Nike’s desire to avoid a trial, where its polished billion dollar image could be scuffed, had to be the reason the company bargained away the constitutional right that has been the backbone of our free market society... Nike: Just Settling for Silence

After five years of vigorously arguing that corporations possess the same full First Amendment rights as individuals when it comes to speaking on matters of public concern, Nike signed away its free speech protections – as well as those of corporations nationwide – when, on Friday, it settled a landmark case brought against the company by anti-business activist Marc Kasky.

The capitulation by Nike leaves intact a ruling by the California Supreme Court, which held that the shoe giant’s public responses to attacks on its overseas labor practices constituted merely "commercial speech" – accorded less protection than other forms of constitutionally safeguarded expression under the First Amendment – because the public relations statements were "likely to influence consumers in their commercial decisions." The decision is likely to open the floodgates for similar attacks on corporate speech and cause a chilling effect for years to come.

In announcing the settlement in a two-page press release laden with references to Nike’s continuing commitment to "corporate responsibility" and "the consumer’s desire for better information to measure company performance and public policy concerns," Nike eviscerated hundreds of pages of legal filings and arguments by, in essence, tacitly acknowledging the California Supreme Court’s four justice majority finding that the corporation’s entry into the public labor debate was "primarily intended to reach consumers … to influence them to buy [Nike] products" rather than express the company’s "opinion or points of view on general policy questions such as the value of economic ‘globalization.’"

In other words, facing what would be a very public and perhaps unflattering trial about the nature of its overseas labor practices and factory conditions, Nike decided that its First Amendment rights weren’t worth risking the company’s image as a "good global corporate citizen" that so many believe is necessary to economic good will in Western consumer markets.

Basically, by rationalizing the settlement by explaining that the company’s scarce resources would be better spent on a commitment to the "‘integration of corporate responsibility into the framework of its business’" rather than on protecting the corporation’s constitutionally protected free speech rights through "prolonged litigation," Nike simply showed its true stripes, or swoosh.

There can be no doubt but that the Kasky case was costing Nike big bicks, maybe even more than the $1.5 million Nike paid as a donation to the Fair Labor Association in Washington, D.C., to settle the case. However, for a company whose revenue climbed to $10.7 billion in its last fiscal year, which ended May 31, a lack of financial resources seems hardly the reason for getting out now. Instead, Nike’s desire to avoid a trial, where its polished billion dollar image could be scuffed, had to be the reason the company bargained away the constitutional right that has been the backbone of our free market society, all for the future sales of some foreign-made shoes.

Such a transparent commercial motive for settling the Kasky case now only validates the California Supreme Court’s troubling and constitutionally incorrect decision that, at its core, discriminates against corporate speech by shielding it with lesser protection than the same speech uttered by individuals.

The shoe giant tries to have it both ways by acknowledging that "[d]ue to the potential difficulties posed by the application of [the California Supreme Court decision and] California Statute section 17200, Nike has decided not to issue its corporate responsibility report externally for its fiscal year 2002 and will continue to limit its participation in public events and media engagement in California" – all apparently to highlight the company’s dissatisfaction with the ruling. But throwing a bone to numerous true free speech advocates, who spent their time and money to file more than 20 separate friend-of-the-court briefs with the U.S. Supreme Court explaining that the First Amendment applies with the same force and effect to speech by individuals and corporations alike, is yet another public relations ploy by the company that urges consumers to "Just do it."

Nike should have kept doing it, rather than just settling for silence.

September 18, 2003
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