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The Supreme Court appeared ready April 23 to protect Nike Inc. from being sued by private individuals who claim the company’s defense of its global labor practices amount to false advertising. But after 70 minutes of oral argument in Nike v. Kasky, No. 02-575, it was unclear that the Court’s ruling would go much beyond that to give companies broad protection from being sued over their participation in political debates with commercial overtones. Several justices seemed to think that Nike’s statements could be legally vulnerable if California or the Federal Trade Commission — rather than consumer activist Marc Kasky — had taken legal action against Nike, or even if Kasky himself claimed that he had bought sneakers and had been harmed by Nike’s claims that it paid its overseas workers decent wages. In another emotionally charged California case heard April 23, the Court also considered whether a state law requiring European insurance companies to disclose records about policies sold to Holocaust victims interfered with U.S. foreign policy. But the Nike case drew the most attention. Protesters outside the Court building attacked the athletic apparel maker by displaying a large mock-up of a Nike shoe trampling the Constitution. The Court itself appeared unusually interested in the case, with Chief Justice William Rehnquist announcing at the start that each side would have an extra five minutes to argue, on top of the customary 30 minutes. Anti-globalization groups criticized Nike, among other large companies, in the late 1990s for what were described as sweatshop conditions in its factories worldwide. When Nike fought back with a public relations campaign — including letters to the editor, op-ed columns, and written reports — Kasky invoked state laws against commercial fraud in challenging Nike’s statements. Although the case did not go to trial, the California Supreme Court agreed with Kasky that the Nike statements were commercial speech. Companies, media organizations, and the Bush administration joined Nike in challenging the California ruling. Some First Amendment advocates expressed hope that the case would be a vehicle for expanding corporate free speech rights. But last Wednesday, it appeared the Court was no closer than it has been in the past to expanding or even clearly defining the category of corporate noncommercial speech that deserves full First Amendment protection, as opposed to commercial speech or advertising, which gets less protection. The Supreme Court was also troubled by technical issues in the case, including whether the California high court ruling amounted to a final judgment in the case that could be appealed. “If they get through the jurisdictional thicket, I think Nike wins,” says Ronald Collins, senior scholar at the First Amendment Center in Arlington, Va. “But I am not sure I see five votes for any one rationale, which could mean that commercial speech doctrine will get muddier, not clearer.” Nike’s lawyer in the case, Harvard Law School professor Laurence Tribe, told the Court that the company’s statements “don’t come close” to commercial speech — even a letter sent by Nike to school athletic directors, who make purchasing decisions about athletic equipment. Tribe also asserted that Kasky “doesn’t have standing to sue for athletic directors.” California has given Kasky a “free-floating power to correct speech,” Tribe said. Kasky’s unusual status under California law as a “private attorney general” seemed to work in Nike’s favor, and was underlined by Solicitor General Theodore Olson, who also argued on Nike’s behalf. Olson said that California consumer protection laws allow “unelected, unaccountable private enforcers” to sue companies at random. He also said anyone with a whim or grievance against a company could become a “licensed censor.” But in answers to questions from the justices, Olson implied that if Kasky had actually claimed he suffered “concrete harm” — for example, by buying Nike shoes in reliance on its statements about its labor practices — the suit would be on firmer constitutional ground. He also implied that California itself could have used Nike’s statements as the foundation for an enforcement action. Kasky’s lawyer Paul Hoeber of San Francisco’s Bushnell, Caplan & Fielding readily acknowledged to the Court that Kasky had never bought Nike sneakers “and never will.” As a result, Hoeber said, Kasky’s suit would not have met federal standards as a viable suit, but under California law it was permitted. Hoeber did not fare well during one portion of the oral argument, when Justice Stephen Breyer proclaimed that Nike’s campaign was a combination of both commercial and noncommercial speech. Nike was trying to “sell products” as well as to contribute to an important “public debate,” Breyer said. Hoeber started to respond that to protect consumers, the Nike campaign should be regarded as commercial speech. Breyer asked, sounding skeptical, “That trumps the First Amendment?” Justice Anthony Kennedy then intervened to ask whether the Court had ever upheld a statute that “chilled speech.” Hoeber replied, “Oh yes,” but when Kennedy asked him to name an instance, Hoeber paused for a long time and finally said, “You caught me there.” In the Holocaust case, American Insurance Association v. Garamendi, No. 02-722, the justices appeared somewhat sympathetic to the insurance industry and the Bush administration, which joined in claiming that the California Holocaust Insurance Relief Act interferes with delicate foreign policy negotiations with other countries over insurance claims by victims. Kenneth Geller of Mayer, Brown, Rowe & Maw, representing the insurance association, said the law would require wholesale disclosure of insurance data safeguarded by European privacy protection laws. The government has pledged to other nations that it would discourage states from enacting laws like California’s that interfere with what he called “a very sensitive area of foreign affairs.” The information has “no nexus to California,” Geller said, and is mostly irrelevant to Holocaust claims. Deputy Solicitor General Edwin Kneedler also said states are not entitled to establish their own foreign policies in an area that is “an exclusive matter for the national government.” But several justices also appeared to appreciate California’s position that the statute does not interfere with foreign policy and was not clearly pre-empted by what either Congress or the president has done in the area of Holocaust insurance claims. Justice Sandra Day O’Connor said it was “troubling” that neither Congress nor the president had specifically pre-empted state law. Frank Kaplan of Alschuler Grossman Stein & Kahan in Santa Monica, Calif., representing California, said the state had acted because neither federal action nor the promises of European insurance companies had gotten Californians the information they needed to make insurance claims stemming from Holocaust deaths. “Stonewalling has occurred for decades and continues today, and continues in California,” said Kaplan. Breyer expressed sympathy with California, but said he could also understand why foreign insurers and governments would not want to release sensitive information irrelevant to Holocaust claims. He suggested a hypothetical in which “Gwendolyn finds out that Uncle Harry . . . left all his money to Cecily.”

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