|The Bitter Truth - Commercial Speech and Public Relations|
A California activist takes corporate giant Nike to court, claiming false advertising and deceptive labor practices; the result is a firestorm over social reporting, free speech, and freedom of the press.
Nike Vs. Kasky Re-Ignites Debate over Commercial Speech
In June 1996, a New York Times Columnist wrote two op-ed pieces that were critical of the Nike Corporation's overseas labor practices.Bob Herbet claimed that Nike knowingly exploited the Asian labor force by running sweat shops in Indonesia and Vietnam. Naturally, Nike CEO Philip Knight responded with a letter to the editor, contesting Herbert's claims and stating that by Nike providing these impoverished markets with employment opportunities will eventually lift them out of poverty and despair. The company then launched a public relations campaign that involved a series of press releases, letters to university athletic directors (a major customer base for Nike) and editorial advertisements (Parloff, 2002).
Two years later, a San Francisco community activist named Marc Kasky took advantage of California's Unfair Competition Law, which allows “any person acting for the interests of. . .the general public”, and filed a claim of false advertising against Nike.
Nike Wins the First Round of Legal Cases
Initially, Nike won a series of trial court sessions, claiming its protection under the First Amendment and stating that since their messages were centered around a matter of public interest, they were protected as free speech. But the California Supreme Court reversed these decisions and characterized Nike's messages as commercial speech by relying on the previous precedent of Bolger v. Youngs Drug Product Corp.
The Court stated that “Nike's speech is not removed from the category of commercial speech because it is intermingled with non-commercial speech.”
In dissent, Justice Ming Chin stated “Far from promoting the sale of its athletic products, Nike did not include [its] information through product labels, inserts, packaging, or commercial advertising intended to reach only Nike's actual or potential customers. . .Nike's speech. . .was not in any sense pre-textural, but prompted and necessitated by public criticism.”
US Supreme court gets involved in the case
The case eventually found its way to the U.S. Supreme Court, where both sides to this viscerally divisive debate awaited anxiously for a ruling that would provide greater definition of commercial speech.
The ruling never came. All of the heated debate and excruciating anticipation came to a halt when the U.S. Supreme Court received arguments for both sides and then decided to send it back to California. In April of 2003, the justices dismissed in a one-sentence unsigned order, as “improvidently granted,” Nike's appeal of the California court's ruling. An anti-climactic resolve to a debate that roused the passion of two distinct political beliefs.
And it got even worse. Nike settled. Now there would be no real decision. U.S. Supreme Court Justice Steven Breyer had provided Nike with fresh ammunition for another go-around in the California court. In dissenting opinion to the dismissal, Breyer stated “The delegation of state authority to private individuals 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” (Goldstein, 2003). But the sportswear giant found the political spotlight too harsh.
The sides remain divided, however, with the majority taking sides with Nike and the protection of free speech. Even Bob Herbert, the New York Times columnist who first wrote the op-ed that scathed the company, backed Nike's freedom to protect itself.
“As much as it pains me to say it,” Herbert wrote in his column, “I am not in favor of stifling the speech of the loud and obnoxious and terminally exploitative Nike Corporation” (Parloff, 2002).
The battle was thought-provoking and challenged marketplace notions of what is advertising and what is political speech. Many predicted a “chilling effect,” an unrelenting self-censure, but that remains to be seen.