Regina Ames
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S087859
IN THE SUPREME COURT OF THE STATE OF CALIFORNIA
) ) KASKY M., ) ) Plaintiff and Petitioner, ) ) v. ) ) NIKE, INC., KNIGHT P., CLARK T., ) PARKER M., GOMEZ S., TAYLOR D., ) And DOES 1-200, ) ) Defendants and Respondents ) ___________________________________)
PETITIONER'S BRIEF ON THE MERITS
On Appeal from the Judgment of the Superior Court
Of the State of California, County of San Francisco
The Honorable David A. Garcia, Judge
Review of the Decision of the Court of Appeal,
First District, Division One
STATEMENT OF THE CASE
Preliminary Statement
Plaintiff Marc Kasky, on behalf of the general public, brought this action under Business and Professional Code sections 17200 and 17500 alleging that Nike, for the purpose of inducing consumers to buy its products, misrepresented the facts about its labor practices in its Southeast Asian shoe factories. J.A. 326 (First Amended Complaint). Nike demurred to the complaint on First Amendment grounds. J.A. 1054. The San Francisco Superior Court sustained Nike's demurrer without leave to amend and entered a judgment of dismissal. J.A. 1929, 1931. The Court of Appeal, First Appellate District, Division One affirmed. Kasky v. Nike, Inc., 79 Cal. App. 4th 165 (2000). This Court granted review on June 21, 2000. Kasky v. Nike, Inc., 97 Cal. Rptr. 2d 511 (2000).
Statement of Facts
Nike has repeatedly made misrepresentations and omissions of facts regarding their manufacturing practices in Southeast Asia. J.A. 336-51. These statements, by their own admission, were predicated on their desire to increase and maintain sales. J.A. 336. Nike's campaign of falsehoods followed criticism about working conditions in their factories abroad of the type listed below. J.A. 336.
Workers who make Nike products are subjected to corporal punishment and/or sexual abuse.
Nike workers in Southeast Asia are subject to abuse. Punishments for working too slowly or refusing to participate in forced overtime have included physical punishments like running, prolonged exposure to sun, beatings, both with foreign objects and at the hands of supervisors, and lack of access to bathrooms during long shifts. J.A. 337-38. Sexual harassment also abounds. Expectant mothers are treated with disrespect and frequently terminated. J.A. 339. Women have also been molested on the job, for which Nike has expressed no remorse. J.A. 339.
Nike violated governmental laws and regulations regarding wages and hours for workers.
Those employed by Nike work ten to twelve-hour days and this does not include the 2.4 hours of forced overtime that Nike demands from its work force daily. J.A. 339. In sum, Nike laborers must work 500 hours of overtime per year. J.A. 341. These extra hours are often not attached to any additional compensation. J.A. 340. Moreover, days off are rare. All of these practices violate local laws and regulations. J.A. 339-40.
Nike disregarded governmental laws and regulations governing health and safety conditions for their workers.
Nike compromises the health and safety of their workers. Solvents such as toulene and acetone are present at dangerous levels and workers are not offered any legitimate protection against the fumes. J.A. 342-45. Dust levels also exceed standards by ten times. J.A. 343.
Nike wages are substandard.
Despite Nike's claim that it pays line-workers double-the-minimum wage in Southeast Asia, in truth, most Nike workers do not even take home enough money to fulfill their minimum physical needs. J.A. 346. Many workers do not even receive the minimum wage required by law. J.A. 345-46.
Nike workers are not fed or cared for.
Nike has claimed that they provide free meals and health care for their workers. J.A. 347. Pay stubs, however, reflect quite the contrary. J.A. 347. Workers are, in some instance, charged over 50% of their daily wage for lunch. J.A. 347. Moreover, healthcare is also deducted from their pay. J.A. 347.
Nike, manipulated a limited study by GoodWorks International and Andrew Young.
