The Peculiar Character of Kasky’s Consumer Complaint

The legal posture of Nike v. Kasky is so unusual that it smacks of an idea born in the brain of a devilish Socratic-minded law professor. Recall that Marc Kasky alleged no harm to either himself or the public.²⁹⁶ What he did allege was that Nike had negligently made false statements. In effect, then, this private attorney general was using the force of the law to compel Nike to tell the truth regardless of a charge, let alone proof, of any injury. Apparently authorized by the peculiarities of California’s unfair business practices law, Kasky used the State’s courts as “truth commissions” to interrogate and punish Nike. In this respect, he wished to take the dispute about Southeast Asian sweatshops out of the court of public opinion and into the court of law. What was once a matter of public debate became a matter of private litigation.

Running with Nike (or How Are We Injured?)

We trust that there are certain kinds of corporate misrepresentations that are immune from any kind of First Amendment protection, even in the eyes of the most stalwart libertarian. Consider the following examples:

· Nike advertises in newspapers that a particular pair of shoes costs $15, when in fact they cost $50.

· Nike advertises on radio that its shoes have reinforced arches, when in fact they do not.

· Nike advertises on television that its shoe tops are made of “100% leather,” when in reality they are made of simulated leather.

Assume, in all three scenarios, that consumers who purchased the products relied upon those corporate assurances. Such examples are blatant illustrations of actionable misrepresentations, and contract law would have little difficulty in finding material breaches. It would be ludicrous, we postulate, to craft any New York Times Co. v. Sullivan defense to protect the corporations against liability for these falsehoods. That being said, liability would typically depend on some allegation of injury to a purchaser, although that would be easy to do here. In this context, the harm principle readily trumps the free-speech principle.

By contrast, there are certain kinds of corporate misrepresentations that would be beyond the pale of government regulation. Consider the following examples:

· Nike advertises in newspapers: “Save an Endangered Species—Yourself.”

· Nike advertises on radio that any kid who wants to “be like Mike” should buy its shoes.

· Nike advertises on television that “Nike has the blessings of the Greek gods.”

These situations are obvious instances of non-actionable misrepresentations. Certainly, contract law would consider all of them to be puffery at best and illusory at worst. It would be preposterous to posit any meaningful consumer harm, as the First Amendment would unquestionably protect Nike’s exaggerations. The law obviously allows such imaginative artistry, whether in noncommercial or commercial speech. In this context, the free-speech principle readily trumps the harm principle.

But what about the gray area, the world of mixed messages where the line between product information and corporate puffery is not easily demarcated? Moreover, since a corporation is a market player, how can it ever make political statements that are not automatically characterized as commercial? Consider the following examples:

· At a “V-Day”²⁹⁷ press conference, Nike announces that it has joined the corporate sponsors of the violence-against-women campaign, which is a common practice likely to improve a corporation’s public image. Later, an anti-corporate activist group charges that Nike knowingly tolerates abuses against women in its foreign factories.

· Phil Knight, Nike’s CEO, appears on Larry King Live and, in response to a question about corporate responsibility and the environment, says “our company is committed to being ‘Green.’” An investigative reporter later reveals that a Nike plant in Taiwan has polluted the local water supply.²⁹⁸

· Same facts as in the actual Nike case, before litigation. This time, however, the company’s representations as to its working conditions in foreign factories are made at a stockholders’ meeting.²⁹⁹

· Same facts as in the actual Nike case, before litigation. This time, however, the company’s representations as to its working conditions in foreign factories are made to college coaches who had informed Nike that they would no longer purchase its products absent clear assurances that the workers were neither underpaid nor physically abused.

How do we get a conceptual hold on these hypotheticals? In these circumstances, what constitutes harm and what qualifies as protected speech?

For Marc Kasky and his lawyers, the answer is straightforward: All are actionable under the California law because harm needs not be alleged or proven. It is enough to assert baldly that the company misrepresented verifiable facts within its knowledge and control, whether done accidentally, recklessly, or willfully. In fact, it might be legally sufficient to demonstrate no more than that the statements were false.

For Professor C. Edwin Baker,³⁰⁰ the answer is equally straightforward: All are actionable, under any state or federal consumer protection law, because for-profit corporations, other than those in the media,³⁰¹ are not entitled to First Amendment protection.³⁰² In other words, liability turns categorically on the identity of the speaker, not the content or the context of the speech.