By Kirsten Murphy, Silha Fellow
On Jan. 10, 2003, the U.S. Supreme Court agreed to review a controversial California Supreme Court decision, Nike, Inc. v. Kasky, No. 02-575, involving the shoemaker Nike and a California activist. The Supreme Court of California ruled on May 2, 2002, in Kasky v. Nike, 45 P. 3d 243 (Cal. 2002) that Nike's statements regarding its overseas labor practices constituted commercial speech. Because Nike's speech was found to be commercial, and therefore entitled to less First Amendment protection, the California court ruled that a claim against Nike for violation of California unfair trade practice and false advertising laws could go forward. If the U.S. Supreme Court upholds the decision, corporations like Nike that sell products in California could be held liable under the California laws for statements considered commercial speech.
The controversy over Nike's overseas factories began in 1996 when numerous reports emerged that Nike ran "sweatshops" in China, Vietnam and Indonesia, as well as allegations of substandard wages and physical abuse of factory workers. Nike responded by launching a public relations campaign: writing letters to editors, taking out full-page advertisements and handing out pamphlets.
San Francisco activist Mark Kasky brought a claim in Superior Court in San Francisco in April 1998 under California unfair trade practice and false advertising laws against the Oregon-based Nike for "false and misleading" statements relating to working conditions in the company's Southeast Asia factories. The laws allow citizens to bring such lawsuits as private attorney generals on behalf of the public. Kasky argued that because Nike made false statements in order to sell its products, the company should be forced to disgorge all profits made in California.
Nike claimed that the case should be dismissed because the statements should be treated as political speech, protected by the First Amendment. The California Supreme Court disagreed. In a 4 to 3 decision, the court decided that the state law applied and the case could go forward because Nike's statements were factual and promotional.
Nike's statements constituted commercial speech, held the court, a category of expression that the U.S. Supreme Court traditionally has granted less First Amendment protection than noncommercial speech. One rationale for the dichotomy between commercial and noncommercial speech is that companies are in the best position to verify the truth of the public statements they make. Therefore, the theory is that corporate speakers do not need as much protection against liability for speech because they themselves can easily check to ensure that they are accurately representing their company or products.
The majority opinion written by Justice Joyce L. Kennard denied that the decision would potentially chill corporate speech on matters of public concern. "Our holding, based on decisions of the United States Supreme Court, 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 enterprise, to promote and defend its sales and profits, makes factual representations about its own products or its own operations, it must speak truthfully," Kennard wrote.
In their dissenting opinions, Justices Ming W. Chin and Janice R. Brown argued that Nike's speech was political speech on an issue of global concern. Moreover, argued the dissenters, the majority decision leaves Nike defenseless against its critics. "Handicapping one side in this important worldwide debate is both ill considered and unconstitutional. Full free speech protection for one side and strict liability for the other will hardly promote vigorous and meaningful debate," wrote Chin.
Nike hired Harvard Law School Professor Laurence Tribe and former Solicitor General Walter Dellinger to argue the case before the U.S. Supreme Court. The lawyers have contended that Nike must be allowed to speak out on a global issue with the same freedom granted to its critics. Thirty-two media organizations joined an amicus brief urging the Supreme Court to accept review. The Silha Center was a signatory to the brief supporting the petition for certiorari, available online at http://www.dwt.com/practc/com_med/kasky.pdf as well as the Silha Center's Web page at http://www.silha.umn.edu/resources.htm. Other signatories to the brief include CNN, The New York Times and The Washington Post.
A second amicus brief was filed on the merits of the case on Feb. 28, 2003. Signed by forty media organizations including newspapers, magazines, broadcasters and professional organizations, as well as the Silha Center, the brief is posted online at http://www.dwt.com/pdfs/kasky-final.pdf.
The brief argues that the California Supreme Court's decision would inhibit the ability of the media to cover issues of public concern regarding corporations. If the Court upheld the California court ruling, the brief urges, journalists would be hard pressed to find corporate representatives who would be willing to talk to them: "Businesses, big and (even more so) small, would be deterred from speaking on issues concerning their operations, or they would offer only bland, indisputable claims, for fear of being held liable for good faith errors or unintended but potentially 'misleading' implications."
The brief also argues that the California court went too far in expanding the definition of commercial speech beyond statements that do no more than propose commercial transactions. The California court's expanded definition of commercial speech drastically limits the ability of corporations to make public statements on public issues, amici contend. "[A] company's speech regarding its corporate culture, such as Nike's speech here, is a public statement in which business is an essential but subordinate component. When a company's public statements are designed in part to participate is such public debates, this Court should refuse to allow a state to substitute a strict-liability consumer-protection regime for the First Amendment's preferred process of investigation, counterspeech and reflection."
The brief further argues that the "Kasky decision will seriously hamper the media's ability to obtain these critical business-oriented statements," depriving the public of important information. Corporations would refrain from speaking to the media, out of fear of making factual errors. "Because issues concerning companies' 'business operations' are increasingly fundamental to the world's social and political landscape, the withdrawal of voices on those issues from the media would deprive the public of vital information," the brief concludes.
The Supreme Court's decision to grant certiorari is unusual because generally the Court does not do so until there has been a final resolution of the case. Many observers wonder whether the Court will reform the commercial speech doctrine, which is often criticized as incoherent. Members of the Court, notably Justice Clarence Thomas, have expressed interest in ending the bifurcation of commercial and noncommercial speech and granting full protection for commercial speech. The Court is expected to hear arguments in April and rule on the case by the end of the spring term, in late June 2003.