By Wyatte Grantham-Philips, Business Writer

WASHINGTON (AP) --

Adidas is facing a class-action lawsuit from investors who allege the company knew about offensive remarks and harmful behavior from Ye, the rapper formerly known as Kanye West, years before ending its partnership with him.

The German sportsbrand cut ties with its star collaborator in late October, following Ye's antisemitic comments on social media and in interviews.

At the time, Adidas said the company "does not tolerate antisemitism and any other sort of hate speech" and called Ye's remarks and actions "unacceptable, hateful and dangerous."

Weeks before the decision, at Paris Fashion Week, Ye also wore a shirt with a "White Lives Matter" slogan — which the Anti-Defamation League categorizes a white supremacist phrase that originated as "a racist response to the Black Lives Matter movement."

The current lawsuit, filed in U.S. District Court in Oregon on Friday, claims that Adidas was aware of the potential harm that Ye's problematic behavior could cause the company for some time — pointing to earlier incidents, including 2018 comments where Ye suggested slavery was a "choice" and reports of Ye making antisemitic statements in front of Adidas staff.

The lawsuit — which represents people who bought Adidas securities between May 3, 2018, and February 21, 2023 — also alleges that Adidas failed to take precautionary measures to limit financial losses if the Ye partnership were to end.

The suit accuses Adidas, the company's former chief executive officer Kasper Rørsted and chief financial officer Harm Ohlmeyer of being aware of or "recklessly" diregarding false or misleading statements surrounding the partnership with Ye, who is not listed as a defendant in the suit.

The suit cites a Wall Street Journal article from November, which reported that executives, inlcuding Rørsted, had discussions dating back to 2018 about the risks of Ye's actions and the possibility of cutting ties with the artist.

The complaint also points to annual company reports from 2018 through 2021 which, the suit says, failed to disclose risks related to Adidas' partnership with Ye.

Adidas has pushed back on the allegations made in Friday's suit.

"We outright reject these unfounded claims and will take all necessary measures to vigorously defend ourselves against them," Adidas said Monday in a statement sent to The Associated Press.

Friday's suit seeks unspecified damages, the payment of legal fees and "further relief as the Court may deem just and proper."

During his collaboration with Adidas, Ye designed the widely successful Yeezy line. According to Friday's suit, by 2019, sales of Yeezy shoes surpassed $1 billion.

Since cutting ties with Ye, Adidas has lost hundreds of millions of dollars. Ending the partnership cost 600 million euros in lost sales in the last three months of 2022, helping drive the company to a net loss of 513 million euros. The decline, also attributed to higher supply costs and slumping revenue in China, contrasts with profit of 213 million euros in the fourth quarter of 2021.

More losses could be ahead, especially as the company struggles with what to do with the existing Yeezy inventory. In March, the company forecasted a 500 million-euro hit to 2023 profit earnings if it decides not to repurpose the remaining Yeezy products in stock. The company also predicted a 2023 operating loss of 700 million euros.

AP Business Writer David McHugh, based in Frankfurt, Germany, contributed to this report.

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