The company paid Allen $5 million only hours before the suit was set to come to trial.
Allen sued American Apparel over a year ago, seeking more than $10 million, after an image of him the from the film
appeared on the billboards and Web site. Allen says his reputation was damaged and his image was used for profit without his consent.
The apparel retailer is set to announce its first-quarter earnings after-market.
Shares of the company climbed 5% to $5.36 in afternoon trading.
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