Court sides with Adidas in appeal over Kanye West collaboration

Adidas has rejected an appeal from shareholders who accused it of concealing misconduct by rapper entrepreneur Kanye West – also known as Ye – before their partnership collapsed in 2022.

A San Francisco court said the sportswear giant did not mislead investors, who claimed they lost money after Adidas shares fell when it cut ties with West.

Yeezy’s partnership with West was one of Adidas’ most successful, but then collapsed A wave of anti-Semitic comments by rappers The brand cost hundreds of millions of dollars.

The BBC contacted Adidas for comment, but was unable to reach the company leading the class action or West’s team.

The West, which is not a party to the lawsuit, He was widely criticized after repeatedly making anti-Semitic statements and promoting conspiracy theories.

His Yeezy brand’s collaboration with Adidas was put under review after he showed off 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.

West’s behavior also prompted several companies, including GAP and JPMorgan, to cut ties with the rapper.

Court documents filed Wednesday show that HLSA-ILA Funds, the firm representing the investors, alleged that Adidas continued its partnership with West despite knowing about his controversial behavior for years.

The filing claims Adidas is “wrestling internally” with West’s behavior however Misled shareholders by not disclosing risks In its reports.

The 9th U.S. Circuit Court of Appeals in San Francisco ultimately sided with Adidas.

The court said on Wednesday that a rational investor would know that partnering with a celebrity like West could come with “inherent risks of inappropriate conduct.”

A local court had previously dismissed HLSA-ILA’s case, and the company later appealed the ruling.

The collapse of Adidas’ partnership with West caused the German company’s stock price to decline in 2023.

The Yeezy, a luxury sneaker designed by West, has been a particularly profitable line of products for Adidas, generating sales of around €1.5bn (£870m; $1.17bn) in 2021.

The collapse of the partnership left Adidas with more than €1 billion worth of Yeezy shoes in stock. In 2023, the brand announced that it would sell those products and donate some of the proceeds to charities working to combat hate.