Demanding a Right to Lie is an Odd Way to Restore Trust
By Jeff Milchen and Jeffrey Kaplan
Yet Nike Corporation lawyers advanced just that claim to U.S. Supreme Court justices last week in the case of Nike v. Kasky. The company hopes the Court will overturn a California Supreme Court decision that denied Nike's privilege to "plead the First" (Amendment) when charged with violating state anti-fraud laws. If the Court rules in Nike's favor, the case could dramatically expand corporate power while weakening tools that our state governments may employ to limit corporate influence.
In the face of much unfavorable publicity in 1996-1997, Nike conducted a public relations blitz to convince people it had cleaned up its subcontractors' "sweatshop" practices in Asian factories. California citizen Marc Kasky sued Nike under state consumer protection laws for allegedly making false assertions about wages, corporal punishment of workers, and other issues in that PR campaign.
Rather than attempting to refute Kasky's charges, Nike instead challenged the legitimacy of the truth-in-advertising law itself. Its attorneys argued that because the PR campaign addressed issues beyond the company's practices and did not promote specific products, the PR blitz should be considered fully-protected political speech, not less-protected commercial speech. To hold Nike liable for false information, they claim, would unconstitutionally chill the company's "speech."
The whining about businesses being "silenced" by a ban on lying lacks credibility when corporations already are obliged by law to issue accurate statements to investors. When companies withhold important information or lie to investors, they can be sued, and the responsible executives can be held personally liable. If Nike were to contest the constitutionality of those standards, Wall Street and the mass media would respond with derision and prompt dismissal. So why should deceiving the public on other issues be permitted?
Nike could simply have challenged Mr. Kasky's ability to sue, since he alleges no personal harm. Instead, Nike's attorneys are venturing far beyond the company's direct interests to attempt a subversion of our Constitution.
The word "corporation" is entirely absent from the Bill of Rights and Constitution--and for good reason. We have rights as human beings because we exist whether governments do or not. Corporations, on the other hand, are creations of the state and have privileges, not rights. The privileges of incorporation, such as unlimited lifespan and limited liability, permit corporations to amass power far beyond what an individual can attain.
Corporations can and do use those privileges to harm people for profit. For years, tobacco company officials claimed -- even in testimony before Congress -- that smoking was safe. As it turned out those executives were lying, but they were bound by the law to bear responsibility and compensated society for a portion of the public costs created by their deception. If the Court rules for Nike, kiss that accountability goodbye.
Kasky does not, as Nike attorneys claim, seek to deny corporations the right to defend themselves against accusations, but to assert our collective right to require that corporations either refrain from fraud or face meaningful consequences. Nike is not being sued for misleading people about corporate globalization, but for publishing misinformation about the specific conditions under which its products are made.
If the Court rules that corporations can enjoy fully-protected political "rights," it would erode already-weakened powers of democratic governments and citizens. For example, giant corporations could dominate elections to the extent they already do ballot initiatives in which they have vested interests.
Corporations need not be held to perfect accuracy, but allowing corporations to deliberately deceive is a recipe for disaster. The Supreme Court should reject the extreme judicial activism that Nike is promoting and make clear that the Bill of Rights was written to protect human liberty, not to shield corporations from public accountability. Whether we think the California law wise or not, we must not allow corporations to override democracy.
Milchen and Kaplan are director and volunteer, respectively, with ReclaimDemocracy.org.
For much more on this case, see our Nike v. Kasky index page
