Global Policy Forum

The Supreme Court action leaves open the question of commercial free speech. The commercial code states that companies may not make false claims in their advertising.

Kasky's suit against Nike, however, concerned a public relations campaign of letters and other public communications. The line between advertising and public relations has become increasingly blurred, and so it is no easy problem to determine whether Nike's statements were or were not protected under the US Constitution.

Nike had appealed to the Supreme Court that these public communications are not advertising, which would be governed by the strictures of the commercial code, but are corporate "speech" and so are protected by the free speech provision of the First Amendment of the US Constitution. The First Amendment says that "Congress shall make no law…abridging the freedom of speech, or of the press." Over many years, that provision has been interpreted to allow all kinds of political speech, but to not allow "commercial speech" that makes false claims.

Nike had asked the Supreme Court to declare unconstitutional the California law under which Kasky brought his original lawsuit. The California consumer protection law allows individuals, to sue companies for false advertising. Had the Court agreed with Nike's argument, the California consumer safety law would have been declared unconstitutional, and the legal battle would have ended immediately.

Barring any further constitutional appeal by Nike, Kasky can now move ahead in trying to prove that Nike lied in its public affairs campaign. "We now have the opportunity to go to trial to determine if Nike's comments were true or not," Kasky told The Associated Press on the day the Supreme Court refused to review the case.

Kasky's suit challenged Nike: You put your facts on the table, and I'll put my facts on the table. Then the court will decide whether the conditions in your contracting companies amount to sweatshop conditions. But the "facts" themselves have been in dispute.

What is a "sweatshop" after all? Should third world factories, where people are evidently happy for factory jobs making products for export and often are paid more than workers in an economy's domestic sector, have the same worker safety and pay standards as in US or European workplaces? Don't lower safety and pay standards serve developing countries by making them more competitive, and thus more able to work their way out of poverty? Are anti-sweatshop protests merely a smokescreen for protectionism?

The answers to these questions have been debated in editorials, opinion articles, parliaments, street demonstrations and many other forums around the world.

The World Trade Organization's provisions strongly discourage nations from excluding imports of goods because of the way those goods have been produced. Disputes land in the WTO's dispute resolution process, which operates by consensus.

Rarely, however, have these questions been tested in a national court of law, whose decisions could have international consequences. Because US law underlies the commercial activity of US-based corporations around the world, decisions reached in US courts will shape millions of international transactions. Even corporations that are based elsewhere will have to follow US law if they hope to sell their products and services in the United States.

If California courts rule that Nike did lie in its public relations campaign, Nike could be required to pay damages.

Nike appears unfazed, though. "We believe that all consumers and other stakeholders should be able to make their own assessment of a company's performance based on robust, credible and relevant information," Maria Eitel, a Nike executive was quoted in news reports as saying. Eitel is Nike's vice president and senior adviser, corporate responsibility. "Equally important, we also believe that all stakeholders should have the benefit of common performance criteria through company reports to make such assessments."

The Supreme Court could review the case again, after California courts finish their work. Although Nike and its critic have been tossed out of the nation's highest court, they have not exited the national - or the international - spotlight for long.

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