FAQs on Kasky versus Nike Inc.

What's happening with the case?
The case was settled on September 12, 2003. This page has not been updated since the settlement.

What was the accusation against Nike Inc.?
In the original 1998 lawsuit, Marc Kasky accused Nike of fraud under California consumer protection law for allegedly making several false claims in a public relations campaign, which was waged in response to criticisms by human rights groups of working conditions in Nike contractor facilities overseas. See our "Just the Facts" page for the full story.

Who is Marc Kasky and what does he stand to gain?
Mr. Kasky is a California citizen who was disturbed at what he believed were deceptions carried out by the Nike Corporation in a public relations campaign. The PR campaign was to counter accusations by anti-sweatshop activists that working conditions in Nike's overseas plants were inhumane and not as Nike presented them. Kasky will receive no financial reward if the case goes to trial and Nike is found guilty. At the time of filing the suit, Mr. Kasky worked for Fort Mason Foundation, an unrelated non-profit organization in San Francisco. We are unaware of Mr. Kasky having any potential financial gain from the case, regardless of the outcome. Mr. Kasky, age 58, has filed two previous lawsuits against corporations under California law.

Do you think the Nike Corporation is guilty?
We don't know. No arguments on the facts of the case have been heard in any court. We address only the Constitutional issue of Nike's claim to a right to lie, and do so with legal impunity, which we reject.

What is the Constitutional basis for the Nike Corporation's claim?
No mention of corporations exists in our Bill of Rights (or anywhere else in the Constitution). Nike's claim is based on precedent that the 14th Amendment applies to corporations. This has been applied in many cases -- illegitimately we believe. The fact that Plessy vs. Ferguson was cited as precedent for all manner of racial discrimination did not make it Constitutional, reasonable or just; nor is the 19th century subversion of our Constitution by 19th century railroad lawyers. See our Corporate Personhood page for extensive information on this history, especially the article The Hijacking of the 14th Amendment.

Won't corporate representatives refrain from disclosing information on controversial issues if their company can be sued for misrepresentations?
Corporations (and their officials) already can be held accountable for making misleading statements about their operations or their products. If corporate officials withhold important information or lie to investment companies, the corporation can be subject to a lawsuit and/or criminal charges, and the officials involved may be held personally liable as well. A double standard exists if this same accountability is not required when a corporation makes statements that affect public perceptions about the corporation.

Investors do not have the right to sue just because a statement made by corporate officials is inaccurate. They must show that the corporate officials were guilty of intentional misrepresentation or gross negligence. This is a reasonable balance. Corporate officials can, for example, assert that they believe a new product will sell well or that an upcoming merger will strengthen the company without fear of being sued should those forecasts prove false unless they lied about matters that materially affected the accuracy of their predictions.

According to Nike, lying corporate executives should be accountable to no one except their shareholders. We think otherwise. To allow corporations to do harm for profit and then lie about it is potentially even more damaging than accounting fraud.

Some Nike Inc. advocates claim that requiring the corporation to tell the truth about its business practices would have a chilling effect on its desire to say anything about related issues. Yet the California Supreme Court found that "on general policy questions such as the value of economic 'globalization'," Nike would continue to have "full First Amendment protection," but that "Nike's speech loses that full measure of protection only when it concerns facts material to commercial transactions -- here, factual statements about how Nike makes its products."

If the California law under which Kasky brought suit does not restrict liability to intentional misrepresentation or negligence, it is overly broad. If that is the case, the solution is to tighten that law, not to allow Nike to misrepresent its practices.

Isn't it difficult to distinguish between protected political speech and commercial speech, which receives a lesser level of protection?

The critical distinction is the speaker, not the speech. Human beings have full protection for their speech. But ultimately, all corporate speech is commercial speech. As one of the amicus briefs filed on behalf of Nike Inc. acknowledges, corporations (for-profit, traded), unlike humans, are one-dimensional, artificial entities with profit as their sole purpose. The brief by trade groups representing the world's largest public relations firms makes this point explicitly: "corporations are entities whose decision makers owe fiduciary duty to its shareholders and owners" and that "no responsible corporate spokesman speaks on a company's behalf without being concerned about the effects those statements may have on corporate sales and profits." The brief goes on: "all corporate speech is, and should be, uttered in the interests of benefiting the corporation in the eyes of potential consumers." Given this view, a strong presumption should prevail that all corporate claims concerning its products or practices constitutes commercial speech, regardless of the venue in which those claims are made.