Nike used the results of this purposefully incomplete study, which they commissioned, to attempt to substantiate a full-page advertisement in several major United States newspapers. J.A. 348. In spite of great efforts by Nike to limit the GoodWorks inquiry the organization still found fault in Nike's labor practices. J.A. 348.
Nike has used these fabrications as marketing tools. They have done so in order to foster their sales in professional and college level sports as well as within the public at large through newspaper and television media. They have acknowledged that consumers are concerned about labor practices such as their's and have perpetuated these untruths in order to stay in good favor with these consumers. J.A. 336.
STANDARD OF REVIEW
The standard of review for an appeal of a demurrer is de novo. Montclair Park Owners Ass. v. City of Montclair, 76 Cal. App. 4th 784, 790 (1999). In other words, this Court has the right to exercise its independent discretion regarding the facts of this case.
ARGUMENT
Nike's Director of Communication, Lee Weinstein, has said, "Consumers are savvy and want to know they support companies with good products and practices . . . During this shopping season, we encourage shoppers to remember that Nike is the industry's leader in improving factory conditions." J.A. 336. Unfortunately, rather than cleaning up the labor practices that they had been covering up, they supplemented their public relations campaign with further untruths.
I. NIKE'S STATEMENTS SATISFY APPLICABLE STANDARDS FOR COMMERCIAL SPEECH UNDER THE BOLGER TEST AND THEREFORE DO NOT DESERVE HEIGHTENED PROTECTION UNDER THE FIRST AMENDMENT.
The Supreme Court in Bolger created three factors to determine whether speech is commercial. Bolger v. Young Drug Products Corp., 463 U.S. 60, 66-7 (1983). The factors considered include economic motivation, whether the advertisement takes a traditional form, and whether the speech was linked to a public controversy. Id. All three are not required. Id. at 68.
A. Nike's Speech Was Economically Motivated.
Nike's speech was commercial, in part, because it was economically motivated. Bolger, 463 U.S. at 60-7. Generally, economic motivation is defined as, "expression[s] related solely to the economic interests of the speaker and the audience." Central Hudson Gas & Electric Corp. v. Public Serv. Commn., 447 U.S. 557, 561(1980). Such an interest has been found to exist even in non-profit corporations. National Commn. on Egg Nutrition v. F.T.C., 517 F.2d 485,487-88 (7th Cir. 1977). The fact that Nike is a for-profit corporation would, of course, only elevate its profit incentive. Moreover, with comments like those regarding the "shopping season" by Weinstein above and the fact that Nike admitted that the purpose of its public relations campaign was to increase and maintain sales this factor becomes mute. J.A. 336.
B. Though Nike's Public Relations Campaign Was Not
Traditional, It Was Advertisement Nonetheless.
The fact that Nike's public relations campaign was not marketed through 'typical advertisements' is immaterial. Bolger, 463 U.S. at 77. The government may regulate any widespread promotional activities directed to the public at large. Bank of the West v. The Superior Court of Contra Costa County, 2 Cal. 4th 1254, 1277, n. 9 (1992). Whether it be an article in a trade journal or informational pamphlets and regardless of whether the product or the seller is mentioned the court has held that commercial speech can still exist. Semco, Inc. v. Amcast, Inc., 52 F.3d 108,113 (6th Cir. 1995); see also Bolger, 463 U.S. at 60; National Commission on Egg Nutrition, 517 F.2d at 489.
A Merchant Need Not Be Engaged In A 'Hard
Sell' For His Speech To Be Commercial.
Even when a product is only mentioned in passing the speech may still be commercial. Bolger, 463 U.S. at 67. For instance, informational pamphlets discussing the availability and desirability of prophylactics when disseminated by the manufacturer have been deemed a type of commercial speech. Id. at 62. This was the case even though the manufacturer only made one reference to their specific product as a sort of footnote at the end of an eight-page pamphlet. Id. Here Nike tried to use the same deceptive medium for its advertisement campaign but went a step further by making many references to its product.
