Court sides with Adidas in investor appeal over Kanye West collaboration

Adidas has won a key legal victory in the United States after a San Francisco court rejected an appeal from shareholders who claimed the company concealed misconduct by rapper and entrepreneur Kanye West, also known as Ye, before their lucrative partnership collapsed in 2022.

The lawsuit argued that Adidas misled investors by failing to disclose concerns about West’s behaviour, which later erupted into public controversy after the artist made repeated antisemitic remarks and promoted conspiracy theories. Shareholders said the company’s share price plunged when it severed ties with West, causing financial losses they believed could have been avoided had Adidas acted sooner or communicated more openly.

But the court found no evidence that Adidas deceived investors or breached its disclosure obligations. Judges ruled that while the fallout from West’s actions had damaged the company financially, Adidas had not intentionally withheld information in a way that violated securities laws. The decision effectively ends the class action effort unless plaintiffs pursue further appeal.

The partnership between Adidas and West had been one of the brand’s most profitable ventures. The Yeezy line transformed the company’s image, attracting new customers and generating billions in revenue. When Adidas cut ties with West following his antisemitic comments, it not only halted production but also faced the challenge of managing unsold Yeezy stock, contributing to hundreds of millions in losses.

West himself was not a party to the lawsuit. The BBC was unable to reach the firm leading the class action or West’s representatives for comment, while Adidas declined to issue a public response to the ruling.

Legal analysts say the decision underscores the difficulty of holding companies liable for the unpredictable behaviour of celebrity partners, even when reputational risks are well known. Brands often face a delicate balance between leveraging star power and managing the potential fallout if relationships collapse.

For Adidas, the ruling provides some relief as it continues to stabilise after the Yeezy breakup. The company has been working to rebuild confidence among investors and consumers, focusing on new product lines and attempting to move past one of the most turbulent episodes in its recent history.