A Long Response to a Comment
Feb. 14th, 2003 12:25 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
lawnrrdIn response to my post a few days ago, where I mentioned the Nike case, someone asked why I thought corporations should be able to lie to people to make them buy their products. I typed in a nice long response, but it was too long to be a comment, so here it is as a new LJ entry.
See, that's just what I'm talking about. "How can you say that Nike should get away with lying to their customers?" Well, that's not exactly what the case is about.
The case before the U.S. Supreme Court is captioned Nike, Inc. v. Kasky. The facts, as described by the Supreme Court of California, are:
The plaintiff, Marc Kasky, believed that Nike's statements were false, and he sued Nike for violating certain California laws against unfair and deceptive trade practices. Kasky did not claim that he had in any way been injured by any alleged deception by Nike. Nor did he have first-hand knowledge that anything Nike said was actually false; he merely read some reports that made him think some of it might not be true. Then he sued.
This dispute happens in the context of an ongoing political debate about globalization, and the allegations about Nike's employment practices are part of that debate. Nike argued before the lower courts that its statements in its own defense were also part of that debate, and thus subject to the highest degree of Constitutional protection as political speech.
The trial court agreed with Nike and dismissed the suit, and that dismissal was upheld on appeal. Kasky then appealed to the California supreme court, which reinstated the suit on the grounds that Nike's statements were merely "commercial speech." The United States Supreme Court hasn't really figured out what that means, but the California court decided that in these circumstances, it meant that Kasky's suit could go forward.
The U.S. Supreme Court granted review on the following questions:
Note that the Court is not going to consider whether Nike's free speech rights are different from an individual's because Nike is a corporation. Under current law (as I understand it), there is no difference, and I personally think that is exactly right. A corporation is owned by individuals and acts only through individuals, and it is incomprehensible to me that its right to speak could be less than that of the individuals who compose it.
Here is why this case is troubling. If the California court's decision is upheld, then large businesses will effectively be silenced in public debate, while their opponents will remain free to say nearly anything they want. If anyone who works for a business does say anything that might in any way lead someone to buy the company's products, anyone will have the right to claim the statement is false and sue. Filing a lawsuit will then give the plaintiff a free pass to look through the business's records, papers, emails, and such, hoping to turn up evidence that supports his case. He will tie up the people who run the business with the need to participate in the litigation, and the business will, of course, have to pay for lawyers to defend the suit. Even if the business prevails, it can't recover the cost of defense, and it certainly can't recover the time or inconvenience.
A successful business has thousands and thousands of employees. Every time any of them says anything about the company and globalization, the company is exposed to this kind of litigation. To protect itself, the business will just order its employees to shut up. It can easily defend any one of these suits, but it can't come close to handling all of them.
While you may disagree with what Nike has to say about globalization, I think at the very least it is a viewpoint that may legitimately be discussed. But to uphold the California supreme court would be to silence the people who are most likely to express that viewpoint. That doesn't seem consistent with the oft-recited "I may disagree with what you have to say, but I will defend to the death your right to say it."
On the other hand, the fact remains that businesses often say things in public debate that are also meant to shape their images, and those images are often the reasons why customers buy their products. If all the shoes support your feet about the same, and they all have similar styling, you may just buy the one that makes you feel better about yourself. And many shoppers feel better about themselves believing that the young women who put their shoes together aren't being raped at work. That's why it troubles me to give businesses a free pass of their own to make stuff up. If Nike really was lying about working conditions in its factory, how is that different from a car company telling us its cars protect passengers with a steel "safety cage," while the frame is actually made of balsa wood?
It's very easy to say, "businesses should be punished for lying," because they really should. But lies are not self-evident; finding the truth takes time and money. This case deals with questions of when you can force someone to spend both.
I think this case ultimately reflects deep flaws in the American legal system. First, I don't think you're entitled to rummage through anyone's files just because you think they did something illegal. If you can't come up with some real evidence, you're not entitled to fish for it. Second, the loser should pay the winner's attorney's fees; it would encourage fast resolution of clear cases, and would discourage the murky ones, and I think those are both very good things. Third, common-law fraud was, and remains, a perfectly adequate means to protect people who lost money because a seller lied to them; laws against "unfair" and "deceptive" trade practices do little but stir up expensive and extortionate litigation. Making these changes would reduce the risk of crushing costs of litigation so that businesses would still participate in public debates that concern them, while still making them accountable for their frauds.
These changes aren't going to happen, though, so instead we further twist Constitutional doctrine to try to find something that works.
See, that's just what I'm talking about. "How can you say that Nike should get away with lying to their customers?" Well, that's not exactly what the case is about.
The case before the U.S. Supreme Court is captioned Nike, Inc. v. Kasky. The facts, as described by the Supreme Court of California, are:
Nike manufactures and sells athletic shoes and apparel. . . . Most of Nike's products are manufactured by subcontractors in China, Vietnam, and Indonesia. Most of the workers who make Nike products are women under the age of 24. Since March 1993, under a memorandum of understanding with its subcontractors, Nike has assumed responsibility for its subcontractors' compliance with applicable local laws and regulations concerning minimum wage, overtime, occupational health and safety, and environmental protection.
Beginning at least in October 1996 with a report on the television news program 48 Hours, and continuing at least through November and December of 1997 with the publication of articles in the Financial Times, the New York Times, the San Francisco Chronicle, the Buffalo News, the Oregonian, the Kansas City Star, and the Sporting News, various persons and organizations alleged that in the factories where Nike products are made workers were paid less than the applicable local minimum wage; required to work overtime; allowed and encouraged to work more overtime hours than applicable local law allowed; subjected to physical, verbal, and sexual abuse; and exposed to toxic chemicals, noise, heat, and dust without adequate safety equipment, in violation of applicable local occupational health and safety regulations.
