Do corporations have the right to defend themselves in the court of public opinion? That question is at the heart of the Nike v. Kasky case to be argued before the U.S. Supreme Court in April, and advertising lobby groups are worried that a gag order is about to be imposed on corporate speech.
Three advertising trade associations filed a "friend of the court" brief last Friday. In it, they argued that the Supreme Court should overturn a California Supreme Court ruling that public statements Nike made about its overseas labor practices constituted commercial speech and were therefore subject to claims of false and deceptive advertising. The Association of National Advertisers, the American Advertising Federation and the American Association of Advertising Agencies allege that the California ruling makes all companies vulnerable to such claims whenever they respond to issues of public debate.
Dan Jaffe, executive vice president at the ANA, said that if the California decision is upheld, it will completely transform how companies do business. "Everything a company says will be treated as an ad," Jaffe said.
At issue are statements Nike made in press releases in 1997 about conditions in its factories in Asia and a Nike print ad that said the sneaker company was doing a good job with overseas labor but could do better. Environmental activist Marc Kasky sued the Oregon-based company, arguing that the company's disclaimers about the working conditions of its overseas laborers constituted false advertising under California's consumer-protection laws.
The trade associations' brief to the court offers examples of the types of corporate speech that would be prohibited if Kasky prevails in the case. Such examples include an ad Exxon placed following the Valdez oil spill in 1989.
A rep at what is now ExxonMobil said the company does not have an official position on the Nike case and declined to comment on the issue of commercial speech in general. Nike executives were unavailable for comment.
Al Meyerhoff, who is representing Kasky through the law firm Milberg Weiss Bershad Hynes & Lerach in San Diego, says the case "raises the question of whether corporations can be held accountable about claims they make about labor practices when those claims are used to sell products.
"So long as companies are truthful and accurate in their statements to the American public, they have nothing to fear from the Nike decision," Meyerhoff said. "I don't understand how you can quarrel with that. We think this case is about holding them accountable."
But Floyd Abrams, a New York lawyer specializing in First Amendment law, argues that the California decision threatens speech "of the highest importance to our society. If Nike cannot defend itself in the court of public opinion without being subject to litigation, we will have less speech and less knowledge by the public."
Abrams said the threat is much broader than restraining corporate speech. Newspapers and broadcasters might not publish certain ads for fear of being sued themselves, he said.
"Nike was engaged in political speech," Abrams said. "It would be a significant blow to subject Nike and all other corporations to litigations when they speak out about their own behavior."