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When Nike Speaks, Is It Always "Commercial Speech"?
The Supreme Court Will Soon Be Asked To Decide

Tuesday, Apr. 15, 2003

The controversy over Nike's treatment of the more than twenty thousand workers in Asian factories who make its products has made it all the way to the U.S. Supreme Court.

On April 23, the Court will hear oral argument in a case that pits California environmental activist Mark Kasky, who is suing on behalf of the general public, against Nike. Kasky claims that Nike violated California's laws against unfair competition and false advertising when it made what he claims to be an inaccurate series of public statements regarding its treatment of the factory workers.

Nike has raised a First Amendment defense to these allegations. It argues that, because its statements are part of an ongoing political controversy and dialogue - in which critics have taken Nike to task for factory working condition, and tried to organize boycotts against it - they are political speech. It therefore has urged the Supreme Court to hold that its statements deserve the full protection of the First Amendment.

But Kasky says no - Nike's speech is not political, but merely commercial. He says the statements are all about money and sales - designed to convince consumers they can buy Nikes in good conscience, and to protect the company's public image so it can make greater profits.

Accordingly, Kasky argues, Nike should be entitled to only modest, if any, First Amendment protection. On this view, Nike's speech was basically just more advertising to target consumers and affect their purchasing decisions. To treat it like speech that occurs during, for instance, a Presidential election campaign is to elevate Nike's speech much higher than it deserves to go.

Who's correct? Of course, the Supreme Court will decide; but in my view, the safe money is on Nike. While it's true Nike's statements were meant to convince consumers to buy its products, that's not all they were meant to do. In addition, even assuming the statements, in isolation, might have been commercial speech, they weren't made in isolation; they occurred within the context of a swirling, highly political controversy.

The Specific Statements at Issue

Specifically, Kasky alleges that Nike repeatedly issued statements claiming, as the California Supreme Court summarized it, "that workers who make Nike products are protected from physical and sexual abuse, that they are paid in accordance with applicable local laws and regulations governing wages and hours, that they are paid on average double the applicable local minimum wage, that they receive a 'living wage,' that they receive free meals and health care, and that their working conditions are in compliance with applicable local law and regulations governing occupational health and safety."

Before Nike spoke out, its critics had accused it of doing exactly the contrary, and mistreating its workers in these numerous ways. Indeed, it was critics' prior statements that had spurred Nike to speak out, as a matter of spin control.

Nike's statements appeared in both paid and unpaid forums, ranging from press releases, to letters to the editor, to private letters to large consumers of Nike goods such as university presidents and athletic directors.

In addition, Nike bought full-page newspaper ads reporting that Good Works International, under contract with Nike, had, after investigation, found no evidence that workers who made Nike products abroad suffered from illegal or unsafe working conditions.

Kasky believes the critics were right all along, and that Nike made false statements to cover up the mistreatment occurring in the factories. He says he will prove that the statements made by Nike in these contexts were false and misleading to consumers - and thus came within state "false advertising" laws.

Kasky also contends that these statements enable the sporting goods giant to unfairly compete with other companies in the same markets, and were thus also illegal under the state law of unfair competition.

The Heated Debate Among The California Supreme Court Justices

The case came to the U.S. Supreme Court from the California Supreme Court. The majority of the court agreed with Kasky, saying that Nike's statements were indeed, commercial speech. The majority pointed to a number of factors supporting its opinion.

First, the majority pointed out, Nike was a commercial speaker - a for-profit corporation engaged in commerce. Second, it addressed its statements, according to the majority, to a commercial audience: potential consumers. Third, it didn't express opinions, but rather made "representations of fact about [its] own business operations for the purpose of promoting sales of its products."

To the majority, it didn't matter that Nike was responding to "charges raised by others and was thereby participating in a public debate." If that was so, it suggested, any commercial speech that caused - or entered - a political fuss might therefore be transformed into political speech.

Nor did it matter to the majority that Nike made plainly political statements - regarding globalization and its merits and effects, and what domestic companies' responsibility for condition in subcontractors' foreign factories should be - side by side with the statements Kasky claims are false. The majority held that the two kinds of statements were not "inextricably intertwined," and that Kasky had done a good job of picking out, and suing upon, only the commercial - not the political - statements in, for instance, the full-page newspaper ad Nike bought to defend itself.

The dissenters analyzed the matter very differently - and, I believe, more persuasively. They pointed out that Nike's critics are entirely protected by the First Amendment, and rightly so; if Nike can't fight back on the same terms, it's quite unfair. Speech that for critics is protected should not be made illegal for Nike.

They also noted that the majority was too quick to assume that Nike was speaking only to its consumers (after all, it wrote letters to newspapers read by the general public, and bought space there), only about its products (not larger questions), and only for the purpose of making sales (not for any broader aims).

As the dissenters noted, it seems, instead, more reasonable to assume that Nike wanted to speak not just to consumers, but to every person who may have heard its critics' charges; wanted to rebut those charges however broadly they reached; and wanted not just to sell more shoes but to protect a now-tarnished image.

