Nike Files Free Speech Suit, Cancels CSR Report
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Nike Files Free Speech Suit, Cancels CSR Report

Nike has officially asked the U.S. Supreme Court to review an unprecedented California Supreme Court ruling that effectively eliminates First Amendment protection for companies and organizations that speak out on public issues related to their business.

Paul Holmes

BEAVERTON—Nike has officially asked the U.S. Supreme Court to review an unprecedented California Supreme Court ruling that effectively eliminates First Amendment protection for companies and organizations that speak out on public issues related to their business. The move was supported by a number of public relations organizations, and drew immediate criticism by plaintiffs in the case.

In papers filed with the U.S. Supreme Court, Nike argued that “Not since New York Times Co. v. Sullivan has [the U.S. Supreme] Court been confronted with a lower court ruling as profoundly destructive of free speech” as the decision in this case.” The filing was prepared by Harvard University’s noted Constitutional scholar and leading Supreme Court advocate, Laurence Tribe, and former acting Solicitor General Walter Dellinger, head of the Supreme Court practice at O’Melveny & Myers.

The company’s petition in Nike v. Kasky stems from a 4-3 ruling of the California Supreme Court sharply reducing the free speech rights of businesses and other groups, as well as the general public who want to hear about those operations. The California court ruled Nike’s public relations response to criticism of its overseas labor practices was commercial, not political, speech, and thus was not protected under the first amendment.

Further, the California court expressly applied its ruling to statements that appear in op-eds and editorials, as well as to comments made to reporters—not just to paid commercial ads.  In this case, Nike’s speech involved such communications as letters to the editor, in which the company responded to public criticism about alleged workplace conditions in Asian footwear factories.

The Arthur W. Page Society has joined with other public relations organizations including the Council of Public Relations Firms, the Institute for Public Relations, Public Relations Society of America, and the Public Affairs Council in submitting a “Friend of the Court” brief.

But plaintiffs insisted the case was not about free speech but rather about ensuring companies cannot disseminate false information in order to sell more products.

“We are confident of the eventual outcome,” said attorney Patrick Coughlin, a partner at Milberg Weiss Bershad Hynes & Lerach. “This case is far more about truth in advertising than it is about freedom of speech. There is no constitutional right to dupe consumers; this has been the law for decades.”

But that law has traditionally been applied to misleading product claims, not arguments about political or social issues, and applies only to corporations—activists can make false and misleading statements about corporate activities, including statements designed at attract media attention and raise more funds—with the full protection of the first amendment.

Says Tribe, “Handicapping one side in this important worldwide debate is both ill considered and unconstitutional.” Adds Dellinger, “This case is about preserving the breathing room that free speech and debate need to thrive. Unless all sides in a controversy play by the same rules, the debate will be distorted and the public will be deprived of a full and fair account of the issues.”

One of the implications of the decision became clear when Nike announced that it would not publicly release its next annual corporate responsibility report. The report reviews the initiatives and progress the company has made in its labor compliance, community affairs, sustainable development and workplace programs. The company already has declined to participate in several media interviews as well as invitations to speak at various business and academic forums due to the decision.

Other companies are expected to seriously curtail their social responsibility communications efforts if the California ruling stands.

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