If Nike Defends Itself, Is That a Commercial? ; Wednesday, the High Court Tackles Parameters of Free Speech, in a Decision That May Determine How Companies Rebut Criticism

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For years, Nike Inc. has been under pressure for the labor practices of its contractors in developing countries. Now, the world's largest athletic-footwear company - known for its swoosh icon and high-priced pitchmen - has gone to the Supreme Court to argue for its right to free speech.

The case, to be heard Wednesday, centers on Nike's ability to participate in public debate over its foreign business operations - which critics call dangerous and immoral - without being held liable for any false or misleading statements. The question is whether Nike is engaging in commercial speech, which is subject to civil charges if found to be false, or political speech, which enjoys greater protection under the First Amendment.

"This case is extremely important, because the court has never really tackled the difficult issue of how you draw the line between commercial speech ... and what we think of as traditional First Amendment expression," says Ann Brick, a lawyer for the American Civil Liberties Union Foundation of Northern California. Aside from its corporate impact, she notes, the outcome could affect labor unions and advocacy groups, whose public statements can have a commercial dimension.

The Nike case also reflects the difficulty of overseeing social and environmental practices of multinational corporations - important to some investors - in an increasingly globalized economy. Corporate America and free-speech advocates have sounded alarm bells over the case, warning that if Nike loses, the decision could have a chilling effect on public discourse over matters of public concern. Nike says it should have the same speech rights as its opponents when participating in a debate over its factories. Critics argue that Nike shouldn't have a constitutional right to lie.

"There are plenty of critics of Nike out there presenting their side of the argument for citizens and consumers to evaluate," says Walter Dellinger, a lawyer for Nike and a constitutional scholar at Duke University. "The First Amendment leaves the resolution of that debate up to the marketplace of ideas, not to courts or other government agencies."

Medea Benjamin, founding director of the social-justice organization Global Exchange, disagrees. Nike makes claims about factory conditions aimed at easing concern over how its products are made and thus, "this is commercial speech," she says. "It's supposed to be the truth."

A test for advertising's boundaries

The Beaverton, Ore.-based company contracts out production to some 900 factories in 51 countries with more than 600,000 employees. Several years ago, Nike began to suffer negative publicity over allegations that conditions in its Asian factories were dangerous and that workers there were badly treated and underpaid.

The Supreme Court case stems from a 1998 lawsuit, in which San Francisco activist Marc Kasky asserted that Nike made false statements about sweatshop conditions in its Asian factories. Mr. Kasky - saying that Nike's statements violated California's unfair- competition and false-advertising laws - sought a court order to financially penalize Nike. …


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