Why the U.S. Supreme Court Probably Decided to Review the Nike Case

Now that the case has reached the U.S. Supreme Court, what is likely to happen? To answer that question, it's necessary to provide some background on the commercial speech doctrine.

Time and again, the Supreme Court, has made clear that it believes commercial speech deserves lesser constitutional protection than political speech. This makes a certain amount of sense - and the Supreme Court has offered three basic reasons to explain why.

First, the Court says that it's easier for the speaker to tell if commercial speech is true or false. The idea is that if a company is talking about its own products, it ought to know what it's talking about, so it's fair to penalize it if it doesn't. In contrast, since we want to encourage political debate even by ordinary citizens who may not be expert on the political issues they discuss, we should not penalize political speech

The second reason is that unlike political speakers, commercial speakers, according to the Court, are unlikely to be deterred (in legalese, "chilled") from speaking just because there may be penalties, since they've got to say something about their product if they want to sell it. A political speaker may be scared into silence, but a company has to speak if it wants to survive.

Finally, the third reason is that the government's special power to prevent "commercial harms" - that is, fraudulent business transactions, toxic or defective products and so on - is implicated. Selling someone on a lousy idea while making a political speech is one thing; selling someone a lousy vacuum cleaner, using commercial speech, and knowing the vacuum cleaner doesn't work, is quite another, in the Court's view.

The problem is that the Court has yet to make a clear dividing line between what is commercial versus political speech. And that's where the Nike case could come in: as a forum for the Court to sketch more carefully just where the divide occurs.

But why choose this case, rather than another, to make a general pronouncement about this area of law? Probably, the reason is that the Court may see this as a relatively difficult case. After all, it neatly divided the California Supreme Court - with four Justices seeing the speech at issue as commercial, and three seeing it as political.

If this is the reason the Court chose to review the case, it's a good one: Especially in the First Amendment context, vagueness in legal tests leads to potential speakers being silenced - so that, in a sense, vagueness itself accomplishes a First Amendment violation by chilling constitutionally protected speech.

The Roots of the Doctrine Show Why the Dissenters Were Right

In my view, going back to the roots of the commercial speech doctrine shows why the dissenters were correct. When one considers again its three justifications, they don't really apply.

That is why I believe the Court will - and should - decide in favor of Nike. The rationales for why the Court applies a laxer First Amendment test to commercial speech don't really fit when one looks closely at Nike's statements.

First, there is the "speaker should know about its own products" rationale. But Nike's products were made not by Nike itself, but factory workers employed by subcontractors in foreign factories governed largely by foreign law. It is, thus, at least conceivable that Nike might not have known everything going on in each of these far flung factories, at least until it had Good Works International make its investigation, and later, would have had reason trust to Good Works International that the report it made was true.

Then there's the "Commercial speakers can't be chilled" rationale. But that just doesn't seem to be true in this instance. Nike has to advertise - but it doesn't have to send letters, or buy editorial ads, as it did here. It doesn't make statements like the ones at issue in the normal course of its business. Instead, it did so to participate in an ongoing dialogue with critics. Conceivably, if Nike is liable for the statements here, it may just stick to shoe ads in the future - and thus its speech may be "chilled" after all.

Finally, there's the argument that the state should have the power to prevent "commercial harms." But if Nike's speech was false, did it really cause purely "commercial harm"? Arguably, it would have caused political harm as well - taking some of the steam out of a boycott that was based on political beliefs.

In sum, Nike was not merely hawking, but also spinning. That ought to make a difference - and ought to show its speech was indeed political.

Drawing the Line Between Commercial and Noncommercial speech

What should the Court do to avoid future confusion over what is commercial speech, and what is political speech, respectively?

First, it should draw a "bright line," so political speakers know they are safe to speak, and commercial speakers know they might be liable for damages.

Second, it should address the interpenetration of all our different worlds - "political, personal, and commercial," as one California Supreme Court dissenter summarized it - by defining more broadly what counts as "political."

With MTV "rocking the vote," celebrities speaking out on the war, and ads like Kenneth Cole's plainly making political statements, it's a losing battle to try to claim that only pure political speech counts as political speech. The problem with that position is that in our society, more often than not, political speech is intermixed with other elements, in a complicated message with multiple motives.

In my view, any kind of speech that is arguably political, ought to be deemed political. We imperil our democracy if we make the sphere of fully-First Amendment-protected political speech too small - especially when the reality is that political speech can be found everywhere.

Julie Hilden, a FindLaw columnist, practiced First Amendment law at the D.C. law firm of Williams & Connolly from 1996-99. Currently a freelance writer, she published a memoir, The Bad Daughter, in 1998. Her forthcoming novel Three will be published in the U.S. in August 2003 by Plume Books, in the U.K. by Bantam, and in French translation by Actes Sud.

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