The ACLU has expressed concern that denying speech "rights" to business corporations would threaten the rights of the ACLU, other public interest groups, and media entities. Since ReclaimDemocracy.org is a non-profit corporation, we take the question seriously. But the Supreme Court already distinguishes between general business corporations, non-profit advocacy groups and media companies. The Court stated explicitly in its Austin decision and in FEC vs. Massachusetts Citizens for Life, Inc. that it can do so; indeed it has declared such distinctions necessary to the basic functioning of democracy. In FEC vs. MCFL the Court laid out the reason for protecting the speech of advocacy groups above that of business entities: "MCFL was formed to disseminate political ideas, not to amass capital."

The California Supreme Court decision was clear: statements made by corporations about their business practices and products must be factual, regardless of the venue in which they make those statements.

Doesn't restricting corporate speech give an unfair advantage to critics who can say anything they want?
The situation would be no different than that which holds for corporate relationships with investors. Investors or financial editorial writers can make claims about the accuracy of corporate statements without fear of legal repercussions (provided they will not gain financially from the effects of their statements). However, corporate officials are considered to be in a privileged and powerful position and can be held accountable for lying about the status of their company.

A direct analogy exists between this situation and the relationship between corporations and their critical detractors in other areas. Corporations are in a position of privilege and power because incorporation has allowed them to amass power to a degree far beyond what an individual human can attain. By 1990 even the majority of the Supreme Court conceded this point in Austin vs. Michigan Chamber of Commerce. The majority ruled that the challenged Michigan law--limiting corporate political spending--was justified because "the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form...have little or no correlation to the public's support for the corporation's political ideas."

Corporations can and do use their privileges to harm people in the interests of profit. For years tobacco company officials claimed in newspaper interviews, letters to the editor, and in testimony before Congress that no compelling evidence that smoking was a danger to one's health existed. It turned out they were lying, and the tobacco companies were held liable for billions of dollars. Nike Inc. is claiming that anytime its PR department use venues other than paid advertisements to communicate, that misinformation in those missives should be immune from normal standards of accuracy for commercial communications.

The consequences of granting corporations free speech "rights" are often severe. During the period just before the Gulf War in 1991, a young woman testified before Congress and television cameras that she watched Iraqi soldiers remove babies from incubators in a Kuwaiti hospital and leave them to die. Her tearful testimony was widely credited with helping turn a skeptical public toward support for the war. Only later did investigators reveal that her story was entirely fabricated by Hill and Knowlton, one of the public relations corporations now financing briefs arguing for Nike's "free speech."

The young woman was the daughter of the Kuwaiti ambassador to the United States and Hill and Knowlton had been hired by Kuwait to persuade Americans to support a war against Iraq. No charges were brought against any party involved for lying to Congress. Now, ten years later, the HBO network is airing a TV special that repeats the story as if true. The fact that most Americans remember the story as true is testament to the power of money to obfuscate the truth. It also exposes as fraudulent the premise advanced by those who advocate for corporate free speech that we just need a "free marketplace of ideas, where people can weigh all arguments and determine the truth."

Won't restricting corporate speech limit political debate?
The lawyer who wrote the ACLU of Northern California's amicus curiae brief in Kasky, Ann Brick, claimed that the California Supreme Court decision "essentially shuts business speakers out of the public debate on any issue that directly affects them. That kind of analysis is absolutely antithetical to the basic First Amendment principle that we let the people, not the government, decide who's right and who's wrong on an issue of public dispute."

Associating a multi-billion dollar corporation such as Nike with "the people" is absurd. This view simply reiterates the bogus claim that corporations should enjoy Bill of Rights protections as legal "persons." Corporate personhood is one of the most pernicious fictions in the history of American law, perhaps second only to the laws that once enforced slavery. Indeed, the two are closely connected. The infamous 19th Century precedent of granting personhood status to corporations claimed the 14th Amendment as justification. This amendment was passed after the Civil War to protect the rights of former slaves.

We do not question the right of corporate managers or other employees to speak out as individuals with the greatest level of protection when doing so of their own volition. However, corporations, with their vast financial resources and limited liability, are not people and should not be protected by the laws of our Constitution.

Compiled by ReclaimDemocracy.org staff and volunteers.