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Sports Law Development of the Week: Skechers Sues Adidas Over Involvement in FBI-NCAA Probe

Sports Law Development of the Week: Skechers Sues Adidas Over Involvement in FBI-NCAA Probe

By: Cameron Miller

The FBI’s investigation into recruiting practices in men’s college basketball continues to cement itself as one of the more wide-ranging sports law cases in recent memory. In recent weeks, the U.S. Attorney’s Office for the Southern District of New York, which is prosecuting the case, expanded their charges against the various defendants with the filing of superseding indictments; another AAU coach was charged and is now cooperating with federal authorities; and the Commission on College Basketball, which the NCAA formed in response to the FBI’s probe, released its report and recommendations.

The fallout widened even further last week, as shoe and apparel company Skechers sued rival Adidas over its involvement in the FBI case. Central to Skechers’ complaint, filed in California federal court on Wednesday, is its allegation that by funneling money to prospective college basketball players to attend an Adidas-sponsored school, Adidas “increase[d] the value of its brand and deceive[d] consumers into believing that athletes are selecting adidas-brand collegiate sports programs and signing endorsement deals with adidas on the basis of superior quality or brand identity.” The public was misled, Skechers asserts, because “Consumers and the public do not reasonably expect that Defendant adidas secures its endorsement deals through illegal conduct that violates NCAA rules regarding recruitment, amateurism, and athletics eligibility.”

            Skechers advances three causes of action:

  1. False Advertising & Unfair Competition under the Lanham Act

Here, Skechers argues that Adidas’ payments to the prospective college basketball players has already given and has the potential to give the false impression that those players “are selecting adidas-branded collegiate sports programs and products on the basis of superior quality or brand identity.”

  1. False Advertising under California state law

Skechers then claims that by paying the prospective college athletes, Adidas secures their endorsement without regard to the “superior quality or brand identity,” thereby burnish[ing] its reputation in a manner that Plaintiff Skechers cannot.”

  1. Unfair Advertising under California state law

It is also argued that, by paying the athletes to attend Adidas-sponsored schools and not disclosing that fact, Adidas violated Federal Trade Commission guidelines, which require disclosures "[w]hen there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience)."

The FBI-NCAA case has already encompassed or implicated a number of legal domains, including criminal, antitrust and contract law. With the Skechers lawsuit, it adds another: business law. Whether these theories are legally defensible, however, remains to be seen.

Amongst the several potential issues confronting Skechers’ claims is the validity of its assertion that consumers believe that college basketball players choose Adidas-sponsored schools based on the “superior quality or brand identity” of its gear/apparel. None of the albeit-limited research cited by Skechers supports that proposition. And while the complaint states that the players who received payments “in fact affiliate themselves with adidas because of improper payments made by adidas,” it is certainly possible that those athletes would have chosen the school anyway for completely unrelated reasons, such as the quality of the coaching or the perennial competitiveness of the school’s basketball team. The complaint also refers to the payments Adidas made to the players as illegal—yet that question is very much in flux.

All of these issues are sure to be explored in the coming months as Skechers and Adidas once more take their rivalry to the courtroom.

Cameron Miller is a 2016 graduate of Stanford University and earned a Master's in Sports Law & Business from Arizona State University in 2017. He is the Sports Lawyers Association's Research Assistant.


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