ANALYSIS: Court sidestep ensures Nike debate will continue to loom

The Supreme Court's failure to rule on Nike vs. Kasky is prolonging the conclusion to a case that will long define what constitutes free and commercial speech.

The Supreme Court's failure to rule on Nike vs. Kasky is prolonging the conclusion to a case that will long define what constitutes free and commercial speech.

Not since the Supreme Court's infamous decision in New York Times vs. Sullivan, nearly 40 years ago, has there been a case with as much import and practical significance for PR as Nike vs. Kasky. Despite anxious anticipation and a flurry of briefs, opinion articles, and buzz among the chattering class of free-speech advocates and consumer protectionists, the Supreme Court dismissed the Nike case on technical grounds. While the basis for the dismissal makes for great cud chewing for lawyers on issues of standing, jurisdiction, and finality, ironically, the Supreme Court's silence on the merits of the case sounds with braying timbre for modern-day PR. Whether and to what extent a corporation, or any other commercial entity, enjoys the free-speech benefits of the First Amendment - the central theme of the Nike saga - presents a momentous and historic values conflict that penetrates the core of our constitutional democracy. More immediate to PR, the case continues to hold the potential to radically redefine the nature and spirit of our profession. Let's remember that the contested communications pertaining to Nike's labor practices concentrated on non-product-specific information - specifically letters and reports - intended to help Nike defend its reputation in the court of public opinion; strategies essential to any strategic communications campaign. The central conundrum dismissed by the Supreme Court in one sentence focused on whether Nike engaged in First Amendment-protected free speech, or in regulated commercial speech, which is subject to the sanction of consumer protection laws. The trial and appellate courts both agreed that the First Amendment protected Nike's conduct, but the California Supreme Court disagreed, though didn't make a final decision. The net of all is that the Nike case will proceed in California, all of the issues that have been percolating thus far will remain the object of public discourse, and Nike will likely raise its First Amendment defense once again. Protecting consumers The delicate challenge that Nike presents for PR is that when a corporation speaks in non-product or non-service-specific terms there will always be a constitutional mixed metaphor - elements of commercial speech and pure free speech will inevitably be intertwined. Consequently, the values tension between the bedrock democratic principle of free speech and the public interest served by protecting consumers is animated graphically by the Nike case. But the vivid discord in these fundamental social principles presents a balancing act that only King Solomon may be capable of negotiating. On one hand, any statement a corporation makes influences "the buy decision" on some level, and therefore can be reasonably construed as commercial speech appropriate for government regulation. Clearly, there is consensus on the need to protect consumers from false and misleading advertising. For PR, however, the analysis is more subtle and acute. Broad-based reputation management programs and social responsibility initiatives, for example, possess, among other interests, a bottom-line agenda. Inasmuch as companies realize that good corporate citizenship sways consumer choice, a properly calibrated corporate personality will include community-directed and image-enhancing traits. Corporate donations to political action committees and campaigns (a common expression of currently protected political speech) have compelling commercial motives as well. Consumer decisions relative to products or services are frequently based on corporate reputation and consumer perceptions about the company. Thus, there seems to be no scenario in which there is absolutely no correlation between corporate expression and commercial interests. Reasonable minds contend, therefore, with the force of legitimate social and regulatory interests behind them, that since all corporate statements, programs, policies, and procedures influence consumer decisions, there should be no latitude or wiggle room in holding companies to the fire of empirical accuracy. As the argument goes, though the consumer may suffer no physical or financial injury, there is psychic or emotional injury suffered by the consumer resulting from corporate driven "misperceptions" about the company. In conversational parlance, "had I known the truth about them as a company I would never have made the purchase or invested in their stock." The Nike case also presents a stark contrast to the pure protectionist view on corporate communications. In underscoring the social and public value of corporate participation in matters of opinion, debate, and thought leadership, it is manifest that muting their voice will diminish the richness of the free speech landscape. Allowing corporations to participate in the free flow of ideas represents a compelling interest both to companies themselves and to democratic interests generally. Like all matters of opinion, corporations contribute significantly on issues from corporate governance and foreign trade to environmental standards and the economy. Often, corporate involvement in pluralistic discussions on the cutting-edge issues of our time makes us all the beneficiaries of innovations in thought. More specific to PR, the vision and values of companies, particularly key messages and corporate statements concerning brand identity, are appropriately aspirational. Notions of corporate positioning and other traditional PR campaigns, by design, embrace matters of opinion and policy constructed intentionally to be both reputation and revenue catalysts. The free-speech dimension of Nike vs. Kasky argues persuasively, therefore, that corporations should not be dispossessed of free-speech rights because corporate communications stake positions, make controversial claims, or may even be incorrect. Divesting corporations of the "right to be wrong," argue the free-speech purists, will have a chilling effect on the free exchange of ideas and will ultimately thrust corporate communications functions into the restricted hands of lawyers to ensure all communications hover well below the regulatory radar screen. As a result, consumers are deprived of important insights into corporate personalities and have less ability to influence the evolution of corporate character. The public debate continues Albeit unintentionally, the Supreme Court's sidestep in the Nike case keeps the discussion on corporate free-speech rights in the public square, where it should perpetually live. Perhaps there is no better illustration of the propriety of this premise than the now dated diatribe on corporate governance. While there has been a blur of legal and political responses, at its roots, corporate governance, as a term of art, elicits an explicit connection to a material breach of public trust. And Sarbanes-Oxley and all other legal and legislative responses are incapable of resuscitating faith. Rebuilding public trust is a marathon, not a sprint, to the legislative floor or nearest courthouse. Corporations will have to look at each of their vital stakeholders and address "trust" in terms that reverberate with each class individually. The lesson is that reputational reprimand has been far more influential on corporate behavior than has any legislation or legal decree. This isn't to say that there is no room for legal and legislative responses, of course there is, but it does suggest that reputational liability has a more enduring influence on corporate conduct than does legal liability. Paradoxically, creating a legal wall that introduces constraints on corporate speech limits the public from access to the open flow of information that will enable it to make educated corporate "buy" choices; resulting in weakened corporate accountability. This seems not to be the outcome Mr. Kasky seeks. The specter of the Nike case makes one thing crystal clear: Corporate reputation has tangible commercial value because it presupposes that it can influence consumer behavior. The takeaway in counseling our clients is that we must insist that integrity, ethics, and conscience be the litmus test for the suitability and utility of all corporate communications initiatives. If we're successful, corporate "share of voice" in the marketplace of ideas will be a desired and respected source of illumination. And if, and more likely when, the Supreme Court is once again presented with the Nike question, the decision is best left to the give and take residing in the relationship between corporations and their consuming public, rather than the pronouncements of a court of last resort.
  • Harlan Loeb is US practice director for litigation services at Hill & Knowlton and is a member of the adjunct faculty at Northwestern University Law School. As the former Midwest counsel for the Anti-Defamation League, he concentrated on First Amendment issues.

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