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Nike Inc. agreed to pay $1.5 million to a worker rights group to settle the commercial free speech case that it took to the U.S. Supreme Court, the company said Friday. Marc Kasky, a San Francisco labor activist, had sued the Beaverton, Ore.-based athletic shoe and clothing giant five years ago, accusing it of false advertising for claiming the company was protecting labor rights at overseas contract factories that make footwear for Nike. “The two parties mutually agreed that investments designed to strengthen workplace monitoring and factory worker programs are more desirable than prolonged litigation,” Nike said Friday in a statement announcing the agreement. The company admitted no liability. The surprise settlement left hanging the core issue of whether Nike lied and if its ads qualified as protected speech under the First Amendment. The California Supreme Court had ruled that Kasky could sue Nike on the false advertising claim, prompting the company to ask for a review by the U.S. Supreme Court. But after hearing oral arguments, the high court refused to tackle the issues and dismissed the case in June, leaving the decision up to California. Many had hoped the Supreme Court would settle the issue; the case was expected to set precedent. Nike had garnered the support of 40 large media companies, including The Associated Press, who filed court briefs in support of the company, arguing the First Amendment right to free speech could be diminished. As part of the settlement, Nike has agreed to pay the Fair Labor Association $1.5 million to boost efforts to improve factory conditions and monitoring. The association, formed in 1999, promotes a code of conduct based on international labor standards, monitors labor practices and coordinates public reports on factory conditions. “Mr. Kasky is satisfied that this settlement reflects Nike’s commitment to positive change where factory workers are concerned,” Kasky’s lawyer, Patrick Coughlin, said. Nike spokeswoman Maria Eitel said, “We have learned a great deal in the five years since this case was first filed about the challenges we and others face in addressing issues in manufacturing environments.” The case, filed in 1998, arose from Nike’s vigorous defense against allegations that it used Third World sweatshops to manufacture its athletic products. Nike defended wages and conditions at Asian plants, run by subcontractors, where workers make tennis shoes and athletic wear with the distinctive Nike swoosh logo. Nike wrote letters and issued press releases about its overseas labor conditions. It said such statements are part of the marketplace of ideas protected by the First Amendment and that it must be free to explain itself to customers, potential customers, or anyone else. Critics said the company’s defense hoodwinked consumers and amounted to false advertising. The Fair Labor Association, which will receive the $1.5 million settlement, includes 179 universities, human rights organizations, consumer groups and various companies. Copyright 2003 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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