Supreme Court to weigh free speech for businesses in Nike case

When the U.S. Supreme Court convenes this week, the justices will consider one of their most important First Amendment tests in years and it all started in Marc Kasky’s San Francisco living room.

The 59-year-old Kasky read an article that questioned Nike’s labor practices, then he decided to borrow the company’s favorite slogan and “Just Do It.” In 1997, he sued the shoe Goliath on behalf of everyone in California, claiming consumers were being duped by Nike’s defense of its overseas business practices and proclamations of a squeaky clean corporate image.

The suit was supposed to shine a light on controversy over conditions inside Nike’s foreign factories. Instead, the case has produced such a thicket of legal questions over what businesses can and cannot say in public statements that the Supreme Court is expected to rewrite the rule book for how much corporate speech is protected by the First Amendment – even when a company may be stretching the truth.

“For me, it wasn’t a big, dramatic act,” Kasky said of his lawsuit. “I felt they were being unfair to mislead people. I had no idea at the time that it would get to the Supreme Court.”

The case gets to the Supreme Court on Wednesday, when justices hear arguments in Kasky’s lone crusade against one of the nation’s best-known brand names and its omnipresent “Swoosh” logo. The case has taken on major free speech implications since a sharply divided California Supreme Court ruled last year that Nike could be sued under a state consumer protection law for allegedly making false statements about its labor practices.

In essence, California’s high court vastly expanded the concept that commercial speech deserves far less First Amendment protection than other forms, such as political or personal speech.

To underscore the importance of the case, the maker of sports apparel and shoes, based in Beaverton, Ore., has amassed an array of support that includes some unlikely alliances. Among others, the company is backed by the Bush administration, the American Civil Liberties Union, dozens of media outlets, corporate America and the AFL-CIO.

These groups warn that companies and organizations would be stifled from saying anything about themselves, and would even be unable to defend themselves against public criticism for fear of being sued for making an inaccurate statement.

“The California Supreme Court decision is really sweeping in its threat and chilling effect on freedom of speech,” said one of Nike’s lead attorneys, prominent Harvard University law professor Laurence Tribe, who is representing the company with former U.S. Solicitor General Walter Dellinger. “It burns the First Amendment on the altar of First Amendment protection.”

For his part, Kasky considers the worries about threats to free speech overstated. He views the case as a simple matter of protecting consumers against corporate deceit. And while Kasky doesn’t enjoy Nike’s roster of support, he is not alone in his fight.

California Attorney General Bill Lockyer, joined by 17 other states, filed a brief earlier this month supporting Kasky and urging the U.S. Supreme Court to uphold the California Supreme Court’s ruling. In that brief, the states maintain that the case is not about free speech, but rather “Nike’s ability to exploit false facts to promote commercial ends.”

“I believe the concerns expressed are really overblown,” said Deputy Attorney General Ronald Reiter, chief author of the brief. “We have a company talking about itself. It’s difficult to see why holding them to the truth would cause any kind of calamity.”

The conflict boils down to whether the statements it made to defend its labor practices are commercial speech, which falls outside traditional free speech protections and is vulnerable to consumer protection laws like California’s tough statutes against unfair business practices and false advertising.

Although its precedents have been murky, the U.S. Supreme Court has generally held that what a company says about its products is commercial speech that does not fall under the First Amendment, particularly if the message is related to a “commercial transaction.” But Nike maintains it wasn’t talking about its basketball shoes, only responding to reports of labor abuses in other countries in an open, public debate about operating in a global economy.

When a spate of media reports questioned Nike’s labor practices in places such as Vietnam, China and Indonesia, the company responded with a flurry of press releases, letters to newspapers and direct statements to athletic directors and universities that make the Nike swoosh a sign of college athletics.

Among other things, the public campaign said that Nike not only treated its overseas workers well, but typically paid them better than local wage laws required, offered them quality health care and protected them against labor and sexual abuses. Kasky’s lawsuit challenged those claims.

Three justices disagreed, led by Justice Janice Rogers Brown, who urged the U.S. Supreme Court to reshape its “black and white, all or nothing” approach to excluding commercial speech from First Amendment protections and find a middle ground. Unless the Supreme Court fixes the problem, Brown warned, “either the voices of businesses in the public debate will be effectively silenced, or businesses will be able to dupe consumers with impunity.”

In the end, Kasky is hoping the U.S. Supreme Court’s conclusion gives him a chance to finish what he started. Kasky filed his lawsuit under a state law that allows citizens to sue as “private attorney generals” on the public’s behalf, seeking to force Nike to relinquish some of its profits that he believes could be linked to its representations about its business methods.

“I never envisioned it being a First Amendment case,” Kasky said. “But their actions propelled this into a Supreme Court case. What’s happened in five years is that the importance of being truthful has been elevated in my awareness. To me, this is just part of being a citizen.”