Everyone's Right to Spin

Big Media Back Nike in Supreme Court Case

On December 13, U.S. Supreme Court justices will meet privately to decide whether a certain First Amendment case is worthy of their notice. Among the parties who want the court to rule on this controversy are Nike, Exxon, Microsoft, the public relations industry, and every major media company in the country. Given that Nike has hired a team of superlawyers who are calling this the most important free speech case since New York Times v. Sullivan, it's hard to imagine the court saying no. A decision on whether the case will be heard is expected on December 16.

The case, Nike v. Kasky, is Nike's attempt to overturn the latest ruling in Kasky v. Nike, a California lawsuit in which activist Marc Kasky wants to put Nike on trial for issuing what he calls false and misleading statements about its labor practices in Southeast Asia. In May 2002, the California Supreme Court ruled that a jury can punish Nike financially for any inaccuracies in a PR campaign that was designed to "maintain its sales and profits" and thus constituted "commercial speech." Shocked, Nike began trumpeting the fact that under state law, California citizens can now sue any business anywhere, leaving corporations and their PR firms no choice but to go silent and disclose nothing at all.

Nike's supporters see this controversy as a free speech issue, pure and simple. Theoretically, the only time companies can be held strictly liable for telling the truth is when they are practicing "commercial speech," i.e., explicitly advertising a product. According to this argument, when companies address public policy issues such as labor practices, they are practicing "political speech," which, just like news reporting, is protected by the First Amendment and is not required to be 100 percent factual. Of course, political speech can be punished if it is libelous.

It would be a disaster, say the friends of Nike, if all corporate speech could be labeled as commercial speech and held to the 100 percent accuracy test. An amicus brief filed by a group of PR associations warns that in a Kasky world, "corporate speech will disappear from every medium of communication with the public." And in his column siding with Nike, USA Today's Tony Mauro wrote, "If California's reasoning stands, then the public-relations industry—which exists to put corporate information in its most favorable light—might as well shut down."

To the contrary, the California Supreme Court denied that Kasky would endanger free speech. One justice wrote, "Our holding in no way prohibits any business enterprise from speaking out on issues of public importance or from vigorously defending its own labor practices. It means only that when a business . . . makes factual representations about its own products or its own operations, it must speak truthfully."

Meanwhile, Nike continues sounding the alarms that Kasky will have a profound chilling effect on the free speech of all corporations. This fall, in a self-fulfilling prophecy, Nike announced that because of Kasky, it would not release its annual corporate responsibility report, which reviews the company's labor and environmental practices. Protests against the company's treatment of workers are ongoing in Indonesia.

By summer's end, the "chilling effect" argument had won a lot of converts in the media, with pundits from The New York Times' Bob Herbert to The Washington Posteditorial page to USA Today's Mauro agreeing that the ruling should be struck down lest it endanger free speech. Then this fall, alarmed news companies enlisted the prominent media defense firm Davis Wright Tremaine, which has filed an amicus brief with the Supreme Court in support of Nike. The brief carries the endorsements of ABC, CBS, NBC, CNN, and Fox; along with the New York Times, Washington Post, and Tribune companies; not to mention Time, Newsweek, Forbes, the Hearst magazines, Reed Elsevier, the Magazine Publishers of America, and the American Booksellers Association foundation, among others. (Village Voice Media, a Davis Wright client, is not a party to the brief.)

The Davis Wright Tremaine brief offers several arguments for media companies to join in this fight. For one, it says, journalists count on a free flow of information between businesses and the public, and to threaten that is to risk receiving only the blandest of communiqués from CEOs. In another parry, the DWT brief paints an optimistic picture of journalists' ability to ferret out corporate deception, without government regulation. "The media serve as an effective watchdog over corporate press releases," the brief states. "When a business practice becomes a matter of public concern, the media scrutinize corporate speech and typically place potentially misleading statements into context."

Of course, it's also possible that some of Nike's media defenders are not so much free speech champions as they are media moguls who fear that when they or their subsidiaries report on their own business practices, they might be subject to lawsuits if they make any false or misleading statements.

On page nine of their brief, the media companies admit their own self-interest, to wit: "When newsworthy companies are themselves media entities such as AOL Time Warner, the ultimate parent of amicus CNN . . . such media organizations will potentially be subject to legal claims arising out of their coverage that their competitors will not."

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