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If Nike defends itself, is that a commercial?

Wednesday, the high court tackles parameters of free speech, in a decision that may determine how companies rebut criticism.

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Last May, Kasky won. The California Supreme Court narrowly ruled that Nike was potentially liable for any false or misleading claims it made in public about its overseas operations.

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Though the statements in question were made in press releases, pamphlets, and on its Web site - not in formal advertisements - the court still found them to be "commercial speech," holding that the speaker, the intended audience, and the message were all commercial, or potentially commercial, in nature.

California's highest court didn't rule on the accuracy of Nike's statements, and instead sent the case back to a lower court for trial. But Nike didn't wait for a California trial. The company took Kasky to the US Supreme Court. In their brief, Nike's lawyers assert that the California Supreme Court expanded the definition of commercial speech "beyond all previously accepted bounds."

Citing US Supreme Court precedent, Nike's brief said that commercial speech must "propose a commercial transaction." In the 1970s, the Supreme Court extended some First Amendment protections to commercial speech, ruling that such speech may carry information relevant to issues of the day.

In its ruling, the California high court stated that it wasn't inhibiting Nike's right to defend itself - just that Nike must speak truthfully when it makes statements about its products or operations.

Confluence of markets and morals

Since the mid-1990s, when Nike first came under fire over its working conditions, the company has fought back, making promises in a voluntary code of conduct regarding labor. In 1997, Nike also commissioned former UN Ambassador Andrew Young to review the critics' charges, and Mr. Young concluded they were false. Nike then used political advertisements, press releases, letters to the editor, and newspaper opeds to publicize Young's finding. All of these communications, Nike says, were kept separate from advertising.

Advocates of corporate responsibility say it's impossible to separate the two, because increasingly, consumers and investors factor in the conditions in which products are manufactured.

Domini Social Investments, in a brief supporting Kasky, argues that if the Supreme Court grants full First Amendment protection to corporate speech, that would undermine reporting and disclosure requirements of the Securities and Exchange Commission - precisely "at a time when restoring investor confidence in the markets is crucial."

"The risk is that the Supreme Court will say the line between commercial and political speech can't be drawn, and if it can't be drawn, do we demote political or promote commercial speech?" says Burt Neuborne, legal director of the Brennan Center for Justice at New York University Law School. "They won't lower the protections for political speech." Instead, he says, the case could backfire against Nike's critics and end up enhancing speech protections for corporations.