Adidas shareholders have filed a class action lawsuit alleging that the clothing company failed to minimize the fallout over their since-terminated partnership with Kanye West, which resulted in a sharp decline in Adidas’ stock.
The lawsuit, filed in an Oregon district court Friday and obtained by Rolling Stone, claims that Adidas was aware as far back as 2018 that West’s controversial comments could impact the stock price, yet remained tied to the rapper up until his string of antisemitic rants made the partnership untenable and left Adidas with $1.2 billion worth of unsold shoes.
The class action lawsuit presents a lengthy list of controversial statements by West even before he went “DEATH CON,” and where Adidas failed to act to mitigate the potential damage to their brand. For example, when West said in a May 2018 interview that slavery “sounds like a choice,” then-CEO Kasper Rorsted (who stepped down earlier this year) stood by the rapper, noting that while West made “comments we don’t support… [Kanye] has been and is a very important part of our strategy and has been a fantastic creator.”
In the aftermath of that controversy, the lawsuit alleges that Adidas “ignored the risks of oversupply of Yeezy branded shoes in the event that the Partnership were to suddenly end, and in particular, if demand for the shoes were to fall due to any controversy surrounding West.” (The class action lawsuit covers anyone who bought Adidas stock between May 3, 2018 — when West made his slavery remarks — until 2023.)
Adidas’ annual reports for the next three years — 2019, 2020 and 2021, years that encompassed both West’s MAGA hat-wearing days and his failed run for president — similarly addressed the risk of remaining in business with West. The situation reached a point of no return in October 2022 when West began his (public) antisemitic tirades, forcing Adidas to sever ties.
However, as the lawsuit notes and as subsequent reporting has proven, Adidas was at least “internally” aware of West’s history of antisemitic statements prior to his rants on social media, far-right talk shows, and in front of paparazzi cameras.
In Nov. 2022, in the aftermath of the West breakup, Adidas’ stocks dropped. While they eventually rebounded, the stocks dropped again in Feb. 2023 when the company announced to shareholders that “failure to sell the stock of Yeezy’s (valued at $1.29 billion) would accordingly lower Company revenue” by that same amount, and if the company didn’t “repurpose” the inventory, they expected “an operating loss of 700 million euros in 2023.”
The lawsuit claims that senior officers and directors at Adidas “acted with reckless disregard for the truth” and that Adidas’ market price was “artificially inflated” by obscuring the risks associated with the Yeezy partnership. “As a result of the wrongful conduct alleged herein, Plaintiff and other members of the Class have suffered damages in an amount to be established at trial,” the lawsuit adds.
Lawyers for the class action lawsuit did not respond to Rolling Stone’s request for comment at press time. Adidas said of the lawsuit in a statement to the BBC, “We outright reject these unfounded claims.” West himself is not among the defendants on the lawsuit.