American Apparel purports to be a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel.

According to a press release dated on August 25, 2010, 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 hiring practices on the Company’s financial performance. Specifically, Defendants falsely stated that they made “diligent efforts” to comply with employment and labor regulations, and failed to disclose, and made false statements to shareholders regarding, the effect of the Company’s illegal hiring practices on its operating costs and margins. Beginning in July 2009, after the Company revealed that it was being investigated by U.S. Immigration and Customs Enforcement regarding its compliance with U.S. immigration law, the true financial condition of the Company began to be revealed. However, Defendants assured investors that such investigation would not have a material effect on American Apparel.

Then, on August 17, 2010, the Company issued a press release announcing that the Company 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. According to the press release, a significant factor in such losses was “lower labor efficiency at the Company’s production facilities in the second quarter of 2010 compared to the prior year period. 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.” By August 18, 2010, as this news was digested by the market, American Apparel’s stock price had declined rapidly, from a close of $1.39 per share on August 16, 2010, to a close of just $0.81 per share on August 18, 2010 – a decline of over 41%.

On December 03, 2010, an Order Approving Stipulation Regarding Consolidation of Cases, Briefing Schedule and Stay Of Discovery was issued by the Court that consolidated all claims arising out of the same or substantially the same transactions or events into one action: In re American Apparel, Inc. Shareholder Litigation, Case No. CV-10-6352.

On March 15, 2011, the Court granted an Order on Motions for lead Plaintiff and lead Counsel. On April 29, 2011, a consolidated Complaint was filed by the lead Plaintiff against the Defendants. The Defendants responded by filing motions to dismiss on May 31, 2011.

On January 13, 2012, the Court issued an Order granting Defendants’ Motion to Dismiss with leave for Plaintiffs to file an amended Complaint. On February 27, 2012, an amended Complaint was filed by the lead Plaintiff against the Defendants.

On January 16, 2013, the Court issued an Order granting in part and denying in part Defendants' motions to dismiss. Plaintiffs were given leave to file an amended Complaint. Plaintiffs filed their amended Complaint on February 15.

On August 8, 2013, the Court issued an Order granting in part and denying in part Defendants' motions to dismiss.

On January 17, 2014, the parties filed a Stipulation of Settlement. The Settlement was preliminarily approved by the Court on April 16. On July 29, the Court granted final approval of the Settlement and entered Final Judgment.