Kanye West’s (Ye) business relationship with Adidas formally ended back in 2022. However, their split (due to antisemitic comments by Ye) continue to impact both entities.
For Adidas, the brand found itself in an intense legal battle with shareholder HRSA-ILA Funds. But their class-action lawsuit has supposedly come to an end. According to AllHipHop, on August 16, a judge dismissed the suit, stating that Adidas could not be held responsible for Ye’s comments.
“Certainly, that Ye allegedly engaged in such behavior while working with adidas is troubling,” said Judge Karin J. Immergut. “This Court does not condone what Ye allegedly did. But the question before this Court is not whether to admonish Ye or hold Adidas morally accountable for Ye’s conduct.”
In court documents, the entity accused Adidas of misleading investors through its fiscal year 2018-2021 risk disclosure comments in its annual statements; its diversity, equity and inclusion statements; and in the European Union’s Non-Financial Reporting Directive and the independent Global Reporting Initiative’s sustainability framework.
But Immergut argued that opposite. “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,” she said. “On the current record before this Court, the answer is no.”
HRSA-ILA Funds also claimed Adidas “was aware of the volatile potential of its partnership with Kanye West.” But proceeded anyway without alerting investors of “Ye’s increasingly erratic behavior,” which supposedly led to “artificially inflated stock prices”.
Contrarily, the judge made reference to a 2020 Business Partner Risk disclosure shared with investors that acknowledged potential fallout from unethical behavior by business partners such as Ye. Within the document, measures to “manage such risks” by way of contract clauses (to suspend or terminate partnerships) were clearly outlined.
Although this is a major victory for the brand, reports of the revenue loss and heaps of unsold merchandisee will surely make it difficult for anyone to celebrate. On the other hand, Ye has seemed to reposition himself. At the 2024 Super Bowl, Ye secured a commercial slot to advertise the Yeezy brand on what appeared to be a website operated by his team.
