciation and, amortization. It’s a proxy people in business use to evaluate a company’s fundamental business model. In a theoretical world where taxes don’t exist, you never borrowed money and machines work forever, are you making more money than you’re spending. But it’s only a good proxy if your debt is in a normal range. And you’re paying a reasonable interest rate.
CHARLIE: The only way the company was able to pay its bills for awhile was borrowing more money.
LISA: Charlie O’Shea is an analyst for the credit rating agency Moody’s. In 2013, he rated American Apparel.
CHARLIE: We have a situation where, the company never grew its profitability sufficient to be able to cover its expenses. It’s akin to somebody running up their credit cards and then they can’t make the—even the minimum payments. And then other credit cards shows up in the mail, and they go out, and get a cash advance on that, and they pay of the other one. You can do that for a while, but at some point, no one’s going to lend you money anymore. And, you’re not going to be able to pay back what you already owe.
LISA: If you talk to Dov about this time that Charlie’s discussing—2013—Dov says, everything was gonna get better. The company was just about to turn a corner. Charlie says, maybe. But from where he stood, the company’s financial situation was pretty much as perilous as it could be. Charlie said Moody’s gave American Apparel the lowest first-time rating it had ever given a retail company.
CHARLIE: We assigned a new rating of CAA1 which is very rare at Moody's. Typically companies that we rate rate at a higher on a first time basis. So the company was already—I don't know what the right adjective would be but the company was already in some form of distress.
LISA: Dov’s friend and American Apparel board member Robert Greene was watching everything unfold from the boardroom, and his doubts were growing.
ROBERT: Things start piling up where there’s more and more stories, there are more and more lawsuits. And the pattern just kept repeating often enough and the stories got worse that you realize that maybe you weren’t right in your assessment of some of these cases. And maybe even the one that he showed me the emails, I had a very skewered impression. And maybe that person was legitimate. I couldn’t tell. So, um, basically what happened was, it became evident that there was really something behind some of them.
LISA: What was behind those lawsuits? That’s coming up after the break.
LISA: Welcome back to StartUp.
The sexual harassment cases against Dov started coming out in 2005. In the years that followed, more women came forward. And the accusations were even more disturbing. These later cases included accusations of outright sexual assault—an employee said she was forced to perform sex acts on Dov while she was being held at his apartment in New York. Another woman said she was made to masturbate in front of him. One employee said Dov threatened her after she refused to have sex with him. Dov has denied the allegations. Many of the cases were resolved through private arbitration.
We reached out to many of the women who filed lawsuits against Dov. They either didn’t get back to us or said that ... even if they wanted to talk, they couldn’t discuss their case. But there was one woman who agreed to talk to us. Her name is Marissa Wilson.
LISA: What happened between you and Dov that compelled you to sue him?
MARISSA: That’s something that I cannot not comment on, today or any day.
LISA: And why… why exactly can't you comment on it?
MARISSA: I'm not at liberty to. I've been silenced.
LISA: Marissa can’t talk about the details because she signed a settlement agreement with American Apparel. She’s also bound by several other documents she signed when she worked at the company. By 2007, American Apparel started requiring employees to sign several legal documents. Once they signed these documents, employees could not publicly talk about what went on inside the company without risking severe financial repercussions, and they were also left without much legal recourse.
One of these documents was an arbitration agreement. By signing it, employees waived their right to sue in court. Disputes would instead be mediated privately, in arbitration. Arbitration clauses are fairly standard in corporate America. But when a case is settled in arbitration, most testimony and judgments are confidential. So, there’s no public record of some of the allegations against Dov.
Employees at American Apparel also had to sign agreements that were much less common. Like a confidentiality agreement, which said that if an employee spoke out publicly against the company or disclosed information about aspects of their employment, they could be forced to pay damages of 1 million dollars.
