Judge refuses to dismiss UCLA’s $200-million lawsuit against Under Armour

A Los Angeles Superior Court judge Thursday rejected Under Armour’s attempt to dismiss the lawsuit brought by UCLA seeking more than $200 million in damages after the apparel company backed out of its agreement with the school last year.

Judge H. Jay Ford III gave Under Armour 20 business days to respond to his decision, setting the next court date for Sept. 23.

“Despite Under Armour’s expensive legal maneuvers, UCLA and fair play won today,” said Mary Osako, UCLA’s vice chancellor for strategic communications. “The story of Under Armour’s corporate shenanigans and broken promises that left our student-athletes and the Bruin community out to dry is one that deserves to be told. We’re gratified that the court cleared the way for the case to proceed.”

An Under Armour spokesperson said the company does not comment on litigation.

UCLA sued Under Armour in August 2020, alleging breach of contract after the apparel company reneged on its 15-year, $280-million sponsorship deal with the school that was the most lucrative in the history of college sports.

Under Armour told the school it was invoking the force majeure clause of the contract in the wake of the COVID-19 pandemic that halted college sports and that the UCLA baseball team had completed fewer than 50% of its games, a requirement for one of its core teams.

Ford wrote in his ruling that Under Armour failed to establish that its termination of the agreement was clearly permitted under a force majeure clause.

“The judicially noticeable documents also do not clearly and affirmatively establish that the pandemic rendered it impossible or impracticable for Under Armour or UCLA to perform,” Ford wrote. “At best, they establish the existence of a pandemic and the public response thereto. They do not establish the impact of the pandemic on Under Armour’s or UCLA’s ability to perform under the Agreement.”

Additionally, Ford determined that Under Armour did not clearly establish that it could end its partnership with UCLA because its baseball team missed more than half of its games during the 2020 regular season.

The judge rejected an Under Armour attorney’s contention that UCLA was using force majeure as an excuse for not playing games while also disputing the apparel company’s right to terminate its agreement under the force majeure clause.

“The positions are not necessarily inconsistent,” Ford wrote, “because of the ‘affected Party’ language in the definition of Force Majeure Event. The ‘affected Party’ language allows for the possibility that an event can be a force majeure event for one party but not the other, e.g. if the pandemic only renders one party’s ability to perform impossible or impracticable.”

Ford also dismissed Under Armour’s claims that the lawsuit should be dismissed because of a breach of operating in good faith; lack of specifics as to the company’s alleged intentional and negligent misrepresentation of its financial standing; and a lack of harm to UCLA by Under Armour’s failure to deliver promised products ordered by the school.

After UCLA’s relationship with Under Armour dissolved, the Bruins agreed to a six-year, $46.45-million deal with Jordan Brand and Nike that took effect in July; the school’s football and men’s and women’s basketball teams will wear Jordan Brand while its other 22 varsity sports teams will wear Nike.

Bruins athletic director Martin Jarmond tweeted a photo of a UCLA bag adorned with the Jumpman logo after the judge’s ruling, writing “You win some…you lose some. Trust the process, bet on yourself.”

In May, Under Armour reached a $9-million settlement with the Securities and Exchange Commission regarding claims it had misled investors about its revenue growth from the third quarter of 2015 through the fourth quarter of 2016, which was the period it was negotiating and finalizing its agreement to serve as UCLA’s apparel sponsor.

According to SEC documents, Under Armour used an accounting tactic known as “pull forward” in which it counted $408 million in orders for future quarters to meet analyst sales projections and tout a falsely elevated revenue growth rate.