Adidas has fended off an appeal from shareholders who accused it of hiding misconduct by rapper-entrepreneur Kanye West - otherwise known as Ye - before their partnership broke down in 2022. A San Francisco court ruled that the sportswear giant did not mislead investors, who claimed they lost money after Adidas shares plunged when it cut ties with West.
The Yeezy tie-up with West had been one of Adidas' most successful partnerships, but its collapse after a spate of anti-Semitic comments by the rapper cost the brand hundreds of millions of dollars. The BBC has contacted Adidas for comment but could not reach the firm leading the class action or West's team.
West, who is not party to the lawsuit, was widely criticised after making antisemitic remarks and promoting conspiracy theories. His Yeezy brand collaboration was put under review after he showcased a 'White Lives Matter' T-shirt design at a fashion show in 2022. Shortly after, he posted anti-Semitic comments online, prompting Adidas to pull his products from sale.
Court documents show that HLSA-ILA Funds, representing investors, alleged that Adidas continued its partnership with West despite being aware of his controversial conduct for years. They claimed Adidas 'internally grappled' with West's behaviour but misled shareholders by failing to disclose the risk in its reports.
The 9th US Circuit Court of Appeals ultimately sided with Adidas. The court stated that a reasonable investor would recognize that partnering with a celebrity like West could come with 'inherent risks relating to improper behaviour'.
The court's ruling followed a district court dismissal of HLSA-ILA's case, which the firm later appealed. The collapse of Adidas' partnership with West caused the company's share price to significantly drop in 2023. The Yeezy trainers, designed by West, had generated around €1.5 billion in sales in 2021 but left Adidas with over €1 billion worth of Yeezy shoes unsold after the collaboration ended. In 2023, Adidas announced plans to sell those products and donate some proceeds to charities working against hate.
The Yeezy tie-up with West had been one of Adidas' most successful partnerships, but its collapse after a spate of anti-Semitic comments by the rapper cost the brand hundreds of millions of dollars. The BBC has contacted Adidas for comment but could not reach the firm leading the class action or West's team.
West, who is not party to the lawsuit, was widely criticised after making antisemitic remarks and promoting conspiracy theories. His Yeezy brand collaboration was put under review after he showcased a 'White Lives Matter' T-shirt design at a fashion show in 2022. Shortly after, he posted anti-Semitic comments online, prompting Adidas to pull his products from sale.
Court documents show that HLSA-ILA Funds, representing investors, alleged that Adidas continued its partnership with West despite being aware of his controversial conduct for years. They claimed Adidas 'internally grappled' with West's behaviour but misled shareholders by failing to disclose the risk in its reports.
The 9th US Circuit Court of Appeals ultimately sided with Adidas. The court stated that a reasonable investor would recognize that partnering with a celebrity like West could come with 'inherent risks relating to improper behaviour'.
The court's ruling followed a district court dismissal of HLSA-ILA's case, which the firm later appealed. The collapse of Adidas' partnership with West caused the company's share price to significantly drop in 2023. The Yeezy trainers, designed by West, had generated around €1.5 billion in sales in 2021 but left Adidas with over €1 billion worth of Yeezy shoes unsold after the collaboration ended. In 2023, Adidas announced plans to sell those products and donate some proceeds to charities working against hate.
