US Court Backs adidas in Investor Appeal Over Kanye West Partnership Fallout
A US appeals court has ruled in favour of adidas, rejecting a claim by investors who accused the company of concealing Kanye West’s misconduct before their high-profile partnership collapsed in 2022.
The decision, handed down by the 9th US Circuit Court of Appeals in San Francisco, upholds an earlier dismissal of a class action brought by HLSA-ILA Funds. The investment firm argued it suffered losses when adidas shares plunged after the company severed its deal with West – known as Ye – following a wave of antisemitic remarks and controversial public behaviour.
Investors alleged the sportswear brand knew for years about West’s conduct but failed to disclose the associated risks. However, the court ruled that shareholders should have understood the “inherent risks” of partnering with a celebrity figure, particularly one as outspoken as West.
The ruling marks the latest development in the fallout from the end of one of adidas’ most profitable alliances. The Yeezy line generated about €1.5bn in sales in 2021, but the partnership unravelled after West appeared at a 2022 fashion show wearing a “White Lives Matter” T-shirt and later posted antisemitic comments online.
The controversy prompted several major firms, including Gap and JP Morgan, to cut ties with the rapper. adidas halted Yeezy production and pulled the products from sale, leaving the company with more than €1bn in unsold inventory. In 2023, the brand resumed limited Yeezy sales and pledged to donate part of the proceeds to organisations fighting hate.
West is not a party to the lawsuit, and attempts to reach representatives for him, adidas, and the investment firm were unsuccessful.
