Nike settlement leaves key speech issues unresolved

BEAVERTON, OR: Nike's decision to settle the high-profile suit brought against it by activist Mark Kasky has left the core legal issue raised by the suit - whether free-speech protections extend to corporate speech - unresolved. The settlement was announced September 12.

BEAVERTON, OR: Nike's decision to settle the high-profile suit brought against it by activist Mark Kasky has left the core legal issue raised by the suit - whether free-speech protections extend to corporate speech - unresolved. The settlement was announced September 12.

The suit was originally provoked by a Nike PR campaign that discussed the labor conditions in its overseas manufacturing facilities. Kasky disputed the claims made in that effort.

The case eventually evolved into a wrangle over whether the US Constitution's free-speech protections extend to PR efforts.

The settlement follows a June decision by the US Supreme Court not to rule on the speech issue.

In arguments in front of the High Court, Kasky's lawyers argued, among other points, that the words of the company's spokespeople should be considered "commercial speech," like advertising, and are therefore not protected by free-speech rights. Nike's legal team asked the court to dismiss the suit on the grounds that the PR effort enjoyed free-speech protection under the First Amendment. The High Court declined to rule on the suit, allowing the case to proceed through the California trial courts, leading Nike to settle.

"The takeaway from this is that we still don't know where this leaves us," said Harlan Loeb, US director of litigation services for Hill & Knowlton. "The Supreme Court could have given more clarity but didn't. And settling the case is another missed opportunity to give more clarity to something that needs more definition."

Just how chilling an effect the settlement will have on corporate speech remains to be seen. It has already impacted Nike for sure, as the company intends to curtail some of its corporate PR efforts, such as no longer releasing its corporate social responsibility reports.

"We're pleased in some respects that we've gotten this behind us," said Kirk Stewart, Nike's VP of corporate communications. "But we're disappointed the issue remains. We and every other company that does business in California will continue to face this issue. And organizations that do business in California will have to be more restrictive surrounding their communications."

Stewart and analysts said the only way the case would get back to the Supreme Court is if Nike litigated the case and lost, and then appealed to the Supreme Court.

Per the final settlement, Nike admits no liability, but agrees to spend $1.5 million on workplace-related issues over the next three years above what it usually spends on such initiatives.

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