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Last month the Suzuki Motor Corp. and Consumers Union settled a product defamation suit over the claim in Consumers Union’s magazine, Consumer Reports, that Suzuki’s Samurai sport utility vehicle rolls over too easily. No money changed hands. Consumers Union issued no retraction, but did “clarify” its report. And the parties avoided a trial on Suzuki’s claims. Settlements are nice, usually, but this one harms free expression. Moreover, it’s not unique, following a disturbing pattern of settlements in First Amendment cases. The pattern goes like this: 1. The plaintiff sues for defamation or on some other speech-based claim. 2. A federal court of appeals or state supreme court refuses to uphold the First Amendment defense as a matter of law, thus sending the case to trial. 3. A petition for certiorari is denied, quite possibly because the lower court’s decision is not final. 4. The decision never becomes a final, reviewable judgment because the parties then settle. In Suzuki Motor Corp. v. Consumers Union of United States (2003), a panel of the U.S Court of Appeals for the 9th Circuit reversed, 2-1, a summary judgment for Consumers Union. Eleven judges later signed a dissent, written by Judge Alex Kozinski, from the court’s decision not to rehear the case en banc. The Supreme Court then denied certiorari, and last month the case settled. Two terms ago in Nike Inc. v. Kasky, the Supreme Court had granted cert and heard argument on the California Supreme Court’s 4-3 ruling that Nike’s statements in defense of its labor practices in Asia were “commercial speech” and therefore should go to trial under California’s unfair competition law. But in 2003 the Court dismissed the writ as improvidently granted, 6-3. Two majority justices — John Paul Stevens joined by Ruth Bader Ginsburg — wrote in an opinion that their “first” reason for dismissal was lack of a final judgment from the state court. There never would be such a final judgment — Nike settled for $1.5 million, with both sides declining to say whether Nike paid Kasky’s legal fees. In 1992, the 9th Circuit upheld, also 2-1, Vanna White’s right-of-publicity suit based on a satirical ad showing a game-show robot that looked like her. On top of the panel dissent in White v. Samsung Electronics America Inc., there was, again, a forceful opinion by Judge Kozinski dissenting from denial of rehearing en banc. Certiorari was denied, and the case went to trial, producing a $403,000 verdict for White. Now the defendants had a final judgment, but they settled, agreeing to pay White the full verdict, though not the attorney fees the trial court had denied her. A fourth example is Dr. Seuss Enterprises, L.P. v. Penguin Books USA Inc. (1997). This was a much-criticized 9th Circuit decision holding that a book of verse and illustrations telling the O.J. Simpson story in the style of the late Dr. Seuss was not a parody, and so would likely infringe both the copyrights and trademarks of Dr. Seuss. The District Court therefore had properly enjoined the book, the 9th Circuit ruled. The defendants filed a petition for certiorari, but at that point the case settled. The petition was withdrawn, and the book stayed banned. ISSUES LEFT ON THE TABLE All these cases presented significant First Amendment issues that could well have merited Supreme Court review. None got such review, for none made it back to the high court after the lower court judgment became final. The First Amendment claims in these cases thus suffered a fatal one-two punch: denial of certiorari and then settlement. The result chills freedom of expression in each case. As Judge Kozinski wrote: “If Suzuki can get to trial on evidence this flimsy, no consumer group in the country will be safe from assault by hordes of handsomely paid lawyers deploying scorched-earth litigation tactics.” Suzuki, as it turns out, didn’t even have to get to trial. Consumers Union’s president said the settlement took a large weight off the organization’s shoulders. This is understandable. Consumers Union reportedly spent $5 million defending Suzuki’s suit, even without a trial. Another suit for panning a product already hangs over Consumers Union in California federal court, and more can be expected. It’s hard to believe that Consumers Union and other organizations engaged in rating consumer products may not be tempted to pull their punches — or, in some cases, get out of the game entirely — as a result of the law made by the 9th Circuit in Suzuki. No less chilling is the decision of the California Supreme Court left standing in Nike. Nike’s general counsel said the company had stopped making public its annual “corporate responsibility report” and would limit its public statements. It well might, since, as one media lawyer put it, the court’s “sweeping definition of commercial speech” now applies to “all speech by corporations that reaches California.” Justice Stephen Breyer, dissenting in Nike (along with Justice Sandra Day O’Connor), wrote that “waiting extracts a heavy First Amendment price. If this suit goes forward, both Nike and other potential speakers . . . may censor their own expression well beyond what the law may constitutionally demand. That is what a ‘chilling effect’ means.” How much more chilling is Nike’s settlement, which removes the U.S. Supreme Court’s option of “waiting” and installs the California Supreme Court’s view of the First Amendment as law for California? Comparable chills were cast by the settlements in White and Dr. Seuss. White helped force ad agencies to “rethink the time-honored use of satire and parody in commercials,” according to a New York Times article. Dr. Seuss casts a pall over parody, satire, and fair use in copyrighted (and trademarked) works in California. Given the combination of cert denials, settlements, and the resulting chill, what can the Supreme Court do? First, it can reconsider its standards for granting review in nonfinal cases. Without the initial denial of review, those cases would be decided, not settled. True, the Court got no chance to grant review in Dr. Seuss, where the cert petition was withdrawn. But the Court’s practice of denying review in nonfinal cases — like White — may well have given the defendants little hope. While the final judgment rule probably explains many of these rulings, the Court professedly has taken a “pragmatic approach” to that rule, recognizing a number of exceptions. The Court should be even more pragmatic, giving more scope to the exception that applies where refusal of immediate review, in the words of its 1975 decision in Cox Broadcasting Corp. v. Cohn, “might seriously erode federal policy.” As Justice Breyer suggested in Nike, few, if any, policies rank higher than “the federal constitutional policy in favor of free speech.” Second, the Court should consider specifically the harm to this policy that may result from settlement where review has been denied. The Court can’t prevent settlements, but perhaps it should give more weight to their likelihood. Nike’s general counsel said his company chose to settle with Kasky because the justices’ refusal to decide “left us with no satisfactory comfort that we could get back to the Supreme Court.” Perhaps the Supreme Court underestimates the costs, risks, and difficulties of having cert denied, going through a trial, losing, appealing through the lower courts, and then persuading the Court, this time, to hear the case. If a well-heeled litigant like Nike won’t try it, who will? One might say that settlements should be encouraged. The Court should consider whether that’s true, however, when it means that important First Amendment questions, decided by lower courts, never reach our highest court. The Supreme Court does not decide cases alone, but requires willing litigants. The Court can’t stop litigants from settling, but it need not adopt jurisdictional rules that pressure them to do so. Where settlement is likely to chill protected speech and prevent the Court from deciding an important First Amendment question, the Court should recognize that denial of immediate review “might seriously erode federal policy.” Otherwise, it may be questioned whether the Court is meeting its responsibility to fashion and protect the law of free speech. Stephen R. Barnett is the Elizabeth J. Boalt Professor of Law Emeritus at Boalt Hall School of Law at the University of California, Berkeley. He can be reached at [email protected]. This article first appeared in The Recorder , the American Lawyer Media newspaper published in San Francisco.

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