Two Principles

Nike wants customers not simply to buy its goods but to believe in Nike;
not only to assess the quality of the products but to believe in the “motivations” of the producers.

-- Benjamin R. Barber²⁹⁰

Commerce is linked to communication. Without reliable and trustworthy communications, commerce as we know it, from simple two-party contracts to multinational and multilateral dealings, would be impossible. People and companies rely on truthful transactions, business dealings free of false or misleading statements. This basic precept suggests one obvious reason why we allow the government to police transactions: to prevent harm to the parties. Consumer protection laws were devised, in part, to diminish such harm to purchasers of products and services by buttressing consumer rights beyond the constraints of private contract law. In other words, mass transactions might then be regulated in situations where the harm was otherwise too inconsequential to a particular consumer to make it worth his or her while to litigate by way of contractual remedies. Consumer protection statutes, including unfair business practice laws, safeguard consumer dealings by allowing a mass remedy for a mass wrong. Still, the operating premise is that some consumer or class of consumers has been injured in some commercial way that we as a society deem meaningful.

In the tumble of communications from sellers to consumers, not all communications are held to exacting standards enforceable under law. For example, even the old common law did not hold sellers strictly liable if their representations to consumers amounted to puffery. And not all expectations based on representations had to be honored at common law if such expectations were commercially unreasonable.²⁹¹ Within such general boundaries, then, the harm principle operates in both contract²⁹² and consumer protection law.

Absent any harm to consumers, there is little, if any, justification for regulating the communications of sellers. Moreover, there is good reason to extend First Amendment protection to such communications—provided, of course, one believes corporations should have constitutional rights at all. That, we submit, is the operative logic of Virginia Pharmacy and its conceptually faithful progeny. The harm principle is the primary, if not determinative, reason why false statements do not receive constitutional protection in the commercial setting. If such communications involve matters beyond the boundaries of a specific transaction, they cause either no harm or no material harm to consumers as consumers and are, therefore, at least candidates for speech that might be characterized as political. In this realm, New York Times Co. v. Sullivan teaches us there is either no harm or whatever harm that may befall citizens stands to be remedied by the free exchange of opinions in the marketplace.

The controversy that occasions this Symposium is one that can be considered and charted between two principles: the harm principle and the free-speech principle. The free-speech rights of sellers diminish proportionally depending on how direct, immediate, and substantial the harm is to consumers. By the same analytical token, when such harm is not readily discernible, the free-speech rights of sellers increase.

Against that backdrop, consider Nike v. Kasky. Two points are especially significant in attempting to reach some measure of clarity here. Consider, first, the changing nature of commercial transactions in America, and second, the nature of the allegations made by Marc Kasky when he filed his consumer complaint against Nike.