WASHINGTON, Jan. 10 (UPI) — The U.S. Supreme Court Friday agreed to decide whether Nike Inc., the world’s leading maker of sporting apparel and equipment, can be held liable for allegedly misleading statements about work conditions in its overseas factories.
A California man sued the company under state law for disseminating statements, not ads, trying to refute the allegation that Nike is an “immoral company, generating great profits on the backs of Third-World labor.”
Nike wants the Supreme Court to determine whether a company engaged in a public debate — “writing letters to newspaper editors and publishing communications addressed to the public on issues of great political, social and economic issues” — can be held liable for not telling the truth.
In effect, does such a public relations push constitute “commercial speech,” and can California law constitutionally hold the publishers of commercial speech liable for misleading statements?
In the latest figures cited by court records, Nike reported annual revenues of $9.2 billion in 1997, as well as an advertising and marketing budge of $1 billion.
Most Nike products are manufactured in China, Vietnam and Indonesia by women under 24.
Beginning in 1996, the CBS News program “48 Hours” and a number of publications ran stories alleging near sweatshop conditions in Nike’s overseas factories. In Nike’s words, the allegations included “physical, verbal and sexual abuse,” as well as exposure “to toxic chemicals, noise, heat and dust without adequate safety equipment,” all for less than the local minimum wage.
After taking a public relations beating, Nike launched a campaign to counter the reports.
The company issued statements saying that the allegations were false, and included the statements in news releases, letters to newspapers and other media.
California has laws to curb false advertising. A private citizen, Marc Kasky, filed suit under their provisions against Nike and several company executives, alleging that the public relations campaign included false statements.
Kasky had little success in the lower state courts in pursuing his case, but eventually the California Supreme Court agreed that he should be allowed to file it.
“The issue here is whether (Nike’s) false statements are commercial or non-commercial speech,” the California Supreme Court said in its ruling last May. “Non-commercial speech” would have greater constitutional protection.
“Because the messages in question were directed by a commercial speaker to a commercial audience, and because they made representations of fact about the speaker’s own business operations for the purpose of promoting sales of its products,” the court said, “we conclude that these messages are commercial speech for purposes of applying state laws barring false and misleading commercial messages.”
Nike then asked the U.S. Supreme Court for review, saying the California law violated the free speech guarantees of the First Amendment.
The justices should hear argument in the case in April.
(No. 02-575, Nike et al vs. Kasky)
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