Adidas has rejected an appeal from shareholders who accused it of covering up misconduct by rapper and businessman Kanye West, also known as Ye, before their partnership broke down in 2022.
A San Francisco court said the sportswear giant did not mislead investors, who claimed they had lost money after Adidas shares plunged when it cut ties with West.
Yeezy’s alliance with West had been one of Adidas’s most successful partnerships, but its collapse after a series of anti-Semitic comments by the rapper cost the brand hundreds of millions of dollars.
The BBC contacted Adidas for comment but was unable to locate the company leading the class action lawsuit or West’s team.
West, who is not a party to the lawsuit, He was widely criticized after repeatedly making anti-Semitic comments and promoting conspiracy theories.
His Yeezy brand 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 caused several companies, including Gap and JP Morgan, to sever 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 conduct for years.
The filing claims Adidas “struggled internally” with West’s behavior but misled shareholders by not disclosing the risk in its reports.
The United States Court of Appeals for the Ninth Circuit in San Francisco ultimately sided with Adidas.
The court said Wednesday that a reasonable investor would know that an association with a celebrity like West could carry “inherent risks related to inappropriate behavior.”
A district court had 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 plunge in 2023.
Yeezy, luxury sneakers designed by West, had been a particularly lucrative product line for Adidas, generating around €1.5 billion (£870 million; $1.17 billion) in sales in 2021.
The breakdown of the partnership left Adidas with more than €1 billion worth of Yeezy shoes in storage. In 2023, the brand announced that it would sell those products and donate part of the profits to charities working to combat hate.
