Cos. Should Be Wary Of Those Who 'Whistle' While They Work

Law360, New York (August 16, 2012, 1:07 PM EDT) -- On July 31, 2012, the United States District Court for the Central District of California dismissed without prejudice a shareholder derivative suit against American Apparel Inc. and its individual directors. The complaint alleged that the individual directors breached their fiduciary duty by, inter alia, failing to institute controls to ensure American Apparel's compliance with immigration laws governing work authorization for employees.

The complaint also alleged that American Apparel misrepresented its compliance with those laws in filings with the U.S. Securities and Exchange Commission, and that a subsequent audit by U.S. Immigrations and Customs Enforcement (ICE) unearthed at least 1,800 undocumented employees...

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