Labor/Employment
Feb. 1, 2001
Sweat Expression
Anomalies in the law tend to attract our attention. The municipal ordinance that makes it illegal to walk a pig on the left side of the street on Sunday is the stuff on which comedians tend to focus in order to show that the law is, in Charles Dickens' phrase, "a ass - a idiot."
Charles S. Doskow
Dean Emeritus and Professor of Law, University of La Verne College of Law
Email: dosklaw@aol.com
Harvard Law School
Charles is a past president of the Inland Empire Chapter of the Federal Bar Association, and in 2012 was awarded the chapter's Erwin Chemerinsky Defender of the Constitution award.
Anomalies in the law tend to attract our attention. The municipal ordinance that makes it illegal to walk a pig on the left side of the street on Sunday is the stuff on which comedians tend to focus in order to show that the law is, in Charles Dickens' phrase, "a ass - a idiot."
Lawyers, of course, know better, and understand that the law is a seamless web, composed of basic principles woven over hundreds of years into the fabric that holds our society together.
Perhaps for that reason, when a counterintuitive proposition is adopted as the ratio decidendi of an appellate court decision, it attracts our interest.
A California Court of Appeal has declared that for First Amendment purposes, the truth of a statement is irrelevant - a seemingly counterintuitive statement that invites analysis. Kasky v. Nike Inc., 93 Cal.Rptr.2d 854 (2000), rev. granted, 97 Cal.Rptr.2d 511 (June 21, 2000). The California Supreme Court has accepted the case for review, depublishing the appellate opinion.
Lawyers are used to dealing with truth as the essential element of determinations under the adversary system. Witnesses take an oath to tell the truth; the zealous representation of opposing parties is supposed to be the best means to have a trial determine the truth; juries and judges must determine which of two accounts of the facts is the truth. Moreover, truth is a determining factor in deciding whether a statement is defamatory.
How then can truth be irrelevant in deciding a case, the gravamen of which is the allegation that the defendant is not telling the truth?
The labor practices of multinational corporations in Asia have been the subject of controversy for some years. Products sold in the United States are said to have been manufactured abroad under primitive and unsafe conditions, for inadequate wages and in violation of law. Child labor is a particular hot-button issue.
In Kasky, the plaintiffs brought a private attorney-general action against Nike, the multinational athletic-shoe and sports-apparel manufacturer, asserting that Nike made misrepresentations with respect to its labor policies in its Far Eastern factories. The plaintiffs pleaded causes of action for negligent misrepresentation, intentional or reckless misrepresentation, unfair business practices and false advertising. Nike's demurrer to the complaint was sustained, and the trial court was upheld on appeal.
Nike's size and scope are impressive. Between 300,000 and 500,000 workers are employed in Asia by contractors producing its products. Its contractors are required to sign a document committing them to complying with local labor laws, and spot audits are conducted.
The factual genesis of the complaint was a series of press releases issued by Nike stressing the company's code of conduct and denying exploitation of underage workers. Nike sent letters to college presidents, newspaper editors and nonprofit organizations. The plaintiffs alleged that the letters and press releases contained six misrepresentations, all denials by Nike that it violates labor laws abroad.
The complaint invoked California unfair-competition law. Business and Professions Code Section 17200 defines unfair competition as "any unlawful, unfair or fraudulent business practice and unfair, deceptive, untrue or misleading advertising" and any act prohibited by Section 17500. Sections in the chapter authorize injunctive relief and civil penalties.
Section 17500 bans the dissemination in any manner of any untrue or misleading statement to the public, with the intent to sell (in the broadest sense) anything. Violation is a misdemeanor, and civil penalties can be imposed.
It is important to understand what the case was not about. No person was the object of a false statement by Nike; the case did not lie in defamation. The plaintiffs brought suit on the theory that Nike's statements, being false, could be punished under California law.
The plaintiffs contended that Nike's speech constituted commercial speech and was subject to regulation under the limited constitutional protection granted to commercial speech. Cases in the Virginia Pharmacy Board v. Virginia Consumer Council, 421 U.S. 809 (1976), line hold that commercial speech that is neither false nor misleading has First Amendment protection. But because truth is a requirement, the protection is at a lower level than most other types of speech, which are essentially immune from regulation.
