Rules that Nike Cant "Just Do It"
Image Advertising Constitutes Commercial Speech
relations executives and legal counsel at corporations desperately
directing damage control through public statements, press releases
and image advertising should pay close attention to a recent case
decided by the California Supreme Court.
week, the court held in Kasky v. Nike that Nikes responses
to public criticism constituted commercial speech for purposes of
applying state laws barring false and misleading commercial messages.
Although case law recognizes that corporate statements may not be
regulated so long as they are non-commercial, defining the messages
as commercial speech denies them the same level of constitutional
California resident who alleged that Nike made statements to Californians
that were false and misleading about its labor practices and about
working conditions in factories that made its products filed the
lawsuit. Specifically, in press releases, in letters to newspapers,
and in other documents distributed for public relations purposes,
Nike made statements that it found no evidence of illegal or unsafe
working conditions at Nike factories in China, Vietnam, and Indonesia.
s complaint called for Nike to "disgorge all monies .
. . acquired by means of any act found . . . to be unlawful and/or
unfair business practice," and to "undertake a Court-approved
public information campaign" to correct any false or misleading
statement, and to cease misrepresenting the working conditions under
which Nike products are made. Nikes defense included the argument
that the relief plaintiff was seeking "is absolutely barred
by the First Amendment to the United States Constitution and Article
I, section 2(a) of the California Constitution."
trial court and court of appeals characterized the messages as noncommercial
speech. The California Supreme Court reversed (4-3), relying on
U.S. Supreme Court precedent to characterize Nikes messages
as commercial speech.
a "limited purpose test," the court specified the parameters
that define commercial speech by requiring consideration of three
elements: the speaker, the intended audience, and the content of
the message. Applying this test, the court found that "the
messages in question were directed by a commercial speaker to a
commercial audience, and
they made representations of fact
about the speakers own business operations for the purpose
of promoting sales of its products." The court added: "Nikes
speech is not removed from the category of commercial speech because
it is intermingled with noncommercial speech . . .. Nike may not
immunize false or misleading product information from government
regulation simply by including references to public issues.
. . . Here, the alleged false and misleading statements all relate
to the commercial portions of the speech in questionthe description
of actual conditions and practices in factories that produce Nikes
productsand thus the proposed regulations reach only that
a strongly worded dissent from the slim California Supreme Court
majority, Justice Chin argues that the public has a right to receive
information on matters of public concern and that the corporate
identity of the speaker should not deprive the speech of its "clear
entitlement to protection." Justice Chin further states that
"characterizing Nikes speech here as commercial speech
is inconsistent with the high courts constitutional jurisprudence
. . .." Justice Brown, in a separate dissent, calls upon the
U.S. Supreme Court to resolve the "chaos" it has created
because it "has expressly refused to define the elements of
non-commercial speech is afforded the highest level of constitutional
protection from governmental intervention, regulation of commercial
speech has traditionally been subjected to a lower level of judicial
scrutiny. But distinguishing between the two types of speech is
not always easy. The precise boundary between commercial and noncommercial
speech has not been clearly defined. The Supreme Court has defined
commercial speech as speech that does "no more than propose
a commercial transaction." Central Hudson Gas & Elec.
V. Public Serv. Commn, 447 U.S. 557 (1980).
has been more than 25 years since the Supreme Court first afforded
commercial speech First Amendment protection. In Virginia Board
of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425
U.S. 748, 765 (1976), the Supreme Court held that commercial speech
receives First Amendment protection, stating that "[i]t is
a matter of public interest that [economic] decisions, in the aggregate,
be intelligent and well-informed. To this end, the free flow of
commercial information is indispensable." But the Court went
on to note that "[u]ntruthful speech, commercial or otherwise,
has never been protected for its own sake." Even under earlier
case law where the Supreme Court extended First Amendment protection
to non-commercial expressions, including expressions that are false
or misleading provided they are made without actual malice, the
Court refused to afford similar protection to deliberate lies. See
New York Times Co. v. Sullivan, 376 U.S. 254 (1964).
last week the Supreme Court re-articulated its Central Hudson
test regarding whether a particular commercial speech regulation
is constitutionally permissible. In Thompson v. Western State
Medical Center, 535 U.S. --- (2002), the Court stated that "[u]nder
the test we ask as a threshold matter whether the commercial speech
concerns an unlawful activity or is misleading. If so, then the
speech is not protected by the First Amendment."
corporate damage control arguably at an all-time high, it is high
time for the United States Supreme Court to provide a bright line
test to determine whether a companys comment on an issue of
public debate is non-commercial speech or whether it is commercial
speech subject to restrictions by state and Federal governments.
Nike case is remanded back to the lower court for a determination
of whether Nikes statements were false or misleading. Nikes
attorney, David Brown of the San Francisco firm of Brobeck Phleger
& Harrison, said it was likely his client would seek review
at the U.S. Supreme Court.
download the decision in Kasky v. Nike, please click
on May 10, 2002]
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