Finally there was a waiver. By signing it, employees waived all claims against the company. It’s pretty standard for an employee to sign a waiver when leaving a job and getting a severance payment. But at American Apparel, employees were asked to sign waivers when they got raises or bonuses, or when they changed positions. They were effectively signing away their legal claims in return for small increases in pay.
Three employment lawyers reviewed the documents for us. We were told that the way American Apparel used waivers is extremely rare. One lawyer, who works on behalf of major corporations, told us it was probably legal, but she’d never seen anything like it.
The lawyers also called the million dollar provision of the confidentiality agreement “extreme,” “overbroad,” and “not standard.” One described it as a way of buying silence from employees. And it did. In the course of our reporting, we’ve had several sources decline to talk on the record because they’re still fearful of violating the agreement. And American Apparel did enforce them—one woman who sued Dov was ordered to pay the company $800,000 after she went on The Today Show to talk about her sexual harassment case.
So, while Marissa can’t speak about the details of her case against Dov and American Apparel, she can discuss the circumstances of her life in general at that time.
I met Marissa at her lawyer’s office in LA. She’s friendly but quiet, with a nervous smile. She started working at American Apparel in 2010, after meeting an employee who liked her style and asked her if she’d be interested in a job. The offer took Marissa completely by surprise.
MARISSA: I knew that it was a place that was difficult to get hired at, because it seemed like only very attractive interesting people worked there, from what I could tell. And it was a place that a lot of people wanted to work at and they wanted me to work there. I got recruited. So I did not seek it but I was very flattered to have the opportunity presented to me.
LISA: And what was the job?
MARISSA: I was a sales associate, a retail sales associate in a store in San Diego.
LISA: At the time, Marissa and her mom were living in low-income housing in San Diego. It was just the two of them, and her mom had recently been laid off from her job as a social worker.
MARISSA: She had received word that her entire branch was going to be closing. She worked in a welfare-to-work program and so she knew that… she had a couple of months’ notice, but I got recruited for American Apparel shortly after she received that news. And so I hadn't really been looking for a job, but one found me. And what I thought to be perfect timing.
LISA: Her mom was sick and struggled to secure another job. Which meant that they were now both depending on Marissa, an 18 year old who hadn’t finished high school, to provide for the family.
MARISSA: It felt like an enormous amount of pressure. I had always been in a sort of caregiver role to my mother. She was ill when I was younger but… that job very quickly became the most important thing in my life. And maintaining it at any cost was important to me, so that I knew that my mother could have a place to stay, a place to live, food, and that I could consistently provide for her. That was the most important thing to me.
LISA: She’d been working at the San Diego store a couple of months when she heard he was going to be stopping by.
MARISSA: This wasn't just someone coming to look at this store, this was the man. This was who started this company. I didn't really know what to expect.
LISA: And this is the point in the story where Marissa would no longer comment. But we have a another source… a report from the arbitrator who considered Marissa’s case.
This report… which was not given to us by either Marissa or her lawyer… states that the evidence presented by Marissa was compelling and believable. It also describes some of the evidence presented by Dov and American Apparel as quote, “not credible.” And the story it lays out is upsetting.
The document details how upon meeting Marissa in the American Apparel store, Dov invited her to come to LA with him for a week-long merchandising training. That training took place at his house. In the report, Dov says he connected with her energy and wanted her to help him turn stores around. He didn’t allow her to return home for a suitcase, and told her that she’d be staying at his house.
I’m going to read a section directly from the report. It states, quote, “Almost immediately after arrival, Wilson was taken to Charney’s bedroom and left alone with him. He was lying on his bed and asked her if she were an exhibitionist or a voyeur. Neither of which word she understood. He asked her to show him her breasts, which she did. She had no sexual or romantic interest in him. He was, as she put it, the age of my dad. He gave her a vibrator and told her to use it on herself. He then told her to perform oral sex on him. She could not think and was, as she described it, in a blackout, survival mode. He then dismissed her. She felt hollow and ashamed and could not process what happened.” End quote.
