U.S. Court Rules in Favor of Adidas in Kanye West Yeezy Investor Lawsuit
The 9th U.S. Circuit Court of Appeals in San Francisco ruled that Adidas did not mislead investors in a class-action lawsuit related to its partnership with Kanye West's Yeezy brand.
The plaintiffs, HLSA-ILA Funds, had claimed Adidas concealed West's misconduct prior to their 2022 breakup. However, the court stated that reasonable investors are expected to understand the inherent risks involved in celebrity partnerships.
Kanye West, who is not a party to the lawsuit, faced widespread criticism over antisemitic remarks and conspiracy theories, which led Adidas to discontinue Yeezy products following a controversial White Lives Matter T-shirt incident in 2022.
West's behavior also caused other companies, such as Gap and JP Morgan, to end their associations with him.
The Yeezy partnership was highly profitable, generating approximately €1.5 billion in sales in 2021, but its collapse left Adidas with over €1 billion worth of unsold Yeezy inventory.
After the partnership ended, Adidas shares declined, with the dispute contributing to the stock's drop in 2023.
In 2023, Adidas announced plans to sell the remaining Yeezy shoes and donate some proceeds to charities focused on combating hate.
The district court had initially dismissed the case, and the appellate court's decision upheld Adidas's position, reinforcing the expectation that investors accept risk in high-profile celebrity collaborations.
