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Adidas has dismissed an appeal from shareholders who accused it of concealing inappropriate behavior by rapper-entrepreneur Kanye West, also known as Ye, before the partnership fell apart in 2022.
A San Francisco court said the sportswear giant did not mislead investors who claimed they suffered losses as Adidas’ stock price plummeted as it severed ties with West.
Yeezy’s collaboration with West is one of Adidas’ most successful partnerships, but in Rapper makes numerous anti-Semitic comments Brands lost hundreds of millions of dollars.
The BBC has contacted Adidas for comment but was unable to contact the company leading the class action or West’s team.
West is not a party to the lawsuit; He has been widely criticized after repeatedly making anti-Semitic remarks and promoting conspiracy theories.
His Yeezy brand collaboration with Adidas came under scrutiny after he showed off a “White Lives Matter” T-shirt design at a 2022 fashion show. Soon after, he posted anti-Semitic comments online, prompting Adidas to remove his products.
West’s behavior also prompted several companies, including Gap and JPMorgan Chase, to cut ties with the rapper.
HLSA-ILA Funds, which represents investors, claims Adidas continued to work with West despite knowing about his controversial behavior for years, according to court documents filed Wednesday.
The document said Adidas was “responding internally” to West’s behavior, but Failure to disclose risks misleads shareholders in its report.
The U.S. Court of Appeals for the Ninth Circuit in San Francisco ultimately sided with Adidas.
The court said Wednesday that reasonable investors would know that working with a celebrity like West could pose “inherent risks associated with inappropriate conduct.”
The district court previously dismissed HLSA-ILA’s case, and the company subsequently appealed.
The collapse of Adidas’ partnership with West caused the German company’s share price to plummet in 2023.
Yeezy, the luxury sneaker designed by West, has been a particularly profitable line for Adidas, with sales in 2021 of around €1.5bn (£870m; $1.17bn).
The breakdown of the partnership resulted in Adidas stockpiling more than 1 billion euros worth of Yeezy shoes. In 2023, the brand announced it would sell the products and donate a portion of the proceeds to charities dedicated to fighting hate.