According to the report, 10 similar incidents occurred while she was at Dov’s house. The report states that Marissa felt, quote, “altered” and that Dov’s behavior was, quote, “disgusting” and “de-humanizing” but she thought this was how the fashion industry worked. That it was “part of her job.” Marissa was far from her home in San Diego, and didn’t own a car or even know how to drive.
The arbitration report also describes testimony from Dov's housekeeper in favor of Dov and American Apparel, against Marissa. The housekeeper testified that Marissa said she loved Dov and was happy to be living at the house—but then, when the housekeeper was asked to pick Marissa out of a photo lineup, she couldn’t.
Dov’s housekeeper was found to be not credible.
After three weeks at the house, Marissa called her brother to come get her and take her back to San Diego. The report states when Marissa told Dov she was leaving, he offered her a dollar fifty an hour pay-rise and a 500 dollar bonus in exchange for signing a release form. Which she did.
The report says Marissa kept working at the San Diego store, but quit a month later. She signed a severance agreement which included a payment of 800 dollars, and released American Apparel of all claims made by her against the company.
The arbitrator who heard Marissa's case was considering this question: were the releases Marissa signed valid? She found they were not, and that Marissa's sexual harassment allegations could go forward. Dov was ousted as CEO just a couple of months later, and American Apparel decided to settle with Marissa for two million dollars.
Dov says that, had he still been CEO, he would not have settled and would have presented more evidence in his own defense.
For Marissa, the money from the settlement helped her family. But it didn't erase her experience.
MARISSA: I've mostly dealt with everything privately, and so a lot of the things that I experienced were not known to even the people that were closest to me. And so I… I would love to be able to give a voice to women because I think… I think it's wrong to be silenced.
LISA: I mean obviously there would be… there is a potential risk to you talking about your experience at American Apparel. How how does it feel that there is even this risk?
MARISSA: It feels like an impossible weight that I'll never be able to rid myself of. I can't speak about my experience at this company. And I've accepted that. But it's still something that I have to deal with privately, and it's something that affects me every day.
LISA: The allegations leveled against Dov were serious. And persistent. It got me thinking, when the CEO is being accused of sexual harassment or assault how do the employees process it? How do they explain it away? Because many did.
There were 10,000 people working at American Apparel, and many of them were radically devoted to Dov. They respected him because he had a habit of lifting people up—young workers, immigrant workers. Many of the upper-level employees were women. How could he turn around and act differently behind closed doors? It’s easier to believe that he was a target of people trying to extort money. That was the line he was giving, and it’s the way the people closest to him interpreted the allegations: “Dov’s inappropriate, crazy. He wears his heart on his sleeve, and sleeps with his employees. Of course he makes for an easy target.”
LISA: How did you reconcile the Dov you knew to the Dov that was portrayed in some of the sexual harassment lawsuits?
AMY: Oh my God. This goes again to the protective side of myself. The conflicted side of myself. Cause I know how caring, how loving he can be, how sweet, how funny.
LISA: This is Amy Talebizadeh. Who we heard from in the last episode. A product developer at American Apparel, who dated Dov for a year.
AMY: And it would drive me crazy. I couldn't sleep at night to see what I was seeing online or like on TV with ABC news, like it just would drive me crazy. Cause it wasn't true! And then when we tried to get the evidence to put together the truth, nobody wants the fucking truth. They want the... we want the guy who looks like he's jerking off on his employees. That's a good story. Nobody cared about how many jobs is he creating in America? Do we ever talk about how he's creating rights for… for the people that need health care, that need workable wages? Like, oh my god… what's… where's the real story? It would bother the shit out of me and I just, it came to a point where it’s like, I can't. How can I fight this?
LISA: Most employees I talked with about the accusations were not as steadfast as Amy.
