Photo Credit: Adidas Factory Outlet in Herzogenaurach, Germany, by Avda / CC by 3.0
The class action lawsuit against Adidas over the company’s partnership with Kanye West has been dismissed by a federal judge, citing insufficient evidence.
A federal judge has dismissed a class action lawsuit against Adidas over the company’s partnership with Kanye West, accusing Adidas of securities fraud involving the disgraced rapper’s volatile behavior. The HRSA-ILA Funds filed the complaint, asserting that Adidas failed to reveal West’s inappropriate conduct between 2013 and 2018 and their internal concerns about working with him.
But the court dismissed these claims, citing insufficient evidence showing misleading statements that may have affected investors. “Certainly, that [West] allegedly engaged in such behavior while working with Adidas is troubling,” said Judge Karin J. Immergut in court documents reviewed by Digital Music News. “This Court does not condone what [West] allegedly did. But the question before this Court is not whether to admonish [him] or hold Adidas accountable for [his] conduct.”
“This Court is faced with a precise legal question: has [HRSA-ILA Funds] sufficiently pleaded facts showing that Adidas misled investors and thereby committed federal securities fraud? On the current record before this Court, the answer is no,” she concluded.
The once highly lucrative Adidas-Yeezy partnership was raking in over a billion dollars by 2021, accounting for eight percent of Adidas’ revenue and over 40 percent of its profits. But HRSA-ILA Funds alleged that beginning in 2013, the company was well aware of the troubling potential of its partnership with the rapper formerly known as Kanye West. Digital Music News reported on this knowledge in 2023 after a New York Times expose.
West’s behavior escalated in 2022 with antisemitic rhetoric on Twitter, which sparked backlash and resulted in account suspension. Ye made further antisemitic remarks in interviews, and Adidas ultimately severed ties with him, leading to financial woes. By 2023, the company’s revenue dropped by $1.3 billion due to the turmoil from the split.