The plaintiffs argued that since the speech at issue was false, punishment under the governing law was permissible. Nike countered that as contentions on a public issue, the statements were entitled to the full protection of the First Amendment, as with true political speech, which can be regulated only with "exacting judicial scrutiny." See Laurence Tribe, "American Constitutional Law" 1131 (2d ed. 1988).
Bolger v. Young's Drug Products, 463 U.S. 60 (1983), set the U.S. Supreme Court's standard for determining whether speech is commercial. At issue in Bolger were pamphlets issued by a condom manufacturer that resulted in its prosecution for illegal unsolicited mailings.
In determining whether the pamphlets were "speech with a commercial purpose" (and thus protected), the court set down three guidelines: First, although the pamphlets were advertisements, that fact was not conclusive in the determination. Second, references to a specific product alone would not make the speech commercial. Third, the court should examine the economic motivation of the publisher.
The court held that the pamphlets were commercial speech because all three factors pointed in that direction.
The Nike court applied the Bolger principles to immunize Nike's releases because the speech in issue had no product reference and had only the intention to promote a favorable corporate image. The court distinguished the commercial-speech cases as promoting a product ("the specific characteristics of goods"). In contrast, here "the speech in issue was intended to promote a favorable corporate image of the company so as to induce consumers to buy its products.
"The fact that the communications at issue here served to promote a favorable corporate image through press releases and letters takes them outside two of the three [Bolger] characteristics of commercial speech ... advertising and reference to specific products."
Recognizing that the publications in Nike differed from the commercial speech analyzed in earlier cases, the court found that a public-relations campaign focusing on corporate image called for an analysis different from that applied to product advertisements.
That discussion included reference to Nike's strong corporate image and widespread consumer market, which placed it "in the context of a broader public debate about the social implications of employing low cost foreign labor for manufacturing functions once performed by domestic workers." In other words, because Nike is important enough to make its labor practices a political issue, its defense of those practices is a matter of public debate.
That analysis led the court to conclude that the publications were public dialogue on a matter of public concern and entitled to full First Amendment protection. Their truth as a factual matter became irrelevant.
From that point, it was an easy step to the court's conclusion. Freedom of expression has always rested on the highest rung of First Amendment values. And under the free-speech guarantee, issues of public interest must be resolved by the public, not by a judge or jury.
There are three rationales usually expressed as underlying the First Amendment's guarantee of freedom of speech: First, only the free exchange of ideas can result in the truth being known; second, the need for open debate is a sine qua non of self-government; and third, the Constitution protects individual liberty, autonomy and self-fulfillment.
It was the first of these three lines of thought that motivated the Nike court to find that the publication under consideration did not fall under the commercial-speech heading. The court said that the labor practices of the foreign contractors of domestic corporations are among the "exigencies" of our time, just as the exigencies of the colonial period gave birth to the First Amendment.
Is the distinction between these modern broadsides and Nike product advertising tenable? A corporation like Nike is formed for one purpose and one purpose only - to make money for its shareholders. Photographs of its products and rhetorical argument in defense of its questioned labor practices are two arrows from the same quiver. It is not necessary to be unduly cynical to believe that corporate good citizenship is not altruistic; it always promotes the profit motive, one way or another.
The conclusion that commercial motivation does not transform speech on a public issue into commercial speech is highly suspect. The hornbook constitutional law cited in Nike that expression on public issues has always "rested on this highest rung of the hierarchy of First Amendment values" led the court directly to the determination that the guarantee of free speech means that the ultimate decisions on public issues must be decided by the public, not by a judge. Quoting Leonardini v. Shell Oil Co., 216 Cal.App.3d 547 (1989): "In the context of ... public debate, the truth of the statement is irrelevant."
The California Supreme Court will now take a crack at the issue of truth in institutional advertising. No sound reason suggests itself for why advertising intended to protect a corporate reputation should receive stronger protection than advertising expressly intended to sell soap, potato chips or athletic shoes.
Charles S. Doskow is dean emeritus and professor of law at the University of La Verne College of Law.
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