They didn't give me a simple answer because it's not a simple situation. We like to think of people as being good or bad. But bad guys can do good things. And good guys can do bad things. The idea that Dov could be both a charming visionary and also an abusive boss... that he could give women and immigrants opportunities and also sexually harass employees. Holding all that together… it's confusing and when you're working closely with someone like that, it's hard to know what to do about it.
I recently met an employee who told us she had bad experiences working for Dov. She never sued him or American Apparel. In fact, this is the first time she has spoken publicly about it. She asked us not to use her real name. So we’ll call her Danielle. We also altered her voice.
Danielle worked at American Apparel for nearly a decade. In her role, she worked closely with Dov and got to know him well. She told us that Dov has a way of manipulating people and while working for Dov, she often felt trapped—sometimes literally. Danielle described one time when she was working late at Dov’s house. She wanted to go home for the night… but she told me… he wouldn't let her.
LISA: Did Dov lock the door? In terms of not letting you leave the house?
DANIELLE: Uh, he never locked his house doors in Los Angeles. But I think it's more like the persuasive side of it. It's more like holding you in a different way. It's more like… I don't know. Manipulation might be the word. Can you not go? Can you not leave? Can you stay with me? Is that okay? Um, I really feel like lonely right now. Can we just watch a movie? Can we just cuddle and hold hands? And you are uncomfortable at that point. You do want to go. Yeah no listen I'm really sorry I'm going now. No! Please! And then like there's the point when I'm going to start holding you.
LISA: To demonstrate how Dov would hold her to make her stay, Danielle reaches over and aggressively grabs producer Luke Malone around the wrist.
DANIELLE: No, please. Stay. I really want you to stay, does that make a difference? Like, I'm telling you now you have to stay. Please. Why do you have to go? Like, what is so important for you that you have to go? Really? Then go. Go. Go! And you're like, listen I really don't want to get in a fight with you. Can you just calm down for a minute. Alright then can you stay, is that okay? Please? And then like there's this whole like going on you. And you're like wait, like listen, I going to stay but can you not, like can you calm yourself for a minute. And the whole thing keeps going and by the time you realize, it's just like, you're already all over me. You now? So, like, does he really need to lock the door?
LISA: So he would do that?
DANIELLE: Yeah, absolutely, absolutely. But it's what I said, if you go back in his brain it's like, you really wanted to stay with me actually, don't you? Say that you want to stay. You want to stay, right? Say it, say it, say it. Say, I want to stay. So you're like uh… No! Say it. For us. I promise I'm not going to tell… Can you say I want to stay. Could you just agree with me. And say, say it, say it! And you're like… I want to stay. Very simple. So.
LUKE: I think what's even more insane about the idea of this happening all is that at the end of the day you're his employee. You know?
DANIELLE: Actually, you're not his employee, you're his friend. We're friends! Right? We all girlfriends at the end of the day, let's just play. I'm not your boss anymore, now I'm your girlfriend.
LISA: He would say I'm your girlfriend?
DANIELLE: Yeah. We're all girlfriends together. Let's play. Let's all play. Nobody cares. Nobody cares about jobs. Let's all play and be happy. Why do you have to go home for? This is so much fun here. Your mom is not here, your dad is not here. You don't even have a family. Come on. So, you're like, oh this is fun… you know? Maybe I should stay.
LISA: Danielle told us that she found it hard to challenge Dov. He had a temper, and sometimes that temper would spill over into violence.
She said the aggression would come out of nowhere and quickly escalate. There were the times he threw a shoe or a phone at her, barely missing her head, when he got annoyed. Or pushed her over when she tried to leave for the day. The most alarming story she told: during one argument, Dov got so mad he ripped her shirt.
She hadn’t agreed to let us record yet when she told us this story. But when she met us, she showed us the shirt. It’s a dark grey American Apparel boat-neck tee. It’s ripped from the collar down the middle, so that it hangs completely open, like a vest.
