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Is Nike a Person?
By Sarah Stodola
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Introduction
On April 23, 2003, the U.S. Supreme Court heard Nike v. Kasky, a case that involves a suit filed in California by Mark Kasky (acting as a “private attorney general”) alleging that the Nike Corporation and/or it representatives released false statements regarding its practices in Third World countries. If the allegations are true, Nike would have violated both California’s Unfair Competition Law and its False Advertising Law. Nike has defended itself using the First Amendment “as applied to the states through the Fourteenth Amendment” – that is, corporations enjoy the status of individuals and therefore protected as such by virtue of the Supreme Court’s interpretation of the Fourteenth Amendment. The case has been hailed as a potential landmark in First Amendment regulation. However, it also has the potential to become a landmark in the interpretation of the Fourteenth Amendment, as will be discussed in this article.
For the purposes of this article, it will be assumed that the statements made by Nike were false. The concern here, and the Court’s consideration in the case, is not whether the statements were true or false, but whether, if they were false, Nike was within its legal and constitutional rights to makes them. If the Court upholds California’s relevant laws, then the case will undoubtedly be remanded to the lower courts in order to determine the veracity of Nike’s statements.
The paper will be divided into three parts; a background of the case Nike v. Kasky, a history of corporate personhood in the United States, and a discussion of how corporate personhood applies to the Nike case.
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Case Background
In 1998, California resident Marc Kasky brought suit against Nike Inc. on behalf of consumers in the state of California, claiming that Nike and/or its representatives had made the following untrue statements regarding Nike’s practices in China, Vietnam, and Indonesia:
1) “workers who make Nike products are protected from and not subjected
to corporal punishment and/or sexual abuse,”
2) “Nike products are made in accordance with applicable governmental
laws and regulations governing wages and hours,”
3) “Nike products are made in accordance with applicable laws and
regulations governing health and safety conditions,”
4) “Nike pays average line-workers double the minimum wage in Southeast
Asia,”
5) “Workers who produce Nike products receive free meals and health
care,”
6) “GoodWorks International report proves that Nike is doing a good
job and ‘operating morally’” (GoodWorks International
is an organization formed by former U.S. Ambassador to the United Nations
Andrew Young and commissioned by Nike for the purpose of investigating
the company’s operations and Asia),
7) “Nike guarantee(s) a ‘living wage’ for all workers
who make Nike products.”
Kasky sought the following: to have Nike barred from making such false statements, publicly correct its misstatements, and return all monies determined to have been obtained by the practice of making such statements.
The respondent acknowledged that he himself did not suffer any “harm or damages” as result of these statements, but was representing the general public, on whom harm and damages were inflicted. Such action is allowable under California’s Unfair Competition Law.
In court proceedings Nike defended itself by claiming that “the relief plaintiff was seeking (was) ‘absolutely barred by the First Amendment to the United States Constitution and Article I, section 2(a) of the California Constitution.’”
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State Court Rulings
In 1999, the California Superior Court ruled that Nike was within its legal and constitutional limits in making the false statements quoted above. The plaintiff (Kasky) appealed. The Court of Appeals affirmed the judgment, concluding that “Nike’s statements were noncommercial speech and therefore subject to the greatest measure of protection under the constitutional free speech provisions.” The plaintiff then petitioned to the Supreme Court of California to review the case, and the Court accepted, reversing the decision of the Court of Appeals and remanding the matter to the lower courts for “further proceedings consistent with this opinion.”
The Supreme Court of California based its decision in favor of Kasky on the following question; whether or not the “defendant corporation’s false statements are commercial or noncommercial speech for the purposes of constitutional free speech analysis under the state and federal constitutions.”
The Court ruled that the messages (quoted above) relayed by Nike and/or its representatives do constitute commercial speech. This decision was made based on the following conclusion; that “when a business enterprise, to promote and defend its sales and profits, makes factual representations about its own products or its own operations, it must speak truthfully.”
The
California Supreme Court cited several decisions by the United States
Supreme Court in arriving at its decision in this case. The reasoning
is summarized as follows:
Because of the Fourteenth Amendment’s due process clause, state
and local laws must adhere to the freedom of speech provision of the Constitution.
The State of California’s laws regarding commercial speech therefore
fall under the jurisdiction of the U.S. Constitution. However, the California
Supreme Court asserted that freedom of speech protection is not universal;
commercial speech enjoys a lesser degree of protection than does individual
speech. Concerning protection of false or misleading speech, the Supreme
Court has determined that “protection for false statements is not
universal,” that there is a difference between “speech that
is actually or inherently misleading, and, on the other hand, speech that
is only potentially misleading,” and that “’(t)he First
Amendment…does not prohibit the State from insuring that the stream
of commercial information flow(s) cleanly as well as freely.’”
