Corporate Freedom of Speech or Commercial Speech?

I remembered having read about the case of Nike v. Kasky back in my Civil Liberties class at Wright State, but had largely forgotten it beyond the fact that I remembered it dealt with commercial speech issues. I subsequently reviewed the information surrounding the case and re-realized why it was important.

We all know at least the very basic idea of the 1st Amendment protection of certain rights, including freedom of speech. We generally accept such an idea as meaning we have the right to express our opinion on different subjects and that the government cannot prevent us from, say, disagreeing with a government policy, or not being allowed to criticize a Cincinnati-based national sports team (oh what kind of world would we live in in such a situation?). But most people are also aware that such rights are not without restrictions, such as the often referenced "you can't shout fire in a crowded theater."

As has been mentioned in previous posts, corporations are treated as entities, they are "persons" in many respects, and thus are accepted as possessing certain fundamental rights. So what about advertisements? Can a company sell snake oil and proclaim that it will cure cancer and give you thick, luscious hair? The short answer is "no" they cannot, under a concept called commercial speech (well, assuming the snake oil didn't somehow actually accomplish its claims). Essentially, if the speech acts as an enticement to do business with someone, then the government does have a right to restrict that speech (such as requiring that the advertisement be truthful and not a bald-faced lie).

Back to Kasky: in the 1990s and early 2000s, the corporation Nike came under fire for allegations of unethical labor practices (such as sweat shop labor). Nike responded to its critics with claims to the contrary. Nike was sued in California on grounds that its claims were commercial speech (after all, they were trying to keep people interested in buying their products) and as commercial speech they could be liable for false adverting. Nike countered that it was participating in public speech by speaking out on a public issue, i.e. labor practices. The Californian trial and appellate courts ruled in Nike's favor, but the California Supreme Court narrowly decided for Kasky, and ruled that Nike had participated in commercial speech, thus paving the way for another trial court case to determine whether the claims had been false or not.

Nike appealed the decision to the U.S. Supreme Court which subsequently decided to hear the case. Now the country would have a definitive decision on whether such a practice was an exercise of public speech or commercial speech.

Or not.

After agreeing to hear the case, the U.S. Supreme Court then later decided to not hear it.

Before the new trial case was decided in California, the parties settled. In effect, we were denied a definitive ruling on whether it was free speech or not, nor did we receive a formal ruling on whether Nike had indeed been misleading in its self-defense claims.

Some might consider this a check on corporation's unfettered ability to say what they want, whereas others may see the issue as an unfair restriction on corporations if ordinary citizens may criticize the company and make allegations against it but the company is handicapped in its capacity to refute such claims. For those interested, check out a Wall Street Journal editorial from 2003 after the Supreme Court had reconsidered its decision to hear the case.