Shareholders who say they were economically damaged have filed a class-action lawsuit over Adidas’ former partnership with rapper Ye.
The plaintiff, HRSA-ILA Funds, claims "significant losses and damages" that stem from the defendants allegedly knowing about Ye’s offensive behavior and not making proper disclosures to investors in relation to it over the years, according to the class-action complaint. The parties facing the suit include Adidas, former CEO Kasper Rorsted and current CFO Harm Ohlmeyer.
The filing of the complaint in the U.S. District Court of Oregon on Friday comes about six months after the sportswear company put a stop to its longtime Yeezy partnership with Ye, formerly known as Kanye West.
ADIDAS ENDS PARTNERSHIP WITH KANYE WEST OVER ANTISEMITIC COMMENTS
In the legal document, the plaintiff said Ye "began to accrue controversy as a result of his various statements on topics such as slavery, racial issues, and politics." It alleged the rapper said anti-Semitic things while in the presence of Adidas employees, in addition to highlighting certain public comments he has made dating to 2018.
The plaintiff accused Adidas, Ohlmeyer and Rorsted of making misleading statements "and/or fail[ing] to disclose" the sportswear company "was aware of [Ye’s] behavior, and failed to warn investors that it was aware of that behavior, and had considered ending the Partnership as a result of it," according to the filing.
The company did not take "meaningful precautionary measures to limit negative financial exposure if the Partnership were to end as a result of West’s behavior" and "overstated the risk mitigation measures it took with regard to Yeezy shoes in the event that it terminated the Partnership," the lawsuit also states.
ADIDAS EXECUTIVES REPORTEDLY RAISED CONCERNS ABOUT RELATIONSHIP WITH KANYE WEST YEARS AGO
"We outright reject these unfounded claims and will take all necessary measures to vigorously defend ourselves against them," Adidas spokesperson Rich Efrus told FOX Business.
The plaintiff asked the court to find the action "to be a proper class action" and to award damages, litigation-related fees and other relief.
The Adidas-Ye partnership ended in October. The Germany-based company said the anti-Semitic comments he had recently made "violate[d] the company’s values of diversity and inclusion, mutual respect and fairness," prompting it to terminate the collaboration after a "thorough review." Adidas has zero tolerance for antisemitism "and any other sort of hate speech," it also said.
ADIDAS WARNS OF LOSSES IN AFTERMATH OF YEEZY FALLOUT
Adidas, which took a €600 million sales hit in the fourth quarter in connection to the deal’s end, has said it is still figuring out how to proceed with the Yeezy stock it still has. The company said that in the event it decides against reusing the products, it could see its operating profit for 2023 drop by €500 million, it said in a February press release.
Since the start of the year, the share price for Adidas had gone up 26% as of Monday afternoon. It has experienced a plunge of nearly 14% in a year.
