Adidas Defeats Angry Shareholder Lawsuit Over Kanye Disaster

Photo Credit: Camilla Carvalho

Adidas prevailed against an appeal by shareholders who alleged the company committed fraud in concealing antisemitic behavior by Kanye West before its partnership with the rapper dissolved.

German footwear and apparel brand Adidas defeated an appeal by U.S. shareholders on Wednesday, December 3. The shareholders’ suit alleged that the company fraudulently concealed antisemitic and other inappropriate behavior by the rapper and businessman formerly known as Kanye West before its partnership with him met a messy end in 2022.

The 9th U.S. Circuit Court of Appeals in San Francisco found that Adidas did not mislead shareholders in its annual reports by stating that improper behavior by partners in the entertainment industry could have a negative effect on business.

“A reasonable investor would know that a partnership with a celebrity partner like [West] would come with inherent risks relating to improper behavior,” the three-judge panel wrote. The panel also found no intent to defraud.

The decision upheld the August 2024 dismissal by a federal judge in Portland, Oregon, where Adidas’ North American headquarters are located. Notably, Kanye was not a defendant in the case.

Shareholders in the proposed class action claimed they lost money because Adidas’ stock price fell after West’s antisemitic remarks led the company to cut ties with him in October 2022. The move ended a nine-year partnership that generated an incredible $1.75 billion in sales in 2021 alone.

According to the shareholders, Adidas continued the partnership despite possessing knowledge since at least 2018 that the rapper regularly made improper comments to employees at both Adidas and his Yeezy design shop.

In May 2023, Adidas began selling its leftover Yeezy stock, pledging to donate some of the proceeds to groups battling antisemitism, and finished late last year. In 2024, Adidas sales in North America fell 2% “solely due to significantly lower Yeezy sales.”

Adidas did not immediately respond to media requests for comment, nor did lawyers for the lead plaintiff, HLSA-ILA Funds, which serves maritime workers in southeast Virginia.