Skechers cites NC State's Dennis Smith in lawsuit that accuses adidas of paying players

A legal spat among apparel companies has produced a lawsuit tied to the ongoing federal investigation into corruption in college basketball.

In the lawsuit, Skechers accuses adidas of false advertising and unfair competition related to the college hoops scandal in a complaint filed Wednesday in the U.S. District Court for the Central District of California, Western Division.

The lawsuit, first reported by the Courier Journal, alleges that adidas “engaged in a deliberate, deceptive and illegal campaign to prop up the reputation and supposed brand appear of its footwear products.”

The allegations go on to say adidas created an appearance that top-caliber basketball players, including former N.C. State guard Dennis Smith Jr., chose its products, when in reality the company “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 (“NCAA”) rules.”

An April 10 federal indictment alleges Jim Gatto, a former adidas executive, helped funnel $40,000 from the apparel company to an N.C. State basketball player's father, believed to be Dennis Smith Sr. The money was given to an unnamed N.C. State basketball coach by an adidas consultant, according to the indictment. The coach represented that he had delivered the money to the father of Dennis Smith Jr., who was a star for the Wolfpack before leaving for the NBA after one season.

Dennis Smith Sr. and Dennis Smith Jr. were not named in the federal indictment.

In the Skechers lawsuit, it is contended that just as Skechers had passed adidas in U.S. market share in sports footwear, adidas “engaged in a pattern of wide-ranging misconduct” including improper payments to top recruits.

The lawsuit states that adidas, concerned that Smith might not honor his commitment to N.C. State, conspired to funnel the $40,000 to Smith Jr.’s father to assure he would play for the Wolfpack and promise to sign a sponsorship deal with adidas once in the NBA.

The lawsuit states that in his 32 games for the Pack as a freshman, Smith Jr. consistently wore footwear and clothing “with prominent adidas logos both on and off the court.” It also noted most, if not all of the games were televised, adding further exposure to Smith's use of adidas products.

The lawsuit stated that after Smith was made a first-round draft pick by the Dallas Mavericks in June 2017, the NBA aired a two-minute highlight reel of Smith, in his adidas gear.

“Maintaining the relationship with Smith was extremely important to adidas, which the company had vigorously promoted,” the lawsuit stated.

While Smith later signed a three-year endorsement deal with Under Armour, the suit stated adidas further promoted itself with Smith by posting 75 photos of Smith in adidas products on its website.

Adidas and Skechers have other history in the courtroom, even some ongoing this week. On Thursday, a U.S. appeals court ruled in a case in which they were in dispute over sneaker design rights, according to a Reuters report.

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