In other words, the State is perfectly within its limits in prohibiting
false statements to the public by corporations.
According to the California Supreme Court, commercial speech can be distinguished from noncommercial speech in several ways. First, although “’speech proposing a commercial transaction’” is indeed commercial speech, this is not the only criteria for determining speech as such. In Bolger v. Youngs Drug Product Corp., the U.S. Supreme Court identified three components of speech which, in combination, determine said speech to be commercial; advertising format, product references, and commercial motivation. The Court indicated that none of these components alone would be sufficient to characterize commercial speech. However, it also made clear that not all of them were necessary to characterize it.
In Nike v. Kasky, it seems clear enough that at least two of these components are present. Product references were certainly made in the statements of the Nike representatives, and the speech was clearly commercial in nature, since Nike had a motivation to profit by painting a favorable image of itself through the speech. In this case, the California Supreme Court dismissed the necessity of commercial speech to be in advertising format, stating that: “Although in Bolger…the United States Supreme Court noted that the speech at issue there was in a traditional advertising format, the court cautioned that it was not holding that this factor would always be necessary to the characterization of speech as commercial…Thus, advertising format is by no means essential to characterization as commercial speech.”
In the Nike case, though, the court considered three elements not considered in Bolger in determining which kind of speech the statements made my Nike were, stating that “categorizing a particular statement as commercial or noncommercial speech requires consideration of…the speaker, the intended audience, and the content of the message.” The speaker was determined to be someone engaged in commerce, or someone representing the person engaged in commerce, since the speakers quoted in the case were representatives of a company trying to make a profit. The intended audience was made up of “actual and potential purchasers of Nike’s products,” including school athletic departments, which are major purchasers of Nike’s products, and media outlets, which reach millions of potential purchasers of Nike’s products. And the content of the message was determined to be commercial in nature, since Nike was “making factual representations about its own business operations.”
The opinion of the California Supreme Court, then, is that Nike’s speech was indeed commercial, and therefore subject to the laws regarding commercial speech in the State of California, and not entitled to the full protection of the Constitution. The Court of Appeal’s judgment in favor of Nike was reversed and the case was remanded back to the lower courts.
There are two dissents in the case, one written by Justice J. Chin and one by Justice J. Brown.
In his dissent, Justice Chin asserts that in the arena of public debate, Nike must be allowed to make its contribution in order for that debate to be genuine. He states that “the majority today refused to honor a fundamental commitment and guarantee that both sides in a public debate may compete vigorously – and equally – in the marketplace of ideas.” He cites Supreme Court cases First National Bank of Boston v. Bellotti and Thornhill v. Alabama in arguing that the United States Constitution, and specifically the First Amendment, allows “both sides in this important public controversy the full protection that our Constitution guarantees.”
In Justice Brown’s dissent, the argument is made that the “commercial speech doctrine” needs to be reconsidered in order for common law to adapt to “the realities of today’s commercial world.” She urges the United States Supreme Court to accept this case and do just that.
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Supreme Court Proceedings
In its final brief for the Supreme Court, the respondent (Kasky) asks three questions, the first two of which are “jurisdictional” and the last of which is “nonjurisdictional.” The third question is the most relevant to this paper. It asks whether the California courts “properly classified the statements at issue as commercial speech for purposes of laws regulating false advertising and other forms of commercial deception.”
Nike’s argument to the Supreme Court is somewhat more compelling for the purposes of this article. The company asserts that the case is dealing with two questions: whether a corporation participating in a public debate may be “subjected to liability for factual inaccuracies on the theory that its statements are ‘commercial speech’ because they might affect consumers’ opinions about the business as a good corporate citizen and thereby affect their purchasing decisions,” and whether “the First Amendment, as applied to the states through the Fourteenth Amendment, permit(s) subjecting speakers to the legal regime approved by that court in the decision.”
Nike obviously will argue that commercial speech in the public debate should receive the utmost protection, and that First Amendment protection does extend to corporate speech.
The specifics of both arguments will be discussed in greater length in the third section of this article.
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Click here to read Part Two of this series.
Click here for a source list.
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Sarah Stodola is the Managing Editor of Me Three. She can be contacted at sstodola@methree.net.
© 2003 Me Three