U.S. Supreme Court Wants Nike Lawsuit to Run Its Course in California

In January, the U.S. Supreme Court said it would hear Nike v. Kasky -- a case that could have produced an important ruling on whether or not the First Amendment protects corporate commercial speech. Now, the Supreme Court says it won't hear the case after all. On June 26, the high court issued a one-sentence order declaring it had changed its mind -- that Nike's appeal had been "improvidently granted." The case will head back to California's state court, though experts believe there's a good chance that it will end up at the door of the U.S. Supreme Court in the future.

The court's decision was a setback for a group of prominent media and free expression organizations that filed an amicus brief in support of Nike last November. The groups, including the American Booksellers Foundation for Free Expression (ABFFE), contend that the case has serious First Amendment implications. "We're disappointed that the court couldn't act in a case where First Amendment rights are so clearly jeopardized," said Chris Finan, president of ABFFE. "But we are hopeful that [the Supreme Court] will do so when the case eventually returns to the court.

In October 2002, Nike filed a petition asking the U.S. Supreme Court to review a California Supreme Court ruling holding that the sports apparel giant engaged in false advertising when it launched a public relations campaign to defend its Southeast Asian business operations. The California high court's decision came after California-based environmental activist Marc Kasky charged that Nike violated California's Business and Professions Code when it issued opinion pieces denying negative reports regarding the company's working conditions and wages in its Southeast Asian factories, as reported by ESPN.com. He said the op-ed pieces were equivalent to false advertising under state law and further accused Nike of making at least six statements that it knew to be false in the course of the campaign.

Though two lower courts ruled in Nike's favor, in May 2002, the California Supreme Court overturned the rulings and cited U.S. Supreme Court decisions that approved broader limits on commercial speech. In its ruling, the court defined speech as commercial if it is made by someone engaged in commerce; is likely to reach potential buyers or customers; and involves descriptions of business operations, employment, or manufacturing policies, or other attempts to enhance the image of a company's product.

The court also ruled that Nike could be sued for consumer protection violations based on answers given to reporters' questions, press releases, op-ed pieces, or editorial advertisements. The California Supreme court did not, however, rule on whether or not the statements were, in fact, false or misleading, leading to the Supreme Court's June 26 decision to send the case back to California.

In mid-November, media groups filed an amicus brief in support of Nike's petition to the U.S. Supreme Court. The groups argue that the California court's ruling makes false statements punishable whenever a company spokesman is speaking to a reporter or even when writing letters to the editor. Moreover, Kasky is not claiming that Nike lied, but that the company issued misstatements, raising the possibility that a company can be punished even for statements that it makes in good faith, but that turn out to be false.

The groups fear the California ruling could have a chilling effect on public debate on corporate conduct, thereby depriving the public of important information. --David Grogan