Nike, Inc. v. Kasky
156 L. Ed. 2d 580, 539 U.S. 654, 2003 U.S. LEXIS 5015 (2003)
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Rule of Law:
When a corporation makes factual representations about its own business operations in communications directed to a commercial audience to promote sales, such communications constitute commercial speech and may be regulated under state consumer protection laws to prevent falsity or deception, even if the speech also addresses matters of public concern.
Facts:
- Beginning in the 1990s, Nike, Inc. faced widespread public criticism and allegations that it mistreated and underpaid workers at its foreign manufacturing facilities.
- In response to these allegations, Nike engaged in a public relations campaign to defend its labor practices.
- This campaign included issuing press releases, sending letters to newspaper editors, and distributing communications to university presidents and athletic directors.
- In these communications, Nike made factual claims about its operations, such as assertions about working conditions, wages, and compliance with local laws, aimed at countering the negative allegations.
- Marc Kasky, a California resident, did not allege any personal injury or financial loss resulting from Nike's statements.
- Kasky alleged that Nike's statements contained false and misleading information and were made for the purpose of maintaining and increasing sales of its products.
Procedural Posture:
- Marc Kasky sued Nike, Inc. in California state trial court under state unfair competition and false advertising laws.
- Kasky filed the suit as a 'private attorney general' on behalf of the public, alleging no personal injury.
- Nike filed a demurrer (motion to dismiss), which the trial court granted on First Amendment grounds.
- Kasky appealed to the California Court of Appeal (an intermediate appellate court), which affirmed the dismissal, finding Nike's communications to be protected noncommercial speech.
- Kasky then appealed to the California Supreme Court (the state's highest court).
- The California Supreme Court reversed, holding that Nike's statements were commercial speech subject to regulation and remanded the case for trial.
- Nike (as petitioner) petitioned the U.S. Supreme Court for a writ of certiorari, which was granted.
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Issue:
Does a corporation's speech about its labor practices and corporate responsibility, when made to defend its reputation and maintain sales, constitute commercial speech that may be regulated for falsity under the First Amendment?
Opinions:
Disposition - Per Curiam
The writ of certiorari is dismissed as improvidently granted. The Court did not reach the merits of the case and offered no majority opinion on the substantive First Amendment issue.
Concurring - Justice Stevens
The Court should not decide the issue at this time. The dismissal is appropriate for three reasons: 1) The judgment of the California Supreme Court is not 'final' under 28 U.S.C. § 1257, as it remanded the case for further proceedings and does not fit within the exceptions outlined in Cox Broadcasting Corp. v. Cohn. 2) Neither party has Article III standing to be in federal court; Kasky alleged no personal injury, and Nike is appealing an interlocutory ruling, not a final judgment that alters its legal rights as required by ASARCO Inc. v. Kadish. 3) Prudential avoidance dictates that the Court should not decide novel and complex constitutional questions on an undeveloped factual record, as a full trial would better inform the correct legal resolution.
Dissenting - Justice Breyer
No, a corporation's speech on matters of public concern should not be categorized as regulable commercial speech simply because it could influence purchasing decisions. The Court has jurisdiction and should decide this case on the merits. Nike has standing because the threat of a costly lawsuit creates a chilling effect on speech, which constitutes a concrete injury. The state court's judgment is 'final' for review purposes under the fourth Cox exception because the federal issue has been decided and refusing review will seriously erode First Amendment policy. On the merits, Nike’s speech is a mixture of commercial and non-commercial content on a matter of public debate and thus deserves heightened First Amendment protection. California’s law, allowing a private attorney general with no injury to bring suit under a strict liability or negligence standard, imposes a disproportionate burden on speech and cannot survive heightened scrutiny.
Analysis:
The Supreme Court's dismissal left the California Supreme Court's ruling in place, creating significant legal uncertainty for corporations. This decision blurred the line between protected public advocacy and regulable commercial speech, suggesting that a company's public relations efforts on social issues could be treated as advertising. Consequently, the ruling had a potential 'chilling effect' on corporate speech, as companies faced the risk of litigation under consumer protection laws for any statement about their business practices that could be deemed misleading. This case highlighted the unresolved tension between protecting consumers from false advertising and protecting a corporation's right to participate in public debate.
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