The Curious Case of Kasky

The perfect opportunity to address the mixed-content issue arose in 2003, when the U.S. Supreme Court granted certiorari to review the California Supreme