Far less is required from a corporate power like Nike to engage in commercial speech however. "A company with sufficient control of the market for a product may be able to promote the product without reference to its own brand name." Bolger, 463 U.S. at 67, n.13. In 1997 Nike's increase in revenue alone equaled the total annual sales of the number-three company in the industry. J.A. 352. In all of its press releases and letters to the media and university athletic departments its infamous 'swoosh' was displayed. This corporate logo is so well known that it acts as advertising and has stood alone in many Nike ads in the past. All totaled, Nike repeatedly mentioned its product and displayed its logo as a means of commercial speech.
Nike Tried To Make Its Advertisements Appear
To Be Informational In Order To Get
Undeserved Heightened Protection For Its
Commercial Speech.
Like Nike, The National Commission on Egg Nutrition (NCEN) tried to mask their public relations blitz, following criticism of their product, as a factually based information campaign. National Commn. on Egg Nutrition, 517 F.2d at 487. The court was not persuaded by this and found that commercial speech can be regulated even though it is informational. Id. at 489. The NCEN put out false statements of fact about the health effects of eating eggs. Id. at 487. The court found that this was commercial speech. Id. at 489. It follows then that Nike's public relations campaign, while also disguised as purely informational, was in fact commercial speech.
Nike is likely to argue that there is a difference between these two cases. They will probably assert that, in National Commission on Egg Nutrition, the lies put out by the NCEN actually harmed those who purchased the eggs (in terms of direct health affects) where as here, only foreign workers are harmed. What this argument negates is that both sets of consumers were defrauded by the companies and may not have bought the products but for the producer's deception. The court in National Commission of Egg Nutrition stated, "The clear purpose of the statements in issue in this case is to encourage the consumption of eggs by allaying fears the public may have about their high cholesterol content." 517 F.2d at 488 (emphasis added). By simply replacing the word "eggs" with "shoes" and the words "high cholesterol content" with "poor labor conditions" the analogy between these two cases is palpable. It follows then that Nike's falsehoods should not be protected simply because they were packaged as information.
iii. The Value Of Advertising Does Not Diminish Simply Because Nike Did Not Pay For It.
Since Nike presented its misstatements in articles rather than mere 'traditional advertisements' the reader/consumer might have actually given the statements more weight when deciding whether or not to purchase Nike's products. Semco exemplifies a similar attempt by a corporation to market their product for free. Semco, 52 F.3d at 108. There, the president of a corporation was asked to write an article for a trade magazine, and the court found the article to be commercial speech. Id. at 113.
Nike's speech was even more commercial in nature than that found in Semco. In Semco, the publisher of the magazine gave the president a topic about which to write. Semco, 52 F.3d at 110. Here, Nike was allowed to spout off any untruths it wished in their letters to the editors and press releases without even so much as an editorial fact check. Nike's speech was commercial and should not be afforded additional protection merely because they did not pay for it.
C. Nike's Commercial Speech Should Receive No
Greater Protection Because They Attempted To
Link It To A Public Controversy.
Commercial speech is not afforded the same protections as political speech. Semco, 52 F.3d at 111. Moreover, the situations where it is protected are quite limited. The protection granted to noncommercial speech will not be given to speech which merely "links a product to a current public debate." Central Hudson Gas & Electric Corp., 447 U.S. at 563, n.5. "Advertisers should not be permitted to immunize false or misleading product information from government regulation simply by including references to public issues." Bolger, 463 U.S. at 68.
This of course presumes there is a controversy at all. Yet, there are no counter protests demanding mistreatment of workers, nor a public outcry against those who have exposed such horrors where they exist. Much like the factual effects of cholesterol, the factual effects of mistreatment of workers by Nike can be systematically catalogued and they have been. Still, if the Court determines like the Court in National Commission of Egg Nutrition did, that the issue is one of importance for the day It may still (as in NCEN) deem the speech commercial.
II. NIKE'S PUBLIC RELATIONS CAMPAIGN SHOULD NOT RECEIVE UNDESERVED FIRST AMENMENT PROTECTIONS
A. The Size Of The Speaker Should Not Affect Their
Right To Speak.
