INTERNATIONAL: Letter From America - 'Nike court verdict could have a devastating impact'

Nike's US courtroom battle over conditions in its factories in South-East Asia could have far reaching implications, writes leading US commentator Paul Holmes.

As I write, Nike's PR executives are awaiting the verdict of the California Supreme Court on a case that has implications not only for the athletic shoe marketer, but also for the entire PR industry. By the time you read this, a verdict may have been reached - one that could have a devastating impact on what companies under fire from activists can do to defend themselves.

Nike has been accused of violating laws designed to protect consumers from deceptive advertising. However, the case doesn't involve claims Nike made about its trainers, but a campaign defending the company's labour-relations record in Asian factories.

In February, lawyers debated whether the campaign was political speech, which is protected by the First Amendment, or commercial speech, which is subject to California state law.

Nike argued that its campaign was 'classic political debate'. But critics claim the campaign was commercially motivated.

The case would be troubling if it involved a paid ad - but it doesn't. It involves a press release distributed by Nike, denying abuses at its plants, and citing a favorable report by Andrew Young, former US ambassador to the UN. The company said it guaranteed a 'living wage' to all its workers, that its workers in Southeast Asia make twice the local minimum wage, and that it complies with local government regulations on workplace issues.

Normally, journalists would evaluate these claims, as well as the counterclaims of the company's opponents. Ultimately, readers would be able to evaluate the credibility of both parties and come to their own decision.

But if Nike's critics successfully silence the company, it would create a situation in which activists could make any claim they like about a company's policies and practices - as long as they weren't doing so for commercial purposes - while the corporate response, if there was a response, would be subject to intense scrutiny.

That would be great news for demagogues (and - not incidentally - for trial lawyers), but lousy news for the public, whose interest is best served by allowing both sides of any argument to be heard and discussed openly.

Nike has received little support from the PR industry. The Public Relations Society of America, for example, has made no official statement on what is clearly a subject of interest to all its members.

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