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SPECIAL TO THE NATIONAL LAW JOURNAL Leaving the First Amendment in tatters and overruling the robust freedom of speech declared to exist in its state constitution less than two years ago, the California Supreme Court declared that its laws and courts will be the final arbiter of the literal and contextual accuracy of all business-related communications. But now the U.S. Supreme Court will have something to say about it. The long-awaited oral argument in Kasky v. Nike took place before the high court last week. The court likely will overturn the decision; hopefully, it will use the opportunity to clarify and elaborate upon the concept of commercial speech. Advertising is the lifeblood of business sales, and humor and absurdity often make ads memorable. Rarely are consumers confused; they appreciate a digression from the inane and boring. For example, when cows loll in pastures singing “Sunshine Day,” as they do in the California Milk Advisory Board’s recent commercials, the metaphor of happy cows pleasantly plays to our senses and reminds us of the benefits of dairy products. Yet, animal-protection groups saw the ad differently and filed a complaint ( PETA v. California Milk Advisory Board), charging false advertising and alleging that cows in California are not happy, but are in fact poorly treated. Oddly, the California Supreme Court determined that commercials like these are indeed subject to review for their “accuracy.” This ruling is nothing short of frightening for business. If literal and contextual accuracy in advertising is the new standard, without allowances for humor or metaphors, then every business will need to rethink the way it packages, promotes and describes its products and services. Do we really want naught but droll pap? In Kasky v. Nike, the California Supreme Court held that all company communications might have a “tendency to confuse.” Kasky arose as part of the controversy surrounding Nike’s purported reliance on underpaid foreign labor to produce its goods. When Nike publicly responded that these allegations were false, a California resident filed a “private attorney general” action underSection 17500 of the California Business and Professional Code. (If a communication is “commercial” it must adhere to the standards set by Sec. 17500, which allows Californians to sue and force a company to defend its communications.) The suit claimed Nike’s denials about its foreign labor practices were false. The court set forth a “limited-purpose test” to determine what is commercial speech, with three key elements: Who said it, whom they said it to and what was said. A major negative to the Kasky opinion is the change to evidentiary standards. Previously, one had to prove the defendant’s assertions were factually untrue or sufficiently misleading that reasonable members of the public were likely to be deceived. But under Kasky, one need only show a “tendency to confuse.” If singing cows can confuse befuddled Californians, then future litigation will be based on the assumption that reasonable members of the public are really dim. Although commercial speech has long had less constitutional protection under the First Amendment than noncommercial speech, this new decision strips commercial speech of most, if not all, of its protection. Under Kasky, even speech that “relates to a matter of significant public interest or controversy” can be deemed commercial. Commercial speech must be put forth by someone who either is engaged in commerce or is acting on behalf of a person engaged in commerce, to any audience of potential consumers. It must be designed to increase sales of the speaker’s product or service, or to support its brand image-including statements made in public relations campaigns. The speech can be conveyed by any media, including television, radio, the Internet or in newspapers or magazines. Speech even includes use of business cards or letterhead. In this light, it is difficult to imagine what communication, in any form or media, is not commercial speech under Kasky‘s indiscriminate sweep. However, as framed by the parties and the vast majority of the amicus briefs, the key issue for the Supreme Court will likely be rather narrow: whether Nike engaged in politically protected or noncommercial speech when it defended itself concerning alleged overseas labor practices. Hopefully, the Supreme Court will do more than cite well-established precedent that protects discussions of commercially related issues that are in the public domain. More is needed, because the California decision poses such an invidious threat to all business communications. The Supreme Court should take this opportunity to safeguard speech by commercial entities from the unbridled scrutiny of the political-correctness police. Judging by Nike’s experience, companies that have the audacity to defend themselves-even against scurrilous charges-may well be subject to scurrilous lawsuits. This would impose a very real and expensive cost on free speech. Claims of false advertising should be limited to the innate characteristics of the specific products or services to be purchased. The court needs to reaffirm what the Founding Fathers knew: A healthy debate and discussion on all issues educates the public and produces an informed citizenry. All issues deserve the sunshine of discussion, not the crucible of the judicial process. Thomas Clarke is a senior partner in the San Francisco office of Redwood City, Calif.-based Ropers, Majeski, Kohn & Bentley. His practice includes unfair business practices and false advertising. Deborah Glass is an assistant general counsel of ARAMARK Corp. (The views expressed in this article are her own).

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