US Supreme Court opts not to rule on Nike PR case

WASHINGTON - The US Supreme Court today declined to rule on whether Nike can be sued for allegedly making misleading statements in its PR materials, effectively allowing the case by California activist Mark Kasky to go forward.

The company and its supporters expressed disappointment at the high court's action.

"Companies should be free to voice their opinions through PR or advertising on major issues that impact their business," said Bob Liodice, President and CEO of the Association of National Advertisers. "Our members' right to free expression has been severely limited by the California law and this lawsuit."

Kasky filed suit against Nike in 1998, claiming that the company had issued false and misleading press releases in order to defend itself against accusations of exploitative labour practices. Kasky claimed that such PR materials should be considered, like advertising, to be "commercial speech," which is not protected by the First Amendment and hence is held to a higher legal standard of accuracy.

The issue before the court was not whether Nike was liable for making false statements, but whether Kasky should be allowed to sue the company at all.

Nike claimed that the suit should be dismissed because the statements were made in the context of a political debate and should enjoy First Amendment protection. Nike and its supporters warned that if the court allowed the suit it could have a chilling effect on corporate speech.

Several prominent media companies filed briefs on Nike's behalf, including Microsoft and The New York Times Company.

In dismissing the case on technical grounds -- implying that the justices never should have agreed to hear the case in the first place -- the court effectively allows the case to continue. But the court did not resolve whether a PR campaign enjoys First Amendment free-speech protections.

Nike representatives said they were disappointed with the dismissal, but unsure of what would come next.

"We look at the opinion as essentially not resolving what we hoped to have resolved today," said legal counsel Jim Carter. "The case goes back to California, but the process is a bit skewed ... ultimately there could be a trial."

"This is not just about the rights of companies, this is about the rights of citizens to hear both sides of a debate about corporate issues," said former-acting Solicitor General Walter Dellinger, who represented Nike in the case. If PR material were to be considered commercial speech, he added, "citizens would only hear distorted views and the press would only hear one side of the argument regarding difficult and important issues."

PRSA President and CEO Reed Bolton Byrum said, "We believe that the Supreme Court is unable to fathom the growing complexity of communications in our society, and this ignorance and naivete imperils corporate communications."

At least three justices -- Anthony Kennedy, Sandra Day O'Connor, and Stephen Breyer -- said they wished the court had ruled on the case.

"In sum, I can find no good reason for postponing a decision in this case," Breyer said.

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