Nike claims lies about sweathop conditions constitutes “free speech”

01Nov07

by Glen Emerson Morris

A law suit in California may have a profound effect on how businesses defend their business practices in public, especially on the Internet. For those not familiar with the case, Nike is being sued by a California activist named Marc Kasky for violating California’s truth in advertising law. After being thrown out by lower courts, the case has landed in the U.S. Supreme Court. If the court decides the case should be heard, a new legal standard will be set.

The issues in the case are simple, the implications are not. After losing business in the mid-nineties to charges of funding sweatshop conditions overseas, Nike publicly denied there were major problems, and claimed it enforced a “Code of Conduct” that prohibited overseas factories from abusing workers. Nike did not include these denials in its ads, just in press releases and public statements. The law suit claims Nike knowingly lied about working conditions to improve sales, which amounted to advertising, and therefore the denials are subject to the truth in advertising law.

In its defense, Nike denies the charges of sweatshop conditions, but has chosen to try to avoid court completely on the grounds that its press releases and public statements weren’t ads, and therefore weren’t covered by the California truth in advertising law. Instead, Nike claims the denials were made as free speech, and protected by the First Amendment. Under this argument, whether the denials were the truth or lies is irrelevant.

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