Talitha Peters, the former vice president, who worked at the organisation for two years, sued Fabletics, which Hudson co-founded in 2013, and its parent corporation TechStyle Fashion Group in October (16), claiming she was unfairly fired for an illegal drug problem she doesn't have.

In new court documents obtained by DailyMail.com, company executives have denied all wrongdoing and have alleged Peters was fired for failing to use ordinary care and diligence in her performance at the company, not for any physical or mental disability.

Their lawyers state, "Defendant denies generally and specifically each and every allegation contained in the Complaint and denies that Plaintiff has suffered any injury or has been damaged in any sum whatsoever."

They want the legal action to be thrown out entirely.

In her lawsuit, Peters claimed the stress of her job prompted a doctor to prescribe her Ambien to help her sleep and she took a three-week medical leave in April (16) to check into rehab to treat her addiction to the drug. When she asked for an extension to her leave, Fabletics officials allegedly tried to look into her medical information and came to the conclusion she was doing illegal drugs. She was allegedly fired in June (16), the day she was due to return to work.

She is seeking unspecified damages for the termination, disability discrimination and invasion of privacy.