Supreme Court Hears Arguments in Nike Case

WASHINGTON The U.S. Supreme Court today heard arguments in Nike v. Kasky, a case dealing with the rights of companies to defend themselves in press releases and other public statements.

Industry groups have expressed concern that a Nike loss could have a chilling effect on all corporate speech, including advertising.

At issue is a California Supreme Court ruling that determined public statements Nike made about its overseas labor practices constituted commercial speech and were therefore subject to claims of false and deceptive advertising.

Environmental activist Marc Kasky sued the athletic footwear giant, claiming that Nike’s disclaimers about the working conditions constituted false advertising under California’s consumer protection laws.

“The California decision has transformed [commercial speech] into a conversation stopper,” said Nike attorney Laurence Tribe in arguments today.

Department of Justice Solicitor General Theodore Olson also argued in support of Nike. He said the First Amendment prevents people who have suffered no harm from suing over alleged false statements.

But San Francisco attorney Paul Hoebler, representing Kasky, argued that since consumers rely on company statements to help them make decisions about buying products, those statements should be truthful.

Where to draw the line between commercial and non-commercial speech was on the minds of some justices. “[Nike is] trying to sell a product and making a statement, so what do we do?” asked Justice Stephen Breyer. “I think the Federal Trade Commission has the right to regulate unfair advertising. I also think the First Amendment is designed to protect all individuals in a public debate.”

Should Nike lose, “it will have a drastic effect on the advertising community,” said Dan Jaffe, evp, govermental relations for the Association of National Advertisers.

The court is expected to rule by the end of June.