UCLA has filed a lawsuit against Under Armour that claims the apparel company defrauded the school.
The Bruins are seeking $200 million in damages, alleging that Under Armour overstated their financial standing before luring the Burins into a $280 million contract that it later breached by failing to make scheduled payments or deliver its product as promised.
The lawsuit comes two months after Under Armour notified UCLA that it was terminating its 15-year contract with the school. Under Armour still owes $200 million on the contract.
In April, Under Armour approached UCLA about pushing out its due payment to July as part of a cash-flow shortage. In June Under Armour said it was ending the contract by invoking the force majeure clause as a result of impacts related to the COVID-19 pandemic; because the UCLA baseball team had completed fewer that 50% of its games last season; and that the school hadn’t taken reasonably appropriate actions in response to the Varsity Blues college admissions scandal.
UCLA rejected all three claims by Under Armour, which resulted in the current lawsuit.
“It is unfortunate that Under Armour is opportunistically using the global pandemic to try to walk away from a binding agreement it made in 2016 but no longer likes,” Mary Osako, UCLA’s vice chancellor for strategic communications, said in a statement that was reported on by the Los Angeles Times. “UCLA has met the terms of the agreement, which does not require that games in any sport be played on a particular schedule. We filed this lawsuit in order to support our student-athletes and the broader UCLA community, including the athletic department that has brought 118 national championships to Westwood.”
Under Armour replied with a statement, saying it was disappointed that UCLA had filed the suit but that it was confident in its decision to end the contract.
“We sought and remain open to working out a reasonable and appropriate transition for the university, and most importantly for the student-athletes,” Under Armour said. “In fact, at UCLA’s request after the termination of the agreement, Under Armour continued to deliver athletic products for the 2020-2021 school year because we support athletes, even as it remains uncertain when sports will resume.
UCLA is arguing that had it known Under Armour’s actual financial position it would have looked elsewhere for an apparel contract.
“Had UCLA known that Under Armour was making false financial statements in violation of law and SEC regulation, and falsely reporting its sales reported from quarter to quarter,” the school wrote in its lawsuit, “UCLA would never have entered into the Agreement and/or would have terminated the Agreement at a time when other similarly-attractive sponsorship agreements could have been negotiated for UCLA.”