August 11, 2025
Shareholders suing Nike Inc. over what they say was a failed business strategy responded Monday to a motion to dismiss the proposed class action, arguing that they have 19 confidential witnesses who can prove that the company painted an overly rosy picture of its prospective growth.
Suing investors claim that Nike lost them billions of dollars by switching to a business growth strategy in 2020, known as consumer direct acceleration, or CDA, that was a “ticking timebomb.”
While Nike has argued that the allegations amount to “fraud by hindsight” and should be dismissed, shareholders responded Monday that they have the testimony of over a dozen former employees who will say otherwise.
Nineteen confidential witnesses “detail severe, contemporaneous problems in all six CDA components — accounts that are further corroborated by defendants’ later admissions and news reports — undermining their positive public statements when made,” according to a motion opposing dismissal that was filed in Oregon federal court Monday.
Investors, led by the City Pension Fund for Firefighters and Police Officers in the City of Pembroke Pines, Florida, sued in 2024 claiming that a series of poor financial results released by Nike beginning in December 2023 led to multiple stock drops, with the price at one point falling by 20% — the largest such drop in Nike’s history, according to suing shareholders.
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The proposed class is represented by Carol Villegas, Irina Vasilchenko, Matthew Grier, Nicolas Apter-Vidler and Mark Willis of Labaton Keller Sucharow LLP, Jonathan Cohen of DRRT, Steven Toll, Molly Bowen and Margaret Wydman of Cohen Milstein Sellers & Toll PLLC and Timothy DeJong, Keith Ketterling and Cody Berne of Stoll Berne.
Read Nike Investors Say Biz Strategy Was ‘Ticking Timebomb’.