by Jeffrey Kaplan and Jeff Milchen
April 26, 2003
If big business hopes to regain the dwindling trust of Americans, claiming the right to lie is hardly the way to do it.
Yet Nike Corporation lawyers have advanced just that claim to U.S. Supreme Court justices in the recently heard case of Nike v. Kasky. They hope the court will overturn a California Supreme Court decision that denied Nikeís privilege to "plead the First" (Amendment) when charged with violating state anti-fraud laws. If ruled on Nikeís behalf, the case could dramatically expand corporate power while weakening tools that governments employ to limit corporate influence.
In the face of increasingly unfavorable publicity in 1996 and 1997, Nike conducted a public relations blitz to convince people it had cleaned up its subcontractors' notorious "sweatshops." But Californian Marc Kasky didnít buy it. He claims Nike was being deceptive about its practices and sued the corporation under California consumer protection laws. He wants the estimated profits that Nike gained from that PR campaign to be spent correcting the record publicly, and seeks no money for himself.
Rather than attempting to refute Kaskyís charges, Nike instead challenged the legitimacy of the truth-in-advertising law itself. The corporationís attorneys argued that because the PR campaign was about more than the companyís practices and did not promote specific products, that the PR campaign should be considered fully-protected political speech, not less-protected commercial speech. To hold Nike liable for false information, they claim, would unconstitutionally snuff the companyís "speech."
Corporations already are legally obliged to issue accurate statements to investors. When companies withhold important information or lie to investors, they can be sued and the officials involved can be held personally liable. If Nike executives were to contest the constitutionality of those standards, Wall Street and the mass media would laugh at them. So why should deception in non-financial communications be exempted?
Corporate officials can make mistakes, like predicting that a new product will sell well or that an upcoming merger will strengthen the company, without fear of being sued -- as long as they don't intentionally deceive (for example, by concealing evidence that a product is malfunctioning). This is a reasonable standard that should be applied to non-financial issues.
But Nikeís going out of its way to try to legally cement its ability to speak deceptively. The trouble is that there is no Constitutional justification for this.
Corporations should not enjoy the same rights as humans -- the word "corporation" is entirely absent from the Bill of Rights and Constitution; and for good reason. People should be held in higher esteem than companies. We have rights because we exist whether or not we create governments.
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.
So some counterbalances to the excesses of corporations are necessary. Without such controls corporations can threaten the functioning of democracies, like the way they already dominate many ballot initiatives. If the Supreme Court rules that corporations can enjoy fully protected political rights, it would rapidly erode the already weakened powers of democratic governments and their citizenries.
Another reason for limiting corporate "freedom" is that corporations can and do use their privileges to harm people in the interests of profit. For years, tobacco company officials claimed -- even in testimony before Congress -- that smoking wasn't a serious health risk. As it turned out, they were blatantly lying, but thankfully theyíve gotten hammered with massive class-action suits. If the Court rules for Nike, kiss that accountability goodbye.
Nikeís lawyers have tried to frame the debate as if the company has been sued for misleading people about broader issues of economic globalization. But the deceptions Kasky accuses Nike of regard verifiable statements about production practices.
Corporations need not be held to perfect accuracy, but they must be held accountable to the high standards of truth we as citizens should expect from corporations -- especially because, again, corporations are nothing more than legal entities created by (and regulated by) our governments. Businesses should earn the publicís trust by showing the same respect for everyone that it does (usually) for investors.
Thatís why the Supreme Court should reject the extreme judicial activism Nike is encouraging and make it clear that the Bill of Rights was written to protect human liberty, not to shield corporations from public accountability.
Jeffrey Kaplan and Jeff Milchen are a volunteer and director, respectively, with ReclaimDemocracy.org, an organization working to restore citizen authority over corporations (www.reclaimdemocracy.org). This article appeared in TomPaine.com (www.tompaine.com). ††