Editorial: Nike "free speech" case. This time the ACLU got it wrong.

Do corporations have a first amendment right to lie to the public about their ethical practices?

April 24, 2003

Nike claims that it cannot be sued for false advertising for publicly defending itself against allegations of human rights abuses in its foreign factories. At issue is Nike's "right" to make false statements in support of its position that it does not do business with human rights abusers (the subcontractors who manufacture Nike products in Asian countries). The ACLU has entered the case on behalf of Nike.

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This time the ACLU has clearly got it wrong. The issue is: When is speech "commercial speech" as opposed to "protected speech"? Commercial speech is speech by a company that is intended to favorably influence buying, investment or other business decisions. When a company takes the step of promote false speech, that speech should be presumed to be intended to influence the decisions of consumers and/or investors, particularly when the speaker sends letters to volume customers and business associates and takes out paid advertising to present their case.

Many consumers make some buying decisions based on their evaluation of the ethical practices of the companies with whom they do business and the products they buy. A prudent investor makes an evaluation of a company's ethical practices before investing.  Information about ethical practices of a public corporation must be considered commercial speech when it may influence buying or investment decisions. Therefore, false information about ethical practices of a company, when contained in a paid advertisement purchased by or on behalf of that company, should be subject to the same requirement of truthfulness as any other advertising.

For example; It has been alleged that the chairman of Enron lied to employee-stockholders of the corporation when he encouraged them to hang on to their stock knowing full well that his "house of cards" was about to collapse.  Indeed, it is alleged he was selling his own stock at the time.  Should such speech be protected by the first amendment?  Employee-stockholders made decisions that ultimately had a negative impact on their financial well being based on the chairman's speech.  Should he be protected from criminal fraud charges because he used speech to perpetrate the fraud?  More importantly, should he be protected from civil litigation filed by his victims because he was exercising his First Amendment right to lie about the financial well being of the company?

Similarly, Nike claimed that allegations of human rights abuse of workers by its overseas contractors were false.  The evidence seems to contradict Nike's claim.   So, what was the purpose of this speech?  Was it commercial?  In addition to targeting the general public in advertising its claims of innocence, Nike targeted large customers such as university athletic departments. I argue that at a practical level it must be considered commercial if it has the effect of influencing buying decisions of investors or consumers.  For instance, the time my very well come when the victims of Nike's sweat shops will have standing to sue the company in U.S. or international courts.  Investors could loose a great deal from such suits.  In assessing risks associated with investments, investors must be able to count on the truthfulness of the companies statements about its ethical practices.

Not all public speech is protected.  Falsely yelling "fire" in a crowded theater or speech that incites violence is also prohibited.  Advocating the violent overthrow of the federal government is also not protected.  Slander and libel laws attach civil liability for false speech that negatively impacts the target of the speech. Lying on a job application can result in being fired and/or civil damages to the company that hired the liar.  Contractors can be sued for lying about their qualifications to perform particular tasks. False advertising of product capabilities is also not protected.  The point is, lies are often not protected under the first amendment. If, in fact, Nike lied in the course of defending itself against allegations of human rights abuse, it did so for commercial reasons.

Some of the organizations that have filed briefs in support of Nike arguing that to allow the suit to continue will open up a floodgate of frivolous litigation against corporations.  This "chicken little" argument is, first of all, nonsense and, second of all, irrelevant.   It is nonsense in that the burden of proof is on the plaintiff (the accuser) in such cases.  First, proving someone is deliberately deceptive is almost always a formidable task.  A task that lawyers on contingency are unlikely to take on easily.  Only the most egregious cases will actually get litigated.  Second, it is irrelevant because the cause of "justice" cannot be hampered by concerns regarding the ability of the courts to "handle the volume."  Should it happen that a large number of cases should be filed, we'll just have to deal with it.  We've done it in the past and we'll just have to do it again.

Mr. Kasky and his attorney have taken on an enormous task.  First, they must prove that the statements made by Nike were false.  Second, they must show that Nike knew that the statements were false. Finally, they must show that Nike's intent in making the statements was to deceive consumers. Now, on the face of  it, it may appear that the Nike case is a pretty clear-cut case of deception.  But, Nike must be given the benefit of the doubt at trial and Mr. Kasky must show, by a "preponderance of the evidence" that all three elements have been met.

Nike is under no obligation to "prove its innocence."   Indeed, to prove one's innocence is a logical impossibility.  One cannot "prove" a negative.  That's why in the American system of justice we have a presumption of innocence and the burden of proof is on the accuser.  All Nike has to show is that the plaintiff failed to prove his case and the jury must return a verdict that favors Nike.

Justice demands that both sides of this issue need to have their day in court.  If Nike is guilty of deceiving consumers, they must pay the price.  If Kasky is unable to prove his case, then, Nike must be presumed innocent, by the state and the rest of us.   But for a commercial enterprise to hide behind the First Amendment rather than face their accusers in court is unconscionable and completely unacceptable.

This editorial is a statement of opinion by the management of TexasSportsNetwork and TexasSportfishing.com who take sole responsibility for its content.  You may direct your comments to: rhmeyer@yahoo.com.

Copyright © 2003 R.H. Meyer - All rights reserved.