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Under the Constitution, political speech is the most protected type of speech. Commercial speech, although protected by the Constitution, is entitled to far less protection. For example, false or misleading advertising is not protected speech, but false or misleading political speech is. In short, the government may regulate commercial speech far more than political speech.

Nike had created advertisements, written letters, and issued press statements to its customers, potential customers, and the public generally, defending its overseas practices. In 1998, Marc Kasky, a San Francisco labor activist, sued the company for false advertising, claiming that the company had lied to the public.  Kasky alleged that Nike ran Third World sweatshops to produce its products and did not, as the company claimed, protect workers' rights overseas. (See "Can Press Releases Be Considered Commercial Speech" in the Winter 2003 issue of the Silha Bulletin.)

Last year, the California Supreme Court ruled that Nike's speech was commercial speech after applying a three-part analysis which looked to the speaker, the intended audience, and the content of the message. (See Kasky v. Nike, Inc., 45 P.3d 243 (Cal. 2002)) The court held that advancing an economic transaction was not a necessary condition for speech to be commercial. Justice Joyce Kennard, writing for the court, opined, "Our holding in no way prohibits any business enterprise from speaking out on issues of public importance or from vigorously defending its own labor practices. It means only that when a business . . . makes factual representations about its own products or its own operations, it must speak truthfully."

Nike sought review by the U.S. Supreme Court of the California high court's decision. Over forty large media companies, including the Associated Press, The New York Times, The Washington Post, ABC, CBS, NBC, Time, and Newsweek – filed friend of the court briefs in support of Nike, claiming that First Amendment protections of free speech would be lessened should Nike be found liable. The Silha Center also filed an amicus brief in the case, available online at www.silha.umn.edu.

The U.S. Supreme Court granted certiorari and heard oral arguments, but ultimately declined to rule on the issues. In June, the high court ruled that it erred in granting review of the lawsuit, dismissing the case and sending it back to the California courts.

Justice John Paul Stevens, joined by Justices Ruth Ginsburg and David Souter, wrote that the California Supreme Court's decision was not "final," and that the truth or falsity of Nike's statements had not been evaluated by the court. He reminded the parties, however, that the high court has long provided "broad protection for misstatements about public figures that are not animated by malice."

Justices Stephen Breyer and Sandra Day O'Connor would have decided the merits of the case, writing that it was "highly probable" that the California law "disproportionately burdens speech" and was unconstitutional. Justice Anthony Kennedy also dissented from the Court's decision to return the case to California without a substantive ruling.

The settlement of the case leaves undecided the limits of commercial speech that includes political statements.

In a statement released to the media regarding the settlement, Nike said, "The two parties mutually agreed that investments designed to strengthen workplace monitoring and factory worker programs are more desirable than prolonged litigation." Patrick Coughlin, Kasky's lawyer, said his client was "satisfied that the settlement reflects Nike's commitment to positive change where factory workers are concerned."

The Fair Labor Association, formed in 1999, includes 179 universities, human rights organizations, consumer groups and various companies.

—Thomas Corbett
Silha Research Assistant