The proposed class action suit, filed in U.S. federal court in Oregon on April 28, names Adidas AG, the company’s former CEO Kasper Rorsted, and current CFO Harm Ohlmeyer as defendants. The 26-page complaint, filed on behalf of Adidas investor HRSA-ILA Funds and other shareholders, accuses the company of ignoring Kanye West’s “extreme behavior” over a nearly five-year period and failing to call out risks to its partnership with the musician and fashion designer in four consecutive annual reports starting in 2018.
Adidas formally terminated a seven-year partnership with West, now known as Ye, on Oct. 25, 2022, with an official statement that began, “Adidas does not tolerate antisemitism and any other sort of hate speech.”
But the group, according to page 13 of the complaint, had discussed the risks of continuing its relationship with West as far back as 2018 but had failed to disclose numerous material facts to shareholders while making public statements that were “materially false and/or misleading at all relevant times.”
Among them: Kanye West made anti-Semitic comments in front of Adidas staff that included a suggestion of naming an album after Adolf Hitler and that slavery in the U.S. was a “choice” for enslaved people.
Adidas failed to take “meaningful precautionary measures” to limit negative financial exposure if the partnership were to end due to West’s behavior, the complaint alleges. Rorsted and Ohlmeyer are individually liable, the suit says, because they were controlling senior executives at Adidas per Section 20A of the Exchange Act, a U.S. law.
The lawsuit is the latest blow to the brand’s partnership with West, which may have peaked in 2019 with more than €1 billion in sales. Three months ago, Adidas, under new CEO Bjørn Gulden, told investors that its sales would fall at a high-single-digit rate this year if it failed to sell off excess Yeezy inventory valued at €1.2 billion and would also lower its annual operating profit by €500 million.
Adidas is scheduled to report its Q1 results on May 5.
