Judicial setback for Nike & corporate free speech

In a busy last week of rulings, the U.S. Supreme Court last week declined to rule on a commercial free speech case involving Nike, shipping the case back to the California court for a possible trial. That came despite many months of rallying by other big businesses and media outlets that advocated the Supreme Court rule on what types of corporate speech are protected by the First Amendment.

In a majority opinion in the Nike vs. Kasky case, the court said it should never have taken on the dispute, although three of nine justices said they were willing to rule on this, the final case announced before the term ended.

In the dissenting opinion, Justices Breyer and O’Connor stated “…the questions presented directly concern the freedom of Americans to speak about public matters in public debate, no jurisdictional rule prevents us from deciding these questions now, and delay itself may inhibit the exercise of Constitutionally protected rights of free speech.”

They also wrote that the Kasky case was inconsistent with the First Amendment because it “authorizes a purely ideological plaintiff, convinced that his opponent is not telling the truth, to bring into the courtroom the kind of political battle better waged in other forums.” Justice Breyer further predicted that Nike would eventually prevail on its First Amendment claims.

Mark Kasky is a California activist who sued Nike five years ago for lying when it denied reports that workers were mistreated in its Asian factories. Nike, which had defended itself against allegations that it used sweatshops in developing countries to manufacture its athletic products, had argued that private individuals can’t use the courts to police what companies say about themselves.

More than 60 entities, including CBS, the ACLU, The New York Times and even the U.S. government, had filed amicus (“friend of the court”) with the U.S. Supreme Court supporting Nike in the case. In January, the highest court had agreed to hear the case, and those groups were hoping it would reaffirm the First Amendment right to free and open debate and overturn a California state court ruling from May 2002 that restricts the ability of businesses and other organizations to speak out on matters of public importance. Even the Bush administration backed Nike in the case, arguing that a defeat for the company would turn private corporate critics such as Kasky into self-proclaimed censors or “fraud-busters.”

According to Adweek, “The case has far-reaching implications for advertisers and if Nike had lost, it could have severely limited the ability of corporations to defend themselves publicly. Corporations and advertising lobby groups worry that First Amendment ‘freedom of corporate speech’ issues are now left in limbo.”

Nike immediately issued a long statement about the ruling saying, in part:

“We are pleased that the only Justices who addressed the legal arguments recognized the importance of the First Amendment in this case and the significance of the issues that we raised. We are also pleased that so many parties sided with our legal position including the U.S. government, the ACLU, organized labor, dozens of media organizations and the U.S. Chamber of Commerce — all of whom recognized the importance of free speech to us, our consumers and other interested stakeholders. The fact is that the Supreme Court was clearly troubled by the decision of the California judges and the chilling effect that the decision will have on speech. But, the Court did not believe it had the authority to decide the case at this time.

“Our fight to preserve the right to free and open debate moves forward,” the statement added.

The case could now linger in California appeals court for years.