From Nike V. Kasky to Martha Stewart: First Amendment Protection for Corporate Speakers' Denials of Public Criminal Allegations

By Caillavet, Cynthia A. | Journal of Criminal Law and Criminology, Summer 2004 | Go to article overview

From Nike V. Kasky to Martha Stewart: First Amendment Protection for Corporate Speakers' Denials of Public Criminal Allegations


Caillavet, Cynthia A., Journal of Criminal Law and Criminology


I. INTRODUCTION

Richard Epstein once said that "[i]t is difficult to conceive of ... a defense of freedom of speech so pure as to countenance securities fraud.... (1) The regulation of false or misleading statements of material fact under the securities laws, (2) like other regulations of false or misleading commercial speech, has been upheld under First Amendment analysis, despite the fact that such regulations necessarily curtail speech. (3) This rubric is problematic, however, when applied to certain types of corporate speech that have become prevalent in today's climate of overlapping legal, political, social, economic, and popular culture.

In particular, as highly publicized allegations of corporate criminal wrongdoing are becoming more and more common, a lively public debate, fueled by the news media, has developed regarding the guilt and innocence of "corporate celebrities." Corporate criminal allegations have incited an upsurge in a form of advertising known as the corporate image campaign, which focuses not on the products or services a company offers, but on improving the public image of the corporation itself. (4) However, public denials of criminal allegations seemingly transcend categorization as mere corporate image campaigning. Where the speech of a commercial entity is a denial of criminal allegations, such speech should be more protected than typical low-value "commercial speech," like product advertising.

Both Martha Stewart and the Nike corporation have become embroiled in legal battles stemming from their potential liability for public statements made to defend against highly publicized allegations of criminal wrongdoing. (5) Potential liability in each case (securities fraud against Stewart and false advertising against Nike) stems from the fact that the commercial entity's denials may have affected the public's view of the corporation's business such that the speech has been categorized as lesser protected "commercial speech." (6) These two distinct corporate personalities and the analogous legal difficulties they have encountered suggest that a burgeoning class of corporate defendants may require application of unique judicial rules to avoid liability for statements merely denying public allegations of criminal wrongdoing. So long as the current trend toward highly publicized white collar criminal prosecutions continues, this class of corporate defendants dwelling in the public eye will require some protection. Regulations directed at curbing misleading commercial speech, such as securities fraud regulations and false advertising laws, for example, must be revisited to protect corporations' and corporate personalities' First Amendment speech right, a right that should be at its peak when speech is offered in defense of allegations of criminal wrongdoing.

Policy considerations favor some form of unique treatment for corporate entities facing highly publicized criminal allegations. When corporate entities face civil liability (or even criminal conviction) for their denials of public criminal allegations, speech at the heart of the First Amendment is chilled. In particular, a commercial entity's interest in self-expression is curtailed, and a valuable check on government overreach is circumvented. Moreover, by not permitting any response, the regulations on corporate speech may be unwittingly expressive on their own; silence in the face of criminal allegations may implicitly signal to the public a corporate entity's guilt or, at least, acceptance of the charges against them. Corporate entities and the investing and consuming public have strong interests in allowing the fullest dialogue possible on issues of corporate criminality. And because the government has available more narrowly tailored means of addressing problematic false statements made during the course of a criminal investigation and trial, such regulations of speech should not be permissible under the First Amendment. …

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