Issue Brief
U.S. Supreme Court Dismisses Nike Case

Date: Jul 02, 2003

In a surprise per curiam decision, the U.S. Supreme Court ruled on June 26, 2003 that the writ of certiorari granted in Nike, Inc. v. Kasky, 539 U.S. ____(2003) was improvidently granted, and dismissed the suit. Six of the Justices supported dismissal. First Amendment and corporate responsibility advocates are disappointed that the Court did not rule on the thorny question of what constitutional standard applies to so-called "mixed" corporate speech.

At the heart of the case is not just the issue of when speech can properly be characterized as "commercial," but also, more fundamentally, whether a distinction between commercial and non-commercial speech can be constitutionally supported, or whether, in an era where companies are called upon to defend their operations as well as their products, it is time to introduce a new constitutional test in evaluating such speech. The dissenting and concurring opinions provide tantalizing glimpses of a possible new approach to speech from commercially motivated speakers touching on matters of public importance.

It is the question of whether so-called mixed speech - speech affecting both the marketplace and involving the marketplace of ideas - should be ruled by different constitutional standards that drew so many interested amici in the case. In his dissenting opinion, Justice Breyer acknowledged that the California statute puts a greater burden on commercial speakers versus non-commercial opponents when speaking on issues of public importance. This double standard does in fact exist.

For example, several years ago, the environmental group Greenpeace promoted a "non-PVC" credit card in direct to consumer offers, touting it as "degradable." Of course, the Federal Trade Commission's (FTC) Guides for the Use of Environmental Marketing Claims specifies that a product cannot be described as "degradable" unless the product would in fact degrade under real life conditions. The Guides provide that:

An unqualified claim that a product or package is degradable, biodegradable or photodegradable should be substantiated by competent and reliable scientific evidence that the entire product or package will completely break down and return to nature, i.e., decompose into elements found in nature within a reasonably short period of time after customary disposal.

The fact that the customary type of disposal for a credit card simply does not involve tossing it into the woods alone suggests that neither Greenpeace nor the issuing bank could have offered appropriate substantiation in accordance with the Guides. Yet, although this speech is a textbook example of speech that did "nothing more than propose a commercial transaction," since the FTC does not have jurisdiction over non-profit entities or banks, it could not initiate a formal enforcement action.

Both the commercial marketplace and the marketplace of ideas value truth, but "truth," in today's complex world, can be difficult to identify. A system which allows certain non-profit speakers to benefit from a preferential constitutional standard that holds them to a less stringent standard of "truth" than for-profit companies does little to further the public interest in informed public debate. Moreover, our system recognizes the need for even antitrust laws to take a back seat to First Amendment rights to lobby under the Noerr-Pennington line of cases. Surely it is consistent with Noerr-Pennington to consider, at a minimum, a more liberal constitutional standard for corporate speech connected to lobbying initiatives in the context of false advertising cases.

Whether speech is in the form of an editorial, a letter to the editor, a paid advertisement, a Corporate Responsibility statement, or some other form, under California's private attorney general statute, zealous private attorneys general can always find statements with which they disagree. The Court's decision to send the case back will force a perhaps expensive trial on the merits to assess the truth or falsity of the statements at issue in the Nike case. This will delay, or, if Nike prevails, perhaps eliminate entirely the possibility that the Supreme Court will address this important constitutional question any time soon. An honest commercial marketplace is critical, and a system of allowable challenges to purely commercial speech, regardless of the for profit or not for profit characterization of the speaker, may be needed to assure market integrity, consumer confidence, and fair competition. The Supreme Court's decision not to rule on Nike v Kasky after all, however, means that for-profit corporate speakers must carefully review the truth and accuracy of factual statements made in all sorts of communications and may face a higher burden than their non-profit critics with respect to their statements.

For more information please contact Sheila Millar at 202/434-4143 or by email at millar@khlaw.com