US Appeals Court Upholds Adidas Dismissal of Shareholders' Suit Over Kanye West Partnership
The 9th US Circuit Court of Appeals in San Francisco upheld Adidas' position, ruling that the shareholders' lawsuit alleging the company misled investors about its partnership with Kanye West's Yeezy brand lacked merit. The suit was initiated by HLSA-ILA Funds on behalf of investors and had previously been dismissed in a district court before the appeal. Kanye West is not a party to the lawsuit. The controversy arose after West's antisemitic remarks and the White Lives Matter incident, which led Adidas to end the Yeezy partnership in 2022. Adidas' collaboration with Yeezy was highly lucrative, generating approximately €1.5 billion in sales in 2021. However, the collapse of the partnership cost Adidas hundreds of millions and adversely affected its share price in 2023. Following the split, Adidas held over €1 billion worth of Yeezy inventory and announced plans in 2023 to sell the remaining stock, with some proceeds to be donated to charities fighting hate. The court noted that reasonable investors would understand that celebrity partnerships carry inherent risks related to improper behavior, and therefore determined that Adidas did not mislead its investors.
