Investors Sue Adidas Over Kanye West Fallout; Weren't Warned About Ye's Problematic Behavior

Adidas is facing a class-action lawsuit from investors who alleged that the company was aware of Kanye West's problematic "personal behavior" years before ultimately ending its partnership with the defamed rapper in October 2022.

Filed on Friday, the complaint — representing unnamed investors who acquired the German brand's securities between May 3, 2018, and Feb. 21, 2023 — alleged that the executives exhibited "devices, schemes and artifices to defraud" investors and erred in taking "meaningful precautionary measures to limit negative financial exposure" if the partnership with the 45-year-old rapper were to end, Billboard reported.

Adidas' former CEO Kasper Rorsted and chief financial officer Harm Ohlmeyer were identified as defendants, while West was not named as a defendant in the suit.

The complaint, filed before the U.S. District Court in Oregon, cited remarks made by West — who now legally goes by Ye — dating back to 2018, including a provocative statement he made during a TMZ interview in which he said that slavery "sounds like a choice."

It also noted that Adidas "stuck by" the rapper after they made the comments and included excerpts from Rorsted's 2018 interview with Bloomberg in which he said that the company "neither comment nor speculate on every single comment" made by their "external creators," per Billboard.

The suit cited West's controversial anti-Semitic comments and a quote, "I can say anti-Semitic things, and Adidas can't drop me," which he said during an appearance on the "Drink Champs" podcast last year just days before his partnership with Adidas ended.

Adidas was also accused of failing to warn investors about the "offensive remarks" West made within "company premises" and that the sports brand's publicly released reports between 2018 and 2021 did not address "serious issues affecting the partnership" in their "Business Partner Risk" sections, but it did state that "improper behavior" from entertainers and athletes representing the brand could hurt the company's reputation.

The suit also cited a Wall Street Journal article, dated Nov. 27, 2022, which revealed that the company's executives, including Rorsted — who stepped down as CEO four years before his contract's expiration in 2026 — already discussed about the risks of Ye's actions and detailed mitigating strategies with the rapper, including cutting-ties with him, back in 2018.

But Adidas has since denied the allegations made against them, telling the Associated Press on Monday: "We outright reject these unfounded claims and will take all necessary measures to vigorously defend ourselves against them."

Adidas entered an endorsement deal with West in 2013, launching the Yeezy shoe collection. It has since become a global phenomenon reaching a whopping $1 billion worth of sales of Yeezy shoes six years later. The Yeezy brand — owned by West and licensed to Adidas — turned into a streetwear pillar that introduced a new fashion trend.

But because of West's controversial comments and incentive actions, the company decided to cut ties with the rapper and end the production of Yeezy-branded products.

"Adidas does not tolerate antisemitism and any other sort of hate speech. Ye's recent comments and actions have been unacceptable, hateful, and dangerous, and they violate the company's values of diversity and inclusion, mutual respect, and fairness," the company said in a statement at the time.

Adidas claimed that contract termination would lead to a "short-term negative impact, losing €250 million — valued at $248.8 million at the time — on the company's net income of that year.

However, they reportedly suffered a $540 million loss in the fourth quarter, partially due to unsold Yeezy products and clothing. This year, the company is expected to hit a total loss of $1.3 billion in "full-year revenue" due to the unsold products.