Although $10 million is too much, I think American Apparel has a weak-ass argument. Woody Allen is not perfect, but he is known foremost as a director and has tried to repair his image. And that is beside the point. Just because someone makes mistakes doesn't mean you can use their image in this way.
A company can't just put a person's image in an ad campaign without getting permission and paying. That's ridiculous--what were they thinking?
And their argument that corporate America doesn't want to use Woody Allen's image is stupid, since they did use his image. They obviously did want it and went to enough trouble to design billboard ads and mount them.
I'm not a fan of Allen's personal life (love many of his films). But who wouldn't want to have the right to say no to--and be compensated for--having their image appropriated for an ad campaign?