Friday, May 3, 2002
S.C. Limits Free Speech Protection for Nike Ad Campaign
By KENNETH OFGANG, Staff Writer/Appellate Courts
Athletic shoe giant Nike, Inc.’s public relations campaign in defense of its labor practices in the Asian countries where its products are made is a form of commercial speech, the California Supreme Court ruled yesterday.
In a 4-3 decision, the justices overruled a First District Court of Appeal panel and held that the company’s First Amendment defense to a private citizen’s suit against the company for unfair competition and false advertising must be judged by the same rules that govern commercial advertisements generally.
“Because the messages in question were directed by a commercial speaker to a commercial audience, and because they made representations of fact about the speaker’s own business operations for the purpose of promoting sales of its products, we conclude that these messages are commercial speech for purposes of applying state laws barring false and misleading commercial messages,” Justice Joyce L. Kennard wrote for the majority.
Kennard was joined by Chief Justice Ronald M. George and Justices Kathryn M. Werdegar and Carlos Moreno.
Justice Ming Chin, joined by Justice Marvin Baxter, dissented, saying the majority was silencing one side of the debate on the issue of Nike’s labor practices while allowing the other its right of “robust” argument.
Justice Janice Rogers Brown wrote a separate dissent, saying the ruling “violates fundamental principles of First Amendment jurisprudence by making the level of protection given speech dependent on the identity of the speaker—and not just the speech’s content—and by stifling the ability of certain speakers to participate in the public debate.”
The ruling sends Marc Kasky’s lawsuit back to the First District’s Div. One for reconsideration. The panel previously ruled that Nike had a complete First Amendment defense and affirmed San Francisco Superior Court Judge David Garcia’s order of dismissal.
The case drew a good deal of attention from business, labor, and civil liberties groups and from public officials. Attorney General Bill Lockyer, the California Labor Federation, and the Sierra Club filed amicus briefs supporting Kasky, while Nike was backed by the Pacific Legal Foundation, the Products Liability Advisory Council, the Civil Justice Association of California, and the ACLU’s Northern California affiliate.
Although Nike is a U.S.-based company, its factories are owned by South Korean and Taiwanese firms, and are located in those countries, China, Thailand, Indonesia and Vietnam.
Court records show that 300,000 to 500,000 Nike employees work to manufacture the shoes and other athletic gear in Asian countries.
Although a Nike-hired consulting firm reported favorable working conditions at the factories, other investigators reported poor health conditions, 11- to 12-hour work days, compulsory overtime, violation of minimum wage laws, exposure to dangerous levels of dust and toxic fumes, and employment of workers under the age of 16.
A series of newspaper and television reports in 1996 and 1997 put additional pressure on the company for its overseas labor record.
Nike fought back with a costly public relations campaign that characterized the company as a leader in the fight to improve working conditions in the host countries. Press releases detailed answers to the allegations, as did a series of letters to collegiate athletic directors.
Kasky sued over those releases and letters, alleging that Nike misrepresented the facts when it asserted that workers are not subjected to corporal punishment or sexual abuse, that the laws and regulations on wages, hours, health and safety were observed, that pay averaged double the minimum wage in Southeast Asia, and that employees receive free meals and health care and a “living wage.”
Prior to 1975, commercial speech was generally considered to be outside the scope of First Amendment protection. But the high court suggested that year, in Bigelow v. Virginia (1975) 421 U.S. 809, that some level of protection was appropriate, and the next year, the justices held in Va. Pharmacy Bd. v. Va. Consumer Council (1976) 425 U.S. 748, that Virginia could not ban advertising by legal abortion providers located in New York.
Subsequent cases under both the U.S. and California constitutions have held that those who engage in commercial speech are entitled to protection similar to that enjoyed by non-commercial speakers unless the speech is false or actually or inherently misleading.
Nike’s communications on the “sweatshop” issue, Kennard said, are clearly commercial speech. Nike is a commercial speaker, and the communications were “intended to reach and influence actual and potential purchasers of Nike’s products” on the subject of its own business practices, the justice said.
The government, she added, has an interest in regulating speech concerning the origin or manufacture of goods, as a matter of consumer protection. She cited federal laws making it unlawful to falsely identify the country of origin of goods, to label goods as being made by blind or Native American workers when they were not, or to falsely identify “the kind, character, or nature of labor employed” in making it.
Chin argued in dissent that the “considerable public interest and scrutiny” of Nike’s labor practices placed its communications on the subject beyond the realm of commercial speech. “Handicapping one side in this important worldwide debate is both ill considered and unconstitutional,” he wrote.
Brown argued that Nike’s statements “are more like noncommercial speech than commercial speech.” Those “cannot be separated from its noncommercial statements about a public issue, because its labor practices are the public issue.”
Nike attorney David Brown told the Associated Press he may ask the U.S. Supreme Court to review the case.
The case is Kasky v. Nike, Inc., 02 S.O.S. 2137.
Copyright 2002, Metropolitan News Company