Cityfile: New York's Most Notable and Influential

• The latest ad campaign for Chanel handbags, shot by Karl Lagerfeld himself, features a very Holly Golightly-looking Lily Allen. [Pipeline, Cut]
• A new front-runner has emerged to possibly take over struggling Christian Lacroix. This time it's Italian retail giant Borletti. [WWD, AFP]
• More trouble for American Apparel and its founder Dov Charney? An anonymous store manager reports Charney has been busy firing employees "he deems unattractive." [Gawker]
• Amber Valletta is the latest supermodel to launch a clothing line. [Cut]More

• Stylist Pat Field may not take part in the Sex and the City sequel—it seems she can't bear the idea of Carrie Bradshaw going from "fashionista to recessionista." But she does have a bit of advice for Susan Boyle, which is nice. [Grazia]
• The return to scarcity: Saks and Neiman Marcus report they're ordering a lot less inventory than they did last year, not surprisingly. [Bloomberg]
• The Rachel Zoe Project returns to the air on August 25. [Fashionologie] More

• Mayor Bloomberg has declared Thursday to be "Burberry Day" in honor of the lighting of the Burberry logo atop the company's new HQ at 444 Madison Avenue. [FWD]
• It looks like the Gianni Versace CEO Giancarlo Di Risio will be departing the company after going head to head with Donatella Versace. [WSJ]
• Italian officials have accused Domenico Dolce and Stefano Gabbana of tax evasion, and have threatened the duo with a $1+ billion fine. [Cut]
• You may want to think twice before you try and squeeze into a pair of skinny jeans. They've been known to cause a nerve condition called "meralgia paresthetica," otherwise known as "tingling thigh syndrome." [MSNBC]More

American Apparel Caves | The intimate details of Woody Allen's love life will not be made public, after all. The filmmaker filed a $10 million suit against American Apparel a few months ago, claiming the apparel company had tarnished his rep by featuring him on billboards in New York and LA without his permission; American Apparel vowed to fight the suit and threatened to delve into Allen's personal life at trial in an effort to prove his image had already been marred by scandal. Now the whole mess is about to disappear: This morning American Apparel agreed to pay Allen $5 million to settle the dispute, which Allen claims is the "the largest reported amount ever paid under the New York right to privacy law." [Reuters, AP]

• More photos, commentary, and criticism from last night's Costume Institute Gala, assuming you're not totally sick of hearing about it by this point. [W, Pipeline, Glamour, NYM, NYT, SF]
• Rumor has it Kate Moss is planning to write her autobiography. We can't wait! [Grazia]
• Narciso Rodriguez, Thakoon Panichgul, and Maria Cornejo —all three of whom happen to have dressed Michelle Obama—have lovely things to say about the first lady's sense of style. [WWD]
• A tour of Jason Wu's apartment. [NYM]
• Eva Mendes and Jamie Dornan will be appearing in the new ad campaigns for Calvin Klein Jeans and Calvin Klein Underwear. [WWD]More

American Apparel Has Gone Too Far [Consumerist]

Woody Allen v. American Apparel | In a deposition for his $10 million suit against American Apparel, Woody Allen described the clothing company's ads today as  "sleazy," "adolescent" and "infantile." Yes, this would be the same Woody Allen who sleazily started an affair with his quasi-stepdaughter, who was an adolescent at the time. But at least he'll have something to talk about at his next session with his psychoanalyst. [NYP]

• A camera crew followed Rachel Zoe around during Paris Fashion Week, which means the second season of her Bravo reality show is headed your way. [FWD]
• Dov Charney's cash-strapped American Apparel is selling 18 percent of the company to a private equity firm to pay down some of its debt. [BN]
• The hat Aretha Franklin wore to the inauguration in January? More than 5,000 orders have been placed since then. At $179 a pop, no less. [NYT]
• Video of Karl Lagerfeld at Paris Fashion Week. [NYM]
• What's Sofia Coppola up to these days? She's directing perfume ads for Dior, that's what. [NYT/The Moment]
• Marc Jacobs and Lorenzo Martone are on their way to Brazil for a little post-fashion season R&R, in case you're interested. [FWD]
• LA Fashion Week begins tonight! [Racked, Stylefile]

