Court rejects the claims made by shareholders against Adidas regarding their partnership with Kanye West

Appeals court decisions Following Kanye West’s contentious remarks, Adidas ended their partnership with Yeezy without misleading investors.

Adidas has successfully defended itself in the face of an appeal from shareholders who claimed that the sportswear behemoth covered up wrongdoing by rapper-entrepreneur Kanye West, better known by his stage name Ye, prior to the conclusion of their collaboration in 2022.

Investors who claimed they lost money when shares dropped after Adidas severed connections with West were found not to have been misled by a San Francisco court.

One of Adidas’ most lucrative collaborations, the Yeezy line, ended abruptly when West made a slew of anti-Semitic remarks, costing the company hundreds of millions of dollars.

Due to his recurrent antisemitic statements and conspiracy theories, West, who is not a party to the lawsuit, has drawn a lot of criticism. After he displayed a “White Lives Matter” T-shirt at a 2022 fashion show, his Yeezy brand partnership with Adidas came under scrutiny. He soon made anti-Semitic remarks on the internet, which led Adidas to take his merchandise off the market.

Due to West’s conduct, a number of businesses severed their connections with him, including JP Morgan and Gap.

HLSA-ILA Funds, the investors’ representative, claimed in court documents submitted on Wednesday that Adidas “internally grappled” with West’s actions but misled shareholders by failing to disclose the risks in reports.

A reasonable investor would recognize that a collaboration with a superstar such as West entails “inherent risks relating to improper behavior,” according to the 9th US Circuit Court of Appeals in San Francisco, which agreed with Adidas.

HLSA-ILA later challenged the case’s prior dismissal by a district court. In 2023, the company’s share price fell due to the dissolution of the Adidas-West collaboration.

In 2021, sales of West’s high-end sneakers, Yeezy, brought in about €1.5 billion (£870 million; $1.17 billion). After the divorce, Adidas revealed intentions to sell the more than €1 billion worth of Yeezy sneakers that were still in storage, with a portion of the earnings going to anti-hate organizations.