After showing us the shirt, she agreed to let us start recording:
DANIELLE: Every time I looked at it, it creates this sort of strength inside of me, but also a lot of anger and also a bit of shame for not doing anything back then.
The shirt-ripping incident happened when Danielle and Dov got into a fight about a printer.
DANIELLE: Uh. We were in his kitchen. And I started saying that one of the main person at Graphics Department was not… Maybe I said he's not doing his job well. And it triggered something that he didn't agree. And maybe I said something back. And I said you know what? Okay great, I'm outta here. Why don't you work on your own. And when I said, “I'm out of here,” that's when he grabbed me: You're not going anywhere. And I think the shirt peeled a little bit and I said, you're ripping my shirt. And he's like I can do whatever I want. I don't fucking give a fuck about that shirt. And then that's when you know like... And he kept on going. I'm like, please don't do that. And now, I started panicking about what was going. And I said, “Now I'm really outta here,” and kept on saying that. Like I have to go. You're just ripping... like you just, like, you don't even know anymore what's happening. And you really want to go. I just remember now, my memory is just going back to remember that every time I said I'm leaving, it would be a moment that would trigger that desperation for always having somebody with him. Never being left alone. And that can trigger some scary something that gets him really nervous, tense. But I was not able to leave the house until he realized that I was completely calm and no longer crying and not in despair the way I was, and I remember going home and him, like, calling me all the way through it. And making sure I would go to sleep and not call anyone and not do anything. And as a pattern, every time he did something bad to me or any other girl, the day after would be nothing but just a lot of apology letters and words and sorry and down his knees. Can you forgive me? This will never happen again. I'm so sorry. I promise you, I promise you, we're going to be friends forever. Or like you know, American Apparel is a growing company. We're going to die working for this company. And, you know we're all going to grow older. Nobody's going to get married. We're all going to live around this company. We're all going to hold hands together and live forever.
LISA: After this happened, Danielle was shaken, but she didn’t feel like she could just quit. American Apparel was sponsoring her work visa, and covering her car payments, insurance, and cell phone bill. She eventually started working for the company, outside of LA and away from Dov, helping to open new stores. She left American Apparel in 2010.
Danielle says she’s gone to therapy to try and get over what happened to her. But it’s clear that the memories sit close to the surface.
DANIELLE: A lot of times when I walked out of that office, I would drive on the streets of LA and watch the stickers placed on the back of LAPD cars that would say, there's no excuse to domestic violence. And every time that I read that, I almost want to stop that car and say, can you please help me? That's how I felt. That's exactly how I felt. Like, helpless. Like, I felt like, you know, like, when you want to knock on the police door, you know that thing that's written on your bumper stick? It's happening to me. Fuck the fucking sexual harassment. Do you understand? How about the physical aggression? How about hiding behind and, like, oh my God, I'm so sorry, you're such a cute girl, I'm so sorry, oh my God. No, no. You did what you did. You hit me. You hit me on the face. You put a pillow on my face to suffocate my voice. You threw a cell phone at my face. You ripped off my shirt. You threw a pair of shoes at my face. You told me to shut up. You called me stupid. Go fuck yourself. You said those words to me. Irreparable. There is no money that can pay me back, you know, what I went through. The nights that I ended up crying. That my husband saw me crying. That my mother saw me crying. That I had to lie, that I had to go, no it's okay. You know, what happened? That's, that's that’s serious shit. That's very serious shit. You know, how are you going to say that it was consensual? Prove that? Try that… You know. Try that.
LISA: We asked Dov about all of this, and he said he was in a romantic relationship with this employee, and that quote nobody’s lovers quarrel is going to read well. He denies he ever physically abused her. But another employee we spoke with said he did see Dov get physical with Danielle, twice. On one occasion, he remember Dov coming at her in a rage and throwing a phone.
