Nike Can't Just Say It, Court Rules

May 5, 2002 5:16 PM

Nike Can't Just Say It, Court Rules Law: Firms can be found liable for deceptive public statements, justices decide. Critics call the decision a blow to free speech. You've got to love it.
posted by onegoodmove (15 comments total)

Does freedom of speech mean freedom to lie?
posted by Neale at 5:45 PM on May 5, 2002

Sometimes it does, sometimes it doesn't. It's a nuanced question, like much of the law. That's where the fun in being a lawyer is.

Can a corporation or their board of directors or their hired advertising agency make deliberately false statements regarding their business practices? Almost certainly not. There are exceptions in advertising in particular, but false advertising usually hinges on the deliberately misleading aspect.

It's not the falsity _per se_.

If it were, every beer ad that indicates that all it takes is a few beers and the Perfect 10 girls will go home with me would open them up to a lawsuit. Perfect 10 girls prefer Courvoisier.
posted by swerdloff at 5:54 PM on May 5, 2002

*sidebar* "DIED. JAY CHIAT, 70, idealistic adman whose influential LA-based firm, Chiat/Day, pioneered the "West Coast style" of conveying strong messages without prominently featuring logos, as in Nike's 1984 billboard portraits of Olympic athletes with a tiny swoosh in the corner ... Among the firm's other creations: Apple's 1984 campaign ... to introduce the Macintosh PC ... and the drumming Energizer Bunny."
posted by sheauga at 6:09 PM on May 5, 2002

How about John 3:16: "For God so loved the world that He have His only begotten Son, that whoever believes in Him shall not perish but have everlasting life."? Why is religious speech different to commercial speech? For historical reason? (Pragmatic decision to reduce conflict?) Religions are both richer, and more powerful, than most (all?) corporations.
posted by mstillwell at 6:10 PM on May 5, 2002

Fred J. Hiestand, general counsel for the Civil Justice Assn. of California, said the ruling will limit corporations' ability to defend themselves against false charges and expose them to undue pressure from interest groups.

how can telling the truth limit a company's ability to defend itself against false charges? why isn't the truth sufficient? are they saying "we're hiding something so we need to be able to lie in order to protect our image"? Is there something I'm missing? bizarre.
posted by techgnollogic at 6:20 PM on May 5, 2002

The question here is how this will decision affect trademarks, intellectual property and alleged taglines and the ability to parody or satirize them. Mastercard sued Ralph Nader two years ago for using the "priceless" approach in his presidential campaign for $5 million, but ended up losing because they could not prove explicitly how they were harmed. If it is decided in California that a corporation must hold true to an "honesty is the best policy" approach, then will satirists be forced to adopt the same principle? Or will the courts draw a distinct dichotomy between the corporation who produces advertising to sell a product for profit and a corporation (say, Saturday Night Live) producing a satirical commercial for both entertainment and profit? Knowing the unlimited coffers and relentless tenacity of corporate lawyers, it should prove interesting how this particular decision is interpreted.
posted by ed at 6:50 PM on May 5, 2002

Re: ed's post - I don't think this affects parody or satire, since those aren't forms of commercial speech, which is what the Nike decision addressed. They're quite the opposite - particularly so in Nader's case.

Regarding techgnollogic's question, "how can telling the truth limit a company's ability to defend itself against false charges?" I think you're absolutely right. Unfortunately, determining what is "the truth" and what is "false" is rarely such a simple matter.

In the Nike case, it would seem that the lines were clear. But in many other cases, both great and small, those lines are not. So corps may keep their mouths shut rather than risk inviting lawsuits over what someone, somewhere, might consider to be a "false" statement.

So the lesson from the Nike decision might be: The truth should set you free - unless some litigious bastard files suit and calls you a liar, anyway.
posted by busbyism at 7:37 PM on May 5, 2002

Parody and satire can both be commercial speech - the Saturday Night Live example was a good one, and so is The Onion.

Something I don't understand from the article: If Kasky ultimately prevails at trial, Nike could be ordered to turn over an unknown amount of profits it has made in California. The money then could be distributed either to charities or to consumers who bought Nike products, lawyers said.

Giving the money to consumers I can understand, but charities? How do they fit into this picture at all? And why not give the money to the workers that are allegedly exploited and the reason this whole stink began?
posted by schlyer at 8:25 PM on May 5, 2002

Do note that this is a California Supreme Court decision, based on "a broad California law that prohibits misleading advertising", and an appeal is all but guaranteed. I think I'd take odds that it will be overturned, given the present make-up of the US Supreme Court.