• Gisele is engaged. [People]
• Fur is back. Jean Paul Gaultier, Karl Lagerfeld and Giorgio Armani are among the designers leading the rebellion. [Ind.]
• Despite the recession (and a gazillion lawsuits), American Apparel is one of the few retailers seeing record profits. [WWD]
• Sass & Bide has dropped out of New York Fashion Week. [Fashionista]
• With marketing budgets on the decline, more designers are looking for a boost from Hollywood's awards season. [WSJ]
• Menswear designer Ferruccio Pozzoni is departing Valentino. [Reuters] 
• As expected, vacancies are up on Madison Avenue. [Crain's]
• The worst of the worst from the Stephen Sprouse party last week. [Pipeline] 
• Rumor has it Elite is cutting both models and bookers. [NYM]
• Blake Lively refuses to wear anything but a size zero. The solution? The Gossip Girl costume department cuts the tags out of larger samples. [FWD]

• The City debuts tonight on MTV! New York has details on the goings-on behind the scenes and what Olivia Palermo is hoping to gain from the spotlight: "Like, maybe I'll start a jewelry line,” [NYM]
• Is Christina Aguilera planning to design a collection for Topshop? [Mirror]
• With holiday sales the worst in 40 years, analysts are predicting 73,000 stores may close in the first half of 2009. [Bloomberg]
• Erin Fetherston may have a hotel project in the works. [HC]
• Tom Ford and Judith Leiber have new Rodeo Drive stores planned. [WWD]
• Chanel is cutting 200 jobs. [Guardian]
• The new parent company of Bill Blass says it's planning to revive the brand's high-end collection within "9 to 12 months." [WSJ]
• Dov Charney's American Apparel has another legal mess on its hands. [WWD]

♦ Claudia Schiffer is the new face of Yves Saint Laurent, succeeding Naomi Campbell. [Vogue]
♦ Beyoncé has tapped Thierry Mugler as "creative adviser" for her upcoming world tour. [WWD]
♦ Another giant American Apparel store opens in Soho this weekend. [Racked]
♦ Forever 21 is opening a 90,000-square-foot store in Times Sq. in 2010, God help us all. [WWD]
♦ A map of all the holiday pop-up shops popping up around town. [Racked]
♦ Your sister-in-law doesn't want another cashmere sweater for Christmas. She'll just take the cash, thanks. [WSJ]

• About 24 million people watched Joe accept the Democratic nomination for veep on Wednesday night. [TV Decoder]
• Michael Wolff discusses his new book about Rupert Murdoch and how the mogul's 99-year-old mother gave him "a joyride on her golf cart at her estate outside of Melbourne." [NYO]
• Daily News editor Ian Bishop has been suspended for throwing a phone and shattering a glass wall. [NYP]
• The lineup for the Telluride Film Festival, which begins on Friday. [THR]
• Forbes has issued its list of the 100 most powerful women. [Forbes]
• A list of the filthiest American Apparel ads ever. [BWE]

• Lydia Hearst is no longer just a pretty face, says OK mag, now that she's joined the cast of Gossip Girl. We won't attempt to parse that logic, but focus instead on the delightful news that things are going well with Lydia's boyfriend Matt Rains, Heatherette designer Traver's brother. The couple enjoys "bowling, botanical gardens and walking through Central Park together." How wholesome! [OK]
• Naomi Campbell guest-edits the Mirror's showbiz column and vents about Kabbalah: "I knew about Kabbalah before Madonna got involved. Kabbalah is not a religion, it's a program. I don't like to get hooked on things like that. It reminds me of AA but just with different words." Well, anything that reminds Campbell of being told not to drink can't be appealing. [Mirror]