Federal Judge Dismisses Adidas Investor Lawsuit Over Kanye West’s Conduct

A sign in front of an Adidas store in Paramus, N.J., on Oct. 25, 2022. Seth Wenig/AP Photo

A federal judge dismissed a lawsuit brought by investors against Adidas AG and one of its top executives, Harm Ohlmeyer, over allegations that the company failed to disclose “overtly antisemitic and other racially offensive remarks” by Kanye West, now known as Ye, during his partnership with the sportswear giant.

The plaintiffs, led by HRSA-ILA Funds, said this omission misled investors and constituted federal securities fraud under the Securities Exchange Act of 1934.

The lawsuit centered on allegations that Ye engaged in inappropriate and anti-Semitic behavior between 2013 and 2018 while collaborating with Adidas on the popular Yeezy line of footwear. The plaintiffs argued that Adidas knew about Ye’s behavior but did not disclose it to investors, thereby creating a misleading impression of the risks associated with the partnership. Adidas officially cut ties with Ye in October 2022.

In her ruling, U.S. District Judge Karin J. Immergut concluded that the plaintiffs failed to adequately plead that Adidas made materially misleading statements in its public filings and statements.

The judge noted that the plaintiffs’ claims focused on Adidas’s risk disclosures, diversity, equity, and inclusion (DEI) statements, and the company’s compliance with the Global Reporting Initiative (GRI) standards.

Immergut found that Adidas’s risk disclosures, which addressed the potential for improper behavior by business partners, did not imply that no such behavior had occurred.

Instead, the disclosures “took such ‘improper behavior’ as a given” and warned of the potential “negative spill-over effect” on the company’s reputation and business, according to the opinion.

The court also rejected the plaintiffs’ argument that Adidas’s DEI statements were materially misleading.

The judge ruled that these statements, including the company’s “zero-tolerance approach” to discrimination and harassment, were aspirational and not concrete enough to be actionable under federal securities laws.

Immergut pointed out that the DEI statements were made to signal Adidas’s general goals rather than specific, verifiable actions.

Regarding the plaintiffs’ claims that Adidas violated the European Union’s Non-Financial Reporting Directive and the GRI standards, the court found that these provisions were “too broad and flexible” to form the basis of a securities fraud claim.

The judge emphasized that the GRI’s requirements were subjective and open to interpretation, making it impossible for a reasonable investor to rely on them as concrete benchmarks.

Although the court granted the motions to dismiss, Immergut is allowing the plaintiffs the opportunity to amend their complaint within 30 days if they believe that they can address the deficiencies identified in the ruling.

Failure to do so would result in the dismissal of the case with prejudice, meaning that it cannot be brought up again.

The Epoch Times reached out to the attorneys representing the plaintiffs to ask whether they would amend the complaint and refile it but did not hear back before publication.