Particularly given that this is based on state law, the general applicability is limited. Were the original ruling upheld, it would only indicate that states may write legislation that regulates commercial speech to that extent, or interpret existing law that broadly.
posted by dhartung at 8:38 PM on May 5, 2002

Yah. Give the workers back the money. And then send them a Nike mail-order catalog...
posted by five fresh fish at 9:39 PM on May 5, 2002

Were the original ruling upheld, it would only indicate that states may write legislation that regulates commercial speech to that extent

Woo boy, that opens a can of worms. Where does that leave national ad campaigns? If this thing is emulated by other states, will corps have to mind which pravda they distribute in which markets?

This case is bigger than I thought at first. Ya got yer free speech issues, yer states' rights issues, yer liability issues...

I also think the money, if any, should go back to the workers, for what it's worth.
posted by RylandDotNet at 10:13 PM on May 5, 2002

This is why labels like "organic" "all-natural" "healthy" etc don't mean a thing. Companies get to define terms in the best way the suits them. Remember how hard is was to find out what the nutritional value of some foods were before the requiment to use that nutritional box? Corporations didn't want to disclose facts that might hurt sales. The nutritional box is a limitation of speech, because we're forcing them to disclose truthfully what their products contain, yet it hasn't killed their ability to sell products.

Yes, this is a double standard and a justified one at that. No one is going to force me to get a lab test on a sandwich I made at home, but if I'm selling them its a different story. I hope this ruling or something like it affects corporations and their ability to lie, hide facts, and fool the consumer.

First on the chopping block should be those gas commercials telling you how buying the high octane gas makes you go faster. Instead of a little tiny disclaimer about performance cars and cars engineered to use 93 octane at the bottom of the screen, if this amount of truth in advertising existed, then they wouldn't be able to make those misleading commercials at all. This ruling is one step closer to eliminating small print and tiny disclaimers and forcing companies to act honestly.

Now I'm waiting to see if writing agreements in long-winded and obfuscated legalese is a protected right also.
posted by skallas at 11:12 PM on May 5, 2002

Parody and satire does not become commercial speech simply because people sell it or use it to make money (i.e. by inserting commercial breaks). In fact, I don't see how parody and satire are related specifically to this case at all. Trademark infringement only applies if the use of a trademark by, let's say, Saturday Night Live in their spoof of a commercial, tends to cause confusion as to whether the entity creating the commercial is the same as, or endorsed by, the trademark holder. In the case of bona fide parodies, it hardly ever does.

The only form of speech that's being regulated here is speech by a seller of goods or services, that makes or implies certain assertions about said seller or its goods or services, and which is likely or intended to influence consumer behavior. If a car company puts out an ad that claims that its new brand of car gets 69 mi/gal (29 km/li), it better be true. If Nike puts out an ad that claims that the workers making its shoes are getting the local minimum wage, it better be true. Anything else is false advertising.

The only constitutionally controversial issue, in my humble opinion, is whether implied assertions can be regulated as commercial claims without running afoul of the First Amendment. But if Nike made a statement of fact in a public forum about its business practices, in a way that was meant to bolster sales, then it better be true, because the 1st Amendment is not a defense against fraud.
posted by skoosh at 11:39 PM on May 5, 2002

dhartung, my instincts (without knowing the case law on this particular subject) is that you are right IF the Supreme Court grants cert. California courts have kind of a reputation for wacky off-the-wall decisions and press releases certainly sound to me like protected speech. of course, the Court only grants cert to something like 5 percent of the cases that are appealed to it, so the Cali court may well have had the last word.
posted by boltman at 12:51 AM on May 6, 2002

Firms can be found liable for deceptive public statements, justices decide. Critics call the decision a blow to free speech

A blow for free speech? I don't get this. Is this any different from libel/slander which you could then say is also a blow to free speech? What about preventing people from telling government secrets? What about suing someone for breaching copyright law? You could also say that these are all blows to free speech.

This ruling also does not affect non-commercial speech. The whole issue of this case is whether Nike's "false statements" are commercial or non-commercial. In this case, they were held to be commercial. Thus, if Nike's statements are false or misleading, then and only then are they in trouble.

Source: Kasky v Nike
posted by jay at 11:41 AM on May 6, 2002