Adidas shareholders have filed a class action lawsuit against the sportswear brand, claiming it knew about Kanye West’s problematic behaviour years before it ended their partnership over his antisemitic comments.
The shareholders also allege that Adidas failed to mitigate their financial losses or take precautionary measures to minimise their exposure, after the designer and rapper’s erratic behaviour and offensive comments saw him and his Yeezy brand dropped by Adidas, which resulted in a sharp decline in the company’s stock.
“We outright reject these unfounded claims,” Adidas said in a statement responding to the lawsuit, adding that the company “will take all necessary measures to vigorously defend ourselves against them”.
West, who is known as Ye, is not party to the lawsuit, which was filed in the US.
Under the Yeezy brand, Ye designed sportswear and sneakers that were hugely successful for Adidas.
But the sportswear giant ended its collaboration with Ye last October after he praised Adolf Hitler and the Nazis in an interview on Infowars, a show hosted by the rightwing conspiracy theorist Alex Jones; dressed models at Paris Fashion Week in clothing with the slogan “White Lives Matter”, which the Anti-Defamation League classifies as a white supremacist phrase; and made antisemitic remarks which saw his Instagram and Twitter accounts suspended.
Adidas has revealed that it could lose up to €1.2bn (US$1.3bn) on unsold Yeezy products if it decides not to sell them and warned it could report its first loss in three decades.
When the company ended its relationship with Ye in October, it said: “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.”
But the lawsuit alleges that Adidas knew about Ye’s behaviour before then, alleging that it was discussed by former chief executive Kasper Rorsted as well as other senior executives.
When Ye said in a 2018 interview that slavery “sounds like a choice”, Rorsted said that, “There clearly are some 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 comment, the lawsuit claims 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 3 May 2018 — the day West made the remark about slavery — until 2023.
After Adidas ended the partnership last October, the Wall Street Journal published details of an alleged 2018 meeting during which employees raised their concerns about Ye’s behaviour to senior executives, who allegedly advised staff on how to avoid interacting with him as well as the possibility that the brand would cut ties with him.
Adidas has since launched an independent investigation into reports that Ye created a “toxic environment” at the company, after staff wrote an open letter claiming that Ye showed them explicit images of himself and his ex-wife Kim Kardashian, shouted at female workers, and made “sexually disturbing references when providing design feedback”. In the letter, staff claimed bosses were aware of Ye’s “problematic behaviour” but “turned their moral compass off”.
In response to those allegations, Adidas said it took them “very seriously”. Ye did not respond to requests for comment.
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