WASHINGTON — Attorneys for Nike and the Bush administration urged the Supreme Court on Wednesday to nix a California truth-in-advertising law they say could stifle corporations from defending themselves against critics.
This story first appeared in the April 24, 2003 issue of WWD. Subscribe Today.
At issue is whether commercial speech — in this case, Nike press releases, letters to the editor and advertorials issued in defense of anti-sweatshop activists —is protected by the First Amendment’s free-speech guarantees.
“Speech in the marketplace of commerce is valuable. It’s valuable for consumers,” argued Theodore Olson, U.S. solicitor general.
If Nike or other corporations can’t freely debate burning issues like the effects of globalization, then laws like California’s will be chilling “conversation stoppers” and businesses will be forced to “talk in vague generalities,” said attorney Laurence Tribe, a Harvard professor representing Nike.
The case against Nike started in 1998 when San Francisco activist Marc Kasky sued the global sneaker maker alleging that Nike was misrepresenting working conditions at its Southeast Asian contractors. California laws regulating unfair competition and false advertising say companies can’t disseminate advertising that is false or misleading.
Kasky based his lawsuit on a 1997 Ernst & Young audit, commissioned by Nike, that found employees at a large Vietnam contractor were exposed to cancer-causing toulene and suffered a high rate of respiratory ailments. Kasky’s case was dismissed by the trial court and a state appeals court also sided with Nike.
However, a divided state Supreme Court rejected the First Amendment defense and ordered the Kasky lawsuit to proceed. That court drew no distinction between a company’s rebuttal of critics and product advertising. “Its intended audience was primarily the buyers of its products,” the court’s majority concluded.
Nike appealed to the U.S. Supreme Court, asserting the company’s free-speech rights and questioning the part of California’s law that allows citizens to lodge false advertising cases instead of the government.
“Anyone who possesses the filing fee…has the power to advance their own agenda,” Olson said. “The potential for abuse is difficult to overstate.”
Kasky’s lawyer, Paul Hoeber, argued that what entity files a claim makes no difference and noted how, aside from California allowing citizens to file cases, its false advertising law is the same as the federal government’s.
Kasky “is in the same shoes as the FTC,” Hoeber said.
As is common, the justices showed no sign of how they might decide the case, which could range from the court sending the case to the trial court to be heard, to defining when commercial speech is protected by the Constitution. How the court might redefine commercial speech has drawn widespread attention among corporations in the U.S. and European Union, as well as newspapers, Madison Avenue and public relations firms.
At times, the justices seemed to strain to sift through the various claims made by either side.
Justice Ruth Ginsburg seemed to be bothered that the truthfulness of Nike’s claims never got the chance to be weighed by a jury. “The problem with this case is that it comes to us at such a preliminary stage,” Ginsburg said.
Justice Stephen Breyer appeared frustrated that the attorneys before him offered no solution about how to differentiate between protected and unprotected commercial speech.
“The First Amendment is designed to protect all participants in a public debate,” Breyer said, noting how the justices might have to distinguish between statements made to sell a product and those made to advance a corporate view on a public debate.
Outside the court, before and after the arguments, there was plenty of lively debate about Nike and the case. Anti-sweatshop activists arrived early with a 10-foot replica of a Nike shoe and shouted the company was “stomping” on the Bill of Rights.
At one point after the hearing, Tribe engaged in debate with Jeff Milchen, director of Reclaimdemocracy.org.
Milchen accused Tribe of “trying to spin this into a debate as to whether globalization is good or bad. Mr. Kasky’s lawsuit is about facts and whether Nike represented its practices accurately.”
Countered Tribe: “I don’t think anyone can convince me that by filing a piece of paper you can shut down important public debate.”