SOURCE: Milberg LLP

October 18, 2010 15:49 ET

Milberg LLP Announces the Filing of a Securities Fraud Class Action Lawsuit Against American Apparel, Inc. -- (NYSE: APP)

NEW YORK, NY--(Marketwire - October 18, 2010) -  A class action lawsuit was filed on August 25, 2010, in the United States District Court for the Central District of California on behalf of all persons who purchased American Apparel, Inc. ("American Apparel" or the "Company") (NYSE: APP) securities during the period from December 20, 2006, to August 17, 2010, inclusive (the "Class Period"). American Apparel is a manufacturer and clothing retailer that has marketed itself as "Sweatshop Free," using a single factory in Los Angeles.

The complaint charges American Apparel and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that during the Class Period, defendants made false and misleading statements about the Company's hiring practices and the effect of such practices on the Company's financial performance. On September 3, 2009, the company announced that it was forced to dismiss 1600 employees who were unable to prove their immigration status or fix problems with their employment records. Those terminations came two months after the company announced that the US Immigration and Customs Enforcement agency charged that 1,600, or one-third, of American Apparel's workers were illegal immigrants. At the time, American Apparel executives said they didn't anticipate any significant loss in productivity. 

Then, on August 17, 2010, the Company issued a press release announcing that it expected to report a loss of $5 million to $7 million in the second quarter of 2010 on net sales of $132 million to $143 million. A significant factor in such losses, according to the Company, was "lower labor efficiency at the Company's production facilities." The lower labor efficiency was primarily a result of the hiring of over 1,600 net new manufacturing workers during the second quarter of 2010." American Apparel's stock dropped approximately 41% on this news.

If you purchased any class of shares of American Apparel from December 20, 2006, to August 17, 2010, you may move the court no later than October 25, 2010, and request that the Court appoint you as lead plaintiff. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. To be appointed lead plaintiff, the Court must decide that you have the largest financial interest of any competing movant and that your claims are typical of the claims of other class members, and that you will adequately represent the class. Your share in any recovery will not be enhanced or diminished by the decision whether or not to serve as a lead plaintiff. If there is a recovery in this action and you are part of the class, you can recover as an absent class member without moving for lead plaintiff or otherwise taking an active role in the litigation. You may retain Milberg LLP, or other attorneys, to serve as your counsel in this action, but do not need to retain counsel to participate in any recovery as an absent class member

The complaint has been filed as a class action on behalf of all persons who own American Apparel securities. No class has yet been certified, and there can be no guarantee that a class will be certified. The complaint in this action was not filed by Milberg.

About Milberg

Milberg LLP is widely recognized as the premier class action and complex litigation firm, representing individual and institutional investors, pension funds, hedge funds, unions, and consumers. Founded in 1965, Milberg has offices in New York, Los Angeles, Tampa, and Detroit. The Firm has taken the lead in landmark cases that have set groundbreaking legal precedents and prompted changes in corporate governance benefiting shareholders in North America and abroad. Please visit the Milberg website (www.milberg.com) for more information about the Firm.

If you wish to discuss this matter with us, or have any questions concerning your rights and interests with regard to this matter, please contact the following attorney:

Contact Information

  • Andrei V. Rado, Esq.
    Milberg LLP
    One Pennsylvania Plaza, 49th Fl.
    New York, NY 10119-0165
    Phone number: (800) 320-5081
    Email: contactus@milberg.com

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