Nike should not receive extra protection based on the fact that it is a large multi-national corporation. The Court of Appeals in Kasky however, seemed to feel differently:
Though participants in purely private labor disputes are entitled to certain First Amendment protections, Nike's strong corporate image and widespread consumer market places its labor practices in the context of a broader debate about the social implications of employing low-cost foreign labor.
Kasky, 79 Cal. App. 4th at 175.
If one were to map this out algebraically it would be bad math. If one follows this to its logical conclusion then the larger the problem one causes the more protection they would receive. A large corporation should receive no more protection than a small one or even an individual.
Furthermore, just because the public is talking about Nike's misrepresentations does not absolve them from those untruths. This would be analogous to a high profile perjury case where the liar's falsehoods were protected merely because the case sparked public discussion.
B. The Fear That, If Nike's Speech Is Determined To Be Commercial And Therefore Not Protected By The First Amendment, Nike Could Never Speak Without It Being Commercial Speech Is Erroneous.
The Court of Appeals set up a false dilemma when it said ". . .if I adopt your analysis of what constitutes commercial speech, . . .Nike can never speak again at any time about any issue." R.T. 4. On the contrary, Nike could speak for and condone, say, a fundraiser for a charitable cause aiding the homeless, drug rehabilitation or those afflicted with any number of diseases. Moreover, it is different to justify or propone the use of cheap labor than it is to misrepresent your own labor practices. Nike was not advocating that labor standards be reduced. It was simply creating and disseminating falsehoods about its practices to its customers and potential customers.
C. A Free Flow of Misinformation Does Not Benefit the Public.
Lies presented as truths through thinly veiled advertisement does not, in any way, benefit the public. For policy reasons, access to misinformation about a company's product is harmful to the consumer. This was the very premise upon which §17200 and §17500 based, not to mention countless laws against false advertising. The Court of Appeals in Kasky stated, "To the extent that the protection of corporate speech benefits the citizen's access to information, corporate rights under the First Amendment may be described as being derivative, i.e. based on the need to protect the public's right of access to information." 79 Cal. App. 4th at 177 n.7 (emphasis added). Surely being subjected to Nike's untruths does not further the other goals of commercial speech, iterated by the Court, including consumer confidence, accuracy of product depiction, and reliability of a product. Id. at 172.
III. NIKE'S COMMERCIAL SPEECH SHOULD NOT RECEIVE
ELEVATED PROTECTION UNDER THE CALIFORNIA FIRST
AMENDMENT.
Nike may argue that its commercial speech should receive heightened protection in California. They will likely cite Blatty v. New York Times Co. to further this proposition (a suit by Blatty against the New York Times for failing to include his book on their best seller list). 42 Cal. 3d 1033 (1986). The California Court extends the reach of the state's First Amendment but does so in order to foster society's "common quest for truth." Id. at 1041. An omission is certainly different than a widespread campaign of falsehoods targeting a disgruntled consumer base.
Conclusion
Scott Bedbury, an advertising director for Nike asserted that the slogan "Just Do It" has "become much more that an ad slogan. It's an idea. It's like a frame of mind." J.A. 332. It appears that Nike would argue that even this advertising slogan should simply be considered part of the social dialogue and protected by the First Amendment. Nonetheless, this catchy phrase is no more protected political speech than the advertising that Nike has disseminated in the form of letters to customers and newspapers or the free media advertising they have received through their press releases. These facts must be looked at in the context of one and other. Zauderer v. Office of Disciplinary Counsel of the Supreme Court of Ohio, 471 U.S. 626, 637 (1985). When they are looked at in such a light, the fact that Nike's untruths took the form of commercial speech becomes apparent. For the above reasons, Petitioners respectfully request that this Court reverse the decision of the Court of Appeal.
Dated March 6, 2001
Respectfully submitted,
________________________
Regina M. Ames
Councel for Petitioner