Nike to argue for free speech in ads - challenge of false advertising goes to high courts

Nike to argue for free speech in ads

A challenge of false advertising goes to the high court.

The Associated Press
April 21, 2003

PORTLAND — Nike Inc. is about to argue that corporations have the right to free speech just like individuals. A landmark case on truth in advertising has reached the U.S. Supreme Court after a consumer activist challenged Nike claims about improving conditions at contract factories in Asia.

Marc Kasky filed a lawsuit in California after Beaverton-based Nike declared that it promotes labor rights at the factories it hires to produce its athletic shoes and clothing.

Kasky, a community activist in San Francisco, said he bought a pair of Nike running shoes because the company convinced him through its advertising and public relations campaign that it had insisted on high workplace standards.

But in the months that followed, Kasky read and watched media reports documenting low pay and abuse of workers at Nike contract factories in Asia and said he concluded that Nike had engaged in false advertising.

On Wednesday, the Supreme Court will hear oral arguments expected to lead to a ruling in July that could either extend corporate rights or set tighter limits on corporate speech.

Some critics argue that multinational companies such as Nike have used the courts to claim rights that were intended to apply only to individuals.

The Kasky case presents a clear choice between people and companies, they say.

“If you allow a corporation to claim constitutional protection from government, then you basically say, we the people can’t control our own economics because the corporation has become the dominant institution of our time,” said David Cobb of Reclaim Democracy, a group that opposes constitutional rights for corporations.

“This case is bringing the issue to a head,” Cobb said.

Nike has focused on narrower free-speech issues raised by Kasky’s 1998 complaint. Without First Amendment protection, the company argues, it can’t defend itself against allegations that it tolerates low pay and abuse of overseas workers.

“This case for us is really about a corporation’s right to free speech, pure and simple,” said Vada Manager, a Nike spokesman. “The issue boils down to the same right that individuals who criticize the company’s practices have to engage in free and open debate.”

Nike has legal precedent on its side because the Supreme Court has expanded protection of corporate speech. It also has broad backing, with a range of supporters from the U.S. Department of Justice to the American Civil Liberties Union claiming that a ruling for Kasky would limit public debate.

Lower courts ruled against Kasky. But the California Supreme Court reversed them on the threshold question of free speech, saying that Nike’s advertising and public relations campaign could be regulated under state consumer-protection laws.

Business groups were quick to criticize the California ruling, including advertising, public relations and media firms, which claimed the court’s precedent would force companies to cut the flow of public information to a minimum.

“Even a cursory review of prominent press coverage from the past few years reveals a vast array of corporate speech — on issues ranging from race discrimination to environmental sustainability to product health and safety — that would now be subject to California’s new ‘commercial speech’ dragnet,” media firms wrote in a court brief.

Some members of Congress in the House Progressive Caucus have cast the case as a consumer-rights issue.

“It is critical that the Supreme Court does not severely narrow the definitions of commercial speech, giving corporations greater reign to make false claims to consumers and the public about their products, working conditions and corporate philosophy,” Rep. Dennis Kucinich, D-Ohio, said in a letter to colleagues.

Kasky’s supporters reject that argument, saying that consumer demand would force companies to continue providing information on business practices while the law would reinforce public confidence in the accuracy of corporate reports.

“We ought to treat companies’ statements about social and environmental facts precisely as we treat their statements of financial facts,” said Cynthia Williams, a University of Illinois law professor.