Shush, Swoosh!

It's open season on Corporate America. Somewhere between the tech-stock bubble bursting and the first Enron executive testifying, an army of special interest groups and trial lawyers awakened to the aroma of opportunity. Lawsuits have been filed against McDonald's on behalf of customers who claim Big Macs made them fat; soft drinks are being banned in schools, their manufacturers accused of contributing to juvenile diabetes; corporate execs are being attacked by women's groups for membership in the Augusta National Golf Club; and anti-globalization mobs are staging cyber-attacks against corporate targets. In this environment, a company's very existence depends on its ability to defend itself in the court of public opinion. That ability has been placed in jeopardy by a California Supreme Court decision, which has dealt anti-business activists a powerful new card.

In May, that court ruled that public statements by Nike, Inc. -- including press releases and letters to newspapers -- in response to public accusations leveled against its overseas labor practices, constituted "commercial speech." That designation strips Nike's statements of their full First Amendment protections, placing them in the same category as product advertisements, to which state laws barring false/misleading advertising apply. Nike has asked the U.S. Supreme Court to review the decision. Without its intervention, the company will have to stand trial in a lower state court against California resident Mark Kasky, who, under consumer protection laws, filed a claim -- without having to show any personal harm -- alleging that Nike's PR campaign contained false/misleading statements. If found liable, Nike could be forced to surrender profits attributable to the statements.

The California Supreme Court's decision is based on a bizarre interpretation of the U.S. Supreme Court's precedent on this subject. The latter has long protected a corporation's right to defend itself in public debate. If allowed to stand, the Nike decision will have a chilling effect on the free speech rights of all corporations, regardless of where they are based or where they speak. Nike, based in Oregon, was accused of making false statements in the New York Times, distributed in California.

With attacks on corporations, as well as the public's demand for them to speak out on controversial issues, the paradox corporate entities face in the wake of the California decision is how to engage in the public debate without fear of being dragged repeatedly to court. The U.S. Supreme Court should reverse the California ruling, confront the conflict that has arisen over the growing gray area between commercial and noncommercial speech, and re-establish the fundamental right of corporations to contribute to the open flow of information in the marketplace of ideas.

Mr. Schippers is executive director of the Center for Individual Freedom.

This article is part of an extensive collection of material on the Kasky v. Nike case at ReclaimDemocracy.org/nike