In response to this adverse publicity, and for the purpose of maintaining and increasing its sales and profits, Nike and the individual defendants made statements to the California consuming public that plaintiff alleges were false and misleading. Specifically, Nike and the individual defendants said that workers who make Nike products are protected from physical and sexual abuse, that they are paid in accordance with applicable local laws and regulations governing wages and hours, that they are paid on average double the applicable local minimum wage, that they receive a “living wage,” that they receive free meals and health care, and that their working conditions are in compliance with applicable local laws and regulations governing occupational health and safety. Nike and the individual defendants made these statements in press releases, in letters to newspapers, in a letter to university presidents and athletic directors, and in other documents distributed for public relations purposes. Nike also bought full-page advertisements in leading newspapers to publicize a report that GoodWorks International, LLC., had prepared under a contract with Nike. The report was based on an investigation by former United States Ambassador Andrew Young, and it found no evidence of illegal or unsafe working conditions at Nike factories in China, Vietnam, and Indonesia.
The plaintiff, Marc Kasky, believed that Nike's statements were false, and he sued Nike for violating certain California laws against unfair and deceptive trade practices. Kasky did not claim that he had in any way been injured by any alleged deception by Nike. Nor did he have first-hand knowledge that anything Nike said was actually false; he merely read some reports that made him think some of it might not be true. Then he sued.
This dispute happens in the context of an ongoing political debate about globalization, and the allegations about Nike's employment practices are part of that debate. Nike argued before the lower courts that its statements in its own defense were also part of that debate, and thus subject to the highest degree of Constitutional protection as political speech.
The trial court agreed with Nike and dismissed the suit, and that dismissal was upheld on appeal. Kasky then appealed to the California supreme court, which reinstated the suit on the grounds that Nike's statements were merely "commercial speech." The United States Supreme Court hasn't really figured out what that means, but the California court decided that in these circumstances, it meant that Kasky's suit could go forward.
The U.S. Supreme Court granted review on the following questions:
1. When a corporation participates in a public debate -- writing letters to newspaper editors and to educators and publishing communications addressed to the general public on issues of great political, social, and economic importance -- may it be subjected to liability for factual inaccuracies on the theory that its statements are "commercial speech" because they might affect consumers' opinions about the business as a good corporate citizen and thereby affect their purchasing decisions?
2. Even assuming the California Supreme Court properly characterized such statements as "commercial speech," does the First Amendment, as applied to the states through the 14th Amendment, permit subjecting speakers to the legal regime approved by that court in the decision below?
Note that the Court is not going to consider whether Nike's free speech rights are different from an individual's because Nike is a corporation. Under current law (as I understand it), there is no difference, and I personally think that is exactly right. A corporation is owned by individuals and acts only through individuals, and it is incomprehensible to me that its right to speak could be less than that of the individuals who compose it.
Here is why this case is troubling. If the California court's decision is upheld, then large businesses will effectively be silenced in public debate, while their opponents will remain free to say nearly anything they want. If anyone who works for a business does say anything that might in any way lead someone to buy the company's products, anyone will have the right to claim the statement is false and sue. Filing a lawsuit will then give the plaintiff a free pass to look through the business's records, papers, emails, and such, hoping to turn up evidence that supports his case. He will tie up the people who run the business with the need to participate in the litigation, and the business will, of course, have to pay for lawyers to defend the suit. Even if the business prevails, it can't recover the cost of defense, and it certainly can't recover the time or inconvenience.
A successful business has thousands and thousands of employees. Every time any of them says anything about the company and globalization, the company is exposed to this kind of litigation. To protect itself, the business will just order its employees to shut up. It can easily defend any one of these suits, but it can't come close to handling all of them.
While you may disagree with what Nike has to say about globalization, I think at the very least it is a viewpoint that may legitimately be discussed. But to uphold the California supreme court would be to silence the people who are most likely to express that viewpoint. That doesn't seem consistent with the oft-recited "I may disagree with what you have to say, but I will defend to the death your right to say it."
On the other hand, the fact remains that businesses often say things in public debate that are also meant to shape their images, and those images are often the reasons why customers buy their products. If all the shoes support your feet about the same, and they all have similar styling, you may just buy the one that makes you feel better about yourself. And many shoppers feel better about themselves believing that the young women who put their shoes together aren't being raped at work. That's why it troubles me to give businesses a free pass of their own to make stuff up. If Nike really was lying about working conditions in its factory, how is that different from a car company telling us its cars protect passengers with a steel "safety cage," while the frame is actually made of balsa wood?
It's very easy to say, "businesses should be punished for lying," because they really should. But lies are not self-evident; finding the truth takes time and money. This case deals with questions of when you can force someone to spend both.
I think this case ultimately reflects deep flaws in the American legal system. First, I don't think you're entitled to rummage through anyone's files just because you think they did something illegal. If you can't come up with some real evidence, you're not entitled to fish for it. Second, the loser should pay the winner's attorney's fees; it would encourage fast resolution of clear cases, and would discourage the murky ones, and I think those are both very good things. Third, common-law fraud was, and remains, a perfectly adequate means to protect people who lost money because a seller lied to them; laws against "unfair" and "deceptive" trade practices do little but stir up expensive and extortionate litigation. Making these changes would reduce the risk of crushing costs of litigation so that businesses would still participate in public debates that concern them, while still making them accountable for their frauds.
These changes aren't going to happen, though, so instead we further twist Constitutional doctrine to try to find something that works.
