D.  California Ruling in Nike Case

Limits Protection for Corporate Speech

 

      One of the eternally elusive issues in the realm of commercial speech is just where to draw the line between messages that are “commercial” and those that are not.  Justice John Paul Stevens has consistently urged his colleagues to focus more on content and less on context, noting that “it matters whether a law regulates communications for their ideas or for their style.”  While the High Court has never directly addressed that issue, it will soon have the opportunity to do so.

 

California Supreme Court Decides Against Nike

      A sharply divided California Supreme Court held in May 2002 that a business may be liable to consumers for “commercial deception” based on “issue advertising” of a kind that had been assumed to be First Amendment protected.  Kasky v. Nike, Inc., 27 Cal. 4th 939 (Cal. 2002).  The specific focus of the case was on Nike advertisements, letters to the editor, and other communications that responded to allegations about the company’s labor practices at offshore manufacturing sites.  The California courts ruled that these messages were “commercial speech” and thus entitled only to limited First Amendment protection, despite their focus on a matter of intense public concern and interest, simply because one purpose of such messages may have been to enhance Nike footwear sales.

      Ironically, the California Supreme Court had been a leader in distinguishing between those messages that “do no more than propose a commercial transaction” and others that may be superficially similar but quite different in content.  In the mid-1980s, in fact, the California court explained that “commercial motivation does not transform noncommercial speech into commercial speech.”  The roots of that vital distinction, however, lay much deeper. 

      In the New York Times libel privilege case, the U.S. Supreme Court dismissed the plaintiff’s argument that, because the statements that triggered the Alabama libel suit had appeared in paid ad copy and not in news or editorial copy, they were unprotected commercial speech.  To the contrary, even though the space had been bought by the sponsors of the statement, this was clearly an “editorial advertisement” entitled to full First Amendment protection despite its context.  New York Times Co. v. Sullivan, 376 U.S. 254 (1964).

      In the Kasky case, however, a bare majority of the California Supreme Court held that Nike’s defense of offshore labor practices and policies was nothing more than “commercial speech,” and accordingly could be suppressed by a plaintiff who had suffered no injury but simply invoked a state law against false and deceptive advertising.  (The supreme court did not rule on whether Nike’s statements were true or false – only that they were commercial in nature and thus subject to the state’s trade practices law.)  The trial judge had dismissed the suit, ruling that the statutes that the plaintiff had cited were applicable only to purely commercial advertising, a category that clearly did not encompass Nike’s defense of its corporate personnel policies. 

      In place of its own previously protective standards, however, the California Supreme Court majority now announced a new three-part formula for deciding when paid messages are and are not commercial speech.  Focusing successively on the speaker, the intended audience, and the content of the messages, the majority came close to ruling that any corporate communication that pertains to a company’s products, and could possibly enhance the market for those products, is commercial speech.  Such a ruling would, for example, encompass “a modern, sophisticated public relations campaign intended to increase sales and profits by enhancing the image of a product or of its manufacturer or seller.”

      The dissenters, in two separate opinions, were sharply critical of such analysis.  They cautioned that, “taken to its logical conclusion, [the majority’s reasoning] renders all corporate speech commercial speech.”  More troubling, the majority’s approach “contravenes long-standing principles of First Amendment law” and “stifles the ability of speakers engaged in commerce, such as corporations, to participate in public debates over public issues.” 

      The other dissenting opinion added its author’s concern that, “under the majority’s test, only speakers engaged in commerce are strictly liable for their false or misleading representations [while] other speakers who make the same representations face no such liability, regardless of the content of their statements.”  Thus resulted an ironic asymmetry: While Nike’s critics are fully protected in their appraisal of company policy, “when Nike tries to defend itself from these attacks, the majority denies it the same First Amendment protection.”

      The California dissenters concluded by insisting that, where a corporate message contains both commercial and noncommercial elements, full First Amendment protection must apply.  “Attempting to parse out the commercial speech from the noncommercial speech in this context,” warned the dissenters, “would be both artificial and impractical.”  The U.S. Supreme Court was urged to intervene, given its long-standing concern with the protected status of such composite messages.  In January 2003, the Supreme Court granted review of the Kasky case, with oral argument scheduled for April and a decision likely in late spring or early summer.  Nike, Inc. v. Kasky, petition for cert. granted, 123 S. Ct. 817 (2003).  

 

Colorado Supreme Court Rules on Newsletter

      In sharp contrast to the Kasky decision, the Colorado Supreme Court has ruled that a profit motive does not deprive a defendant of what would otherwise be a valid “public concern” defense to a suit for invasion of privacy based on the unconsented use of another person’s name or likeness.  In Joe Dickerson & Associates v. Dittmar, 34 P.2d 995 (Colo. 2001), a private investigating company published in its newsletter an article about the felony conviction of a person whom the firm had been hired to, and did, investigate. 

      That particular issue of the newsletter, distributed free of charge to law firms, law enforcement agencies, and others, recounted the firm’s recent success in recovering stolen assets in several cases.  The article mentioned plaintiff Dittmar by name, and included her photograph.  The Dickerson agency’s achievement in solving the case and recovering the stolen property thus placed the firm in a light potentially favorable to current and potential clients.

            The Colorado Supreme Court ruled that the essential elements of a claim for invasion of privacy had indeed been met by Ms. Dittmar’s suit, thus reversing the trial court, which had dismissed the suit outright.  But the supreme court recognized that such misappropriation claims were always subject to a “newsworthiness” defense.  The role of that defense was complicated, however, because the Dickerson newsletter contained both commercial and noncommercial material.  In the end, the court found that “the defendant’s publication was primarily noncommercial because it related to matters of public concern” and thus merited protection under the privilege. 

      Finally, “the fact that the defendant’s reason for publishing the newsletter may have been his own commercial benefit does not necessarily render the speech ‘commercial’ … [a publisher’s] profit motive does not affect the fact that the article relates to the arrest and circumstances of a ... matter of legitimate public concern.”  While the Dittmar and Kasky cases are not precisely parallel, the contrast between the approaches to a shared issue is highly instructive.

 

-- Robert M. O’Neil