Adidas Wins Court Battle With Investors Who Say They Should’ve Been Warned About Kanye West

A federal judge has sided with Adidas in a motion to dismiss a lawsuit claiming the company didn’t properly warn investors of worrisome behavior from longtime partner Ye (formerly Kanye West) before cutting ties with the rapper in October 2022 over antisemitic comments and generally erratic behavior.

Adidas suffered financially after halting the popular Yeezy shoe line, losing more than $600 million in sales in the final quarter of 2022. Investors claimed in the lawsuit that Adidas knew as far back as 2018 that Ye’s behavior could be a major problem, even bringing up a presentation to former CEO Kasper Rørsted that outlined the rapper’s issues and how to deal with them, including potentially ending the partnership.

But the judge sided with Adidas in Friday’s ruling, saying the company had not misled investors, and pointed out that Ye had exhibited questionable behavior publicly for years.

“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. Rather, this Court is faced with a precise legal question: has Plaintiff 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,” wrote Karin Immergut, a U.S. District Judge in Oregon.

Investors have another chance to refile an updated case within 30 days, though Immergut wrote any attempt “would likely be futile.”

It’s another win for Adidas amid a troublesome year for the company, with whistleblowers in China calling out executives for corruption and embezzlement in June, and an ill-advised campaign with model Bella Hadid falling apart in July. Despite all of this, and the company’s first annual loss since 1992 last year, Adidas in late July announced a strong second quarter of 2024 with a net profit of $205.5 million.