A legal battle is brewing between Skechers and Adidas.
Skechers filed a federal court complaint, the first formal action in a civil lawsuit, against Adidas in the U.S. District Court for the Central District of California on Wednesday. It includes counts for false advertising and unfair competition, and is based on the FBI investigation into college basketball corruption, Forbes’ Darren Heitner reports.
A top Adidas executive, James Gatto, was among the 10 men – a group which also included assistant coaches at Arizona, Auburn, USC, and Oklahoma State – who were indicted for their alleged roles in the fraud and bribery scandal.
“Adidas would have consumers, investors, and the public believe that hot, up-and-coming collegiate basketball players, as well as talented young players who move on to the National Basketball Association, choose Adidas’ products due to their supposed superior performance and style,” the complaint states. “In fact, however, Adidas has coopted young players into wearing and expressly or implicitly endorsing its products by funneling hundreds of thousands of dollars in secret payments to players, their coaches, and/or family members in violation of National Collegiate Athletic Association rules.”
Skechers goes on to complain that it has been “gravely harmed by Adidas’ massive, secret payments to young basketball players, not only in their athletic performance division but in all footwear categories in which they compete.”
Skechers is asking for recovery of Adidas’ “ill-gotten profits, damages for lost sales and diminished brand value and increased advertising and marketing costs, and an injunction preventing Adidas from making further illegal, undisclosed endorsement payments to amateur basketball players.”
An Adidas spokesperson told ESPN the complaint is “frivolous and nonsensical.”
Federal officials accuse Gatto and others of directing payments to prep players and their families in exchange for their commitments to Adidas-sponsored schools.
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