Legal Principle at Issue
Whether a corporations public relations campaign refuting working conditions at its plants is commercial speech entitled to reduced First Amendment protection or noncommercial speech entitled to traditional free-speech protection.
Petition denied or appeal dismissed. Petitioning party did not receive a favorable disposition.
In 1996 and 1997, various media outlets report on allegedly unsafe working conditions at Nike facilities in Southeast Asia. Nike responds to these allegations and negative publicity with a series of press releases, letters to university presidents and athletic directors and editorial advertisements. These documents deny that Nike mistreats workers, subjects them to unsafe working conditions and fails to pay proper overtime pay.
In 1998, consumer activist Marc Kasky files a lawsuit against Nike and five of its corporate officers in San Francisco Superior Court, alleging negligent misrepresentation, intentional or reckless misrepresentation, unlawful business practices, and false advertising. The lawsuit claims that Nike violated state consumer laws prohibiting false advertising and unfair competition. Nike files a demurrer (motion to dismiss) on First Amendment grounds.
In 1999, a trial court dismisses the suit on First Amendment grounds. A state appeals court affirms this ruling next year in Kasky v. Nike, Inc., 79 Cal. App. 4th 165, 93 Cal. Rptr. 2d 854 (Cal.App. 2000). The California appeals court disagrees with plaintiffs theory that Nikes expression is commercial speech deserving reduced First Amendment protection. The court writes that a public relations campaign focusing on corporate image, such as that at issue here, calls for a different analysis than that applying to product advertisement. Instead, the court determines that Nikes speech is noncommercial speech and public dialogue on a matter of public concern.
On May 2, the California Supreme Court reverses in Kasky v. Nike, Inc. , 27 Cal. 4th 939, 45 P.3d 243 (Cal. 2002) by a vote of 4-3. The majority determines that because the messages in question were directed by a commercial speaker to a commercial audience, and because they made representations of fact about the speakers 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.
Nike appeals to the U.S. Supreme Court, which agrees to hear the case. The Court schedules oral arguments for April 23, 2003.