Nike has appealed to the U.S. Supreme Court to review a ruling by the California court that could affect First Amendment rights. And it's not the only company that has asked the court to look at the ruling that strips away protection for companies when speaking on public issues relating to their business.
More than 40 groups -- including CNN, the New York Times, other public interest groups, businesses, media outlets and communications companies -- have joined the ACLU Nov. 14 in filing amicus ("friend of the court") briefs expressing concern over the California decision.
In Nike v. Kasky, the California Supreme Court in a 4-3 ruling in May said that because a company's public statements about its operations might persuade consumers to buy its products, those statements must be treated as commercial advertising, which limits protection.
Media institutions, including CBS, the Washington Post and the Los Angeles Times, said in a brief that the California decision poses a serious and immediate threat to the media's ability to report on important issues regarding corporate America, and could deter businesses from speaking to the press on various public issues.
"This chilling effect will deprive the public of access to important information and the clash of competing viewpoints that undergirds the First Amendment," the statement said. "Extending the definition of commercial speech to corporate statements about publicly debated business operations also is unnecessary. When a business practice becomes a matter of public concern, the media filter and scrutinize potentially misleading corporate speech and place it into context."
The outcome is being watched closely by all industries, including sporting goods, fitness and outdoors, with representatives telling SNEWS they have monitored the case since Nike's appeal to the highest court to review the California court's ruling.
New Balance's Katherine Shepard, senior corporate communications manager told SNEWS that the companies has not changed its overall communications strategy and practices, nor how it communicates company messages. A spokesperson for Timberland agreed.
However, if the California court's decision is upheld, Shepard said, "We may have to consider how we communicate information about our programs."
The case began with California resident Mark Kasky who filed a claim -- without being asked to show any personal harm -- alleging Nike's public relations campaign contained false or misleading statements. Even though Oregon-based Nike made the statements in the letters section of the New York Times, the case has played out in California courts because the newspaper is distributed in California.
Kasky alleges that Nike made statements to Californians that were false and misleading about its labor practices and about working conditions in factories that made its products. Specifically, in press releases, in letters to newspapers, and in other documents distributed for public relations purposes, Nike made statements that it found no evidence of illegal or unsafe working conditions at Nike factories in China, Vietnam and Indonesia.
Kasky's complaint calls for Nike to "disgorge all moniesâ€¦acquired by means of any act foundâ€¦to be unlawful and/or unfair business practice," and to "undertake a Court-approved public information campaign" to correct any false or misleading statement, and to cease misrepresenting the working conditions under which Nike products are made.
California's trial court and court of appeals characterized the messages as noncommercial speech; however, the California Supreme Court reversed that, relying on U.S. Supreme Court precedent to characterize Nike's messages as commercial speech. Subsequently, Nike has declined media interviews and public speaking invitations and is not publicly releasing the results of its annual corporate responsibility report.
A group of businesses, including Microsoft, Pfizer and Bank of America, filed another amicus brief and called the effect of the California decision "both immediate and grave, threatening all corporate speakers with civil and criminal liability for engaging in protected speech." It is therefore unnecessary and unwise to permit the case to continue to trial without immediate Supreme Court review, they added.
The U.S. Supreme Court will decide whether to hear the case by the end of this year or January 2003. If the court accepts the case, oral arguments will be in the spring and a decision will be expected by summer 2003.
SNEWS View: It almost seems as if the rest of the outdoor, sports, and fitness industry has stuck its ostrich head in the ground on this one -- yet the outcome could affect every last company in the industry. Maybe this is the kind of issue that makes a company want to tip-toe behind a door and hope it doesn't get noticed while the big guy gets slugged a few times. But that's the wrong approach in this case, because if the big guy -- Nike, in this case -- gets knocked out, that same bully could come after every other company's communications policies and messages. It's time for others to write briefs to the court and step forward with an opinion.