Adidas Secures Definitive Victory in the Multi Billion Dollar Yeezy Dispute

Background of the lawsuit HRSA-ILA Funds, an Adidas shareholder, filed a putative class action on behalf of “all others similarly situated” against Adidas AG and Harm Ohlmeyer, with Kasper Rorsted named as a defendant in the district court.

The fund alleged that Adidas had a “significant partnership” with Ye and Yeezy, which it terminated in Fall 2022 after public backlash to Ye’s antisemitic and other improper behavior, and that the fallout and end of the partnership contributed to a drop in Adidas’s share price.

Legal standards the court applied To survive dismissal, a section 10(b) claim must meet heightened pleading standards under Federal Rule of Civil Procedure 9(b) and the Private Securities Litigation Reform Act of 1995, including stating with particularity what was said, why it was misleading, and facts supporting a strong inference of scienter.

A section 10(b) claim also requires six elements: a material misrepresentation or omission, scienter, a connection with the purchase or sale of a security, reliance, economic loss, and loss causation; failure on material misrepresentation or scienter alone is enough to dismiss. Why the Ninth Circuit rejected the business partner…