Nike’s Full Court Press Against Kasky Breaks Down

The Supreme Court capped off a week of surprises and milestones with what looked like one big “Never mind” when it dismissed the Nike v. Kasky “commercial speech” case. But appearances can be deceiving. In fact, the Court’s decision signaled the defeat of Nike’s bid to take Marc Kasky–and any more like him–out of the game altogether.

Kasky, a resident of California, had sued Nike under California’s decades-old consumer protection laws regulating, among other things, false advertising, claiming that statements made by Nike to defend its labor practices were lies. Kasky claimed Nike made false statements about its labor practices and factory conditions because consumers care about these issues and indeed anchor their purchasing decisions on such information. Nike made these statements in letters to the editor of various papers, press releases, paid advertisements (not unlike the one Martha Stewart recently ran), on its Web site and other venues. Such false statements, made for a commercial purpose, Kasky claimed, violated California law.

In order to appreciate the significance of what the Supreme Court did, understand that Nike’s response to Kasky’s claim was, in effect, “So what? Even if everything you say is true, under the First Amendment we’re entitled to lie.” Now that is what you call an “in your face” defense.

This move of Nike’s is what is known in the legal biz as a demurrer, or a motion to dismiss. In order to grant a demurrer, a court must find that, even if everything the plaintiff says is true, the law provides no recourse.

Here Nike wanted a ruling that the First Amendment offered it absolute immunity for any misstatements it may have made, knowingly or unknowingly. The trial court and the intermediate appellate courts in California agreed with Nike. But the California Supreme Court, relying on precedent from the U.S. Supreme Court, disagreed, finding that these statements were made with a commercial purpose and thus were “commercial speech.” Since the late 1970s the Supreme Court has held that “commercial speech”, as long as it was truthful, could enjoy a limited First Amendment protection. Put another way, in the commercial speech area the government could regulate content for its truth –precisely what it cannot do with other protected speech. However, before the Supreme Court created this category no one thought commercial speech was “speech” at all for purposes of the First Amendment.

The California Supreme Court’s decision was bad news for Nike since a failure to win at the motion-to-dismiss stage meant entering into the dreaded realm of discovery. (And who knows what might emerge there? Just ask the tobacco industry.) So, hungry for a win, needing a win, Nike went for the big one, the U.S. Supreme Court. And they had good reasons to believe that they might win.

For several years various corporate interests, particularly those in the advertising, media and image businesses, have urged the high Court to do away with the commercial speech doctrine altogether and to treat commercial speech like political speech. They argued that commercial speech should not be treated as some sort of second-class citizen of speech. And they’ve found at least one ally in Justice Thomas.

Although the Court has (so far) resisted or rebuffed these entreaties, it has nevertheless struck down some attempts to regulate commercial speech (such as Massachusetts’s effort to severely restrict tobacco advertising in the Lorillard case). But the Nike case presented another such opportunity, so its petition was soon joined by a blizzard of briefs–representing not only the usual suspects (advertising and chamber of commerce interests), but garnering support from some undreamed of allies such as the AFL-CIO. Nike might be forgiven for thinking they could rush the play, take control and slam dunk their way to victory, given a line-up like this–especially after the Supreme Court agreed to hear the case, which resulted in another daunting array of amici (friends of the court) briefs, this time balanced by some for Kasky.

Their high hopes, however, were dashed when the Supreme Court dismissed. Dismissal means that the fondest wish of Nike and its amici–that its legal arguments represented the endgame–is over. Now Kasky gets the chance to prove his case with evidence. Whether he can do it is another story. But at least he gets to try.

TAMARA R. PIETY, assistant professor of law at The University of Tulsa College of Law, wrote an amicus (friend of the court) brief against Nike on behalf of The Sierra Club, an environmental organization concerned about “greenwashing,” a form of commercial speech where corporations take an environmentally friendly tone in their advertising, labeling and other public image materials, whether or not those claims are true. She can be reached at: tamara-piety@utulsa.edu

© copyright TAMARA R. PIETY 2003

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