Adidas wins shareholder lawsuit over Kanye West controversy

Adidas has managed to fend off a complaint from shareholders who accused the company of hiding the inappropriate behavior of singer and entrepreneur Kanye West before their partnership ended in 2022.

A court in San Francisco ruled that the German sportswear giant did not mislead investors, who had claimed they lost money after Adidas shares dropped significantly in value when the company cut ties with West, CE Report quotes Kosova Press.

The Yeezy collaboration was one of Adidas’ most successful projects, but it ended after a series of antisemitic remarks by the singer, which cost the company hundreds of millions of euros.

The BBC attempted to contact Adidas for a statement, but could not get a response from the company representing the class-action lawsuit or from West’s team. The singer, who was not a direct party to the suit, was widely criticized after making antisemitic statements and promoting conspiracy theories.

The Yeezy collaboration with Adidas had come under review after West presented a shirt with the slogan “White Lives Matter” during a fashion show in 2022. He later published further antisemitic comments on social media, which pushed Adidas to remove his products from sale. West’s behavior also led other companies, such as Gap and JP Morgan, to end their partnerships with him.

According to court documents filed on Wednesday, the HLSA-ILA fund, which represented the investors, claimed that Adidas had continued its collaboration with West despite knowing about his controversial behavior. They argued that the company had failed to inform shareholders about the risks associated with this partnership.

The U.S. Ninth Circuit Court of Appeals ruled in favor of Adidas, stressing that a reasonable investor should know that collaborations with celebrities carry inherent risks, including inappropriate behavior. A local court had previously dismissed the HLSA-ILA lawsuit, but the firm later filed an appeal.

The breakup of the partnership with West caused Adidas shares to drop significantly during 2023. The luxury Yeezy products had generated around €1.5 billion in sales in 2021, making it one of the company’s most profitable lines.

After the split, Adidas was left with over €1 billion worth of unsold Yeezy shoes in storage. In 2023, the company announced that it would sell these products and donate part of the proceeds to organizations fighting hate speech and discrimination.