Supreme Court looks at free speech

WASHINGTON -- Nike hoped to improve its bottom line and its public image when it embarked on a public relations campaign against allegations it used Third World sweatshops to make sneakers, a lawyer told the Supreme Court on Wednesday.

Nike's effort is the centerpiece of an argument over free speech in the business world and whether private consumers can go to court if a company stretches the truth.

Nike painted a rosy picture of its labor practices and consumers relied on those misrepresentations when choosing which products to buy, attorneys for a California activist argued. That is false advertising not protected by the First Amendment, and Nike should be made to answer for it in court, attorney Paul R. Hoeber told the court.

Not so fast, several Supreme Court justices replied.

"The First Amendment is designed to protect all participants in a public debate," Justice Stephen Breyer said.

The government can police false or deceptive advertising, but companies should be free to respond to their critics, Breyer said. It is extremely hard to say what is a sales pitch and what is not, he added.

"They can be both trying to sell a product and trying to make a statement relevant to the public debate," Breyer said.

The distinction makes all the difference because of the way the Supreme Court has treated advertising and other forms of "commercial speech" in the past. The court has resisted a black-and-white definition of commercial speech but has repeatedly said that it deserves less constitutional protection than might a political statement or a newspaper article.

The Nike case offers the court an opportunity to draw the line more clearly.

The case arose from a public debate over allegations that big American firms exploit their foreign workers. Nike became a "poster child" for that debate in the mid-1990s, the company's attorney told the high court Wednesday.

When Nike fought back, it used the same kind of public relations tactics employed by its critics, attorney Laurence Tribe argued for Nike. The company, the world's largest maker of athletic shoes, wrote letters to newspaper editors and issued press releases, fact sheets and other documents.

Such statements are part of the marketplace of ideas, the company claims.

"It's part of an extended argument about why the allegations against Nike are unfounded," Tribe said.

The company said that it paid good wages and that working conditions met strict standards. It pointed to a report commissioned by Nike in which former United Nations Ambassador Andrew Young gave generally good marks to the company's overseas factories. Young also pointed to areas he said needed improvement.

Nike got help Wednesday from the Bush administration's top Supreme Court lawyer. Solicitor General Theodore Olson told the justices that a California court gave the California critic, Marc Kasky, too much authority to go after Nike in court.

Unless the Supreme Court says otherwise, the Nike case could mean that "anyone with a whim, a grievance and a filing fee can become a government-licensed censor," Olson argued.

No one wants to stop Nike or other companies from speaking up, Kasky's lawyers countered.

The point is that when a company speaks, it ought to tell the truth or pay the consequences in court, Kasky's lawyers told reporters outside the courthouse.

"The fact is, when they make specific representations about the conditions under which their products are made that are false, well that's not OK because consumers rely on what companies say," Kasky lawyer Patrick J. Coughlin said.

The company is hiding behind the notion of free speech, he said.

"They moved to get rid of it on First Amendment grounds, hoping that their lies would be completely protected," Coughlin said of Kasky's case. "No. In the First Amendment arena, you can't lie about your products. And that's what this case is about."

Public interest and consumer activists dragged a large cardboard mock-up of a Nike sneaker to the sidewalk outside the Supreme Court building Wednesday morning, and positioned it atop a cardboard sheet depicting the Constitution.

"Tell the Truth - Just Do It!" read one protester's handmade sign.

Nike wants the Supreme Court to overturn a ruling by California's top court that would allow Kasky to sue the firm under state law. The justices spent a significant portion of Wednesday's 70-minute oral argument session examining whether Kasky, a private citizen who admittedly never bought a pair of Nike sneakers, should be able to sue on behalf of the general public.

Kasky sued five years ago, but his allegations have never gone to trial.

Forty large media companies, including The Associated Press, signed a friend of the court brief favoring Nike.

Corporate executives won't talk about product safety or other important issues if they fear their words will lead to a lawsuit, the media organizations said.

The case is Nike v. Kasky, 02-575.