NCPA - National Center for Policy Analysis

Corporate Shakedown Imperals Free Speech

July 10, 2003

A recent case heard by the California Supreme Court should be a warning to anyone concerned about free speech, says Newsweek columnist Robert Samuleson.

In the mid-1990s, anti-globalization activists claimed the workers in Nike's overseas factories were underpaid and mistreated. Nike defended its record in letters, pamphlets and press releases, arguing that the jobs were highly prized and paid above-average wages.

  • Marc Kasky, a self-styled activist, then sued Nike in 1998, claiming that under California law, its defenses constituted "false advertising."
  • Two lower California courts dismissed the suit as violating the First Amendment.
  • But the California Supreme Court, in a 4-3 decision, agreed with Kasky that Nike's defenses constituted "commercial speech," and were thus not entitled to broad constitutional protections.
  • First, advocacy groups attack a company or industry.
  • Next, companies face a dilemma: be silent and let the attacks stand, or respond and face an expensive and embarrassing suit.
  • Finally, companies that end up in court face a daunting standard of proof -- not whether what they said was true but whether it might be misleading.

Free speech, to be free, has to cover everyone, says Samuelson, not just the politically fashionable. It is true that the Supreme Court didn't directly restrict free speech. It simply refused to decide the constitutional issues in the Nike case and sent it back to California for trial.

But the practical effect is to expose Nike and other companies to expensive trials and huge economic risks. Their choice may be to shut up or pay up. That taxes free speech, and when you tax something, you often get less of it.

Source: Robert Samuelson (Newsweek), "Court ignores a new form of corporate shakedown," Dallas Morning News, July 9, 2003.


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