From the beginning of my reporting, I told Dov we would have to talk about the sexual harassment lawsuits and his romantic relationships with employees. And initially he said he’d talk about it at some point. For months, I tried to get Dov to agree to a taped interview. We discussed the issues many times off the record, but we always ended up in the same place. Dov saying his private life is private.
And then one day, late summer—this was before I talked to Danielle or Marissa—I pressed Dov about setting aside time to talk about the issue of sexual harassment… on the record.
DOV: I don’t care. I’m not interested. You’ve already asked about it—it’s not—it’s it’s a waste of my time. Unless someone is willing to stand up and prove it, it’s over. It hasn’t been proven. I’ve denied it. I’ve won cases that’s it… I’ve won every case that’s been litigated and I’m wasting my time talking to you about it because it’s not, it doesn’t, it’s, it’s you you are… your own questioning of it in… reinserts it into people’s minds. That’s how I feel about it. It’s boring.
LISA: How about if I told you though that, you know, that people are that people are think—that people do think about it. How about if I told you, and have to trust me on this, because, like, I’ve talked to people…
DOV: I don’t care about some small percentage of people who think about it. You you are more concerned about it because it’s of interest to you as a media person to explore that uh sensitive dynamic but to me it’s not interesting. And… and people are going brain dead to all that stuff. It’s the manifestation of the internet age and clickbait. And there’s… Peter Thiel had some great thoughts about it, you know, in connection to his support of Hulk Hogan in Hulk Hogan’s journey against Gawker. Is Gawker less popular today or more popular? It’s less popular. People are bored of it. It’s boring. It’s a waste of my time. I don’t have any regrets in term… I didn’t… you know, I’m done with that. I was exploited. That’s it. I’m a victim of that scenario. Nobody else. And no one has proven otherwise.
LISA: When you say you don’t have any regrets, um—
DOV: I don’t regret my humanity. No. I don’t. And I believe that my private life is private and for me only. And I believe in privacy. And my personal life is not a subject of… should not be a subject of the media or should not be exploited. And at this point, I don’t really care. I know I’ve led a good life. I’ve contributed to the City of Los Angeles. I was one of the, you know, I was one of the… I was an employer that made a huge difference in the lives of tens of thousands of people. That’s been confirmed to me. In writing. Letter after letter. Several times a day, okay? I have to focus on running an amazing company. That’s it—
LISA: Okay, one last question—
DOV: You can ask it every week again and I’ll tell you again, I don’t care anymore. So here I’m just going to say one thing off the record—
LISA: I have to stop the tape here because this part of the conversation is off the record. But it was here that things took an extremely disturbing turn. Dov became enraged in a way I have never experienced with another person.
We’ve asked Dov to allow us to play the off-the-record portion of this conversation for you. He has not agreed to let us air this tape. I can't give specific details but I can tell you that there's a lot more to this story than I ever thought when I first started reporting.
We’ll get into that, on the next episode of StartUp.
A quick correction: On the previous episode of Startup, we said four women sued Dov in 2005 for sexual harassment and that those cases were settled out of court. It was actually three women who settled. The fourth woman asked a judge to dismiss her case.
StartUp is hosted by me, Lisa Chow. Our show is produced by Bruce Wallace, Luke Malone, Molly Messick, and Simone Polanen. Our Senior Producer is Kaitlin Roberts. We are edited by Alex Blumberg and Alexandra Johnes—who, by the way, had to duck out last week to do something very important. Give birth to her son. A big congratulations to her and her family.
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This episode has been updated to reflect that, in Marissa Wilson's arbitration proceedings, the arbitrator was not deciding on claims of sexual harassment against Dov Charney, but on the validity of waivers she signed affirming she had no legal claims against American Apparel. The arbitrator ruled in Marissa's favor, clearing the way for Marissa's sexual harassment claims to move forward. American Apparel settled for $2 million rather than fight her claims. By that time, Dov was no longer CEO of American Apparel. He says that, had he still been CEO, he never would have settled, and would have presented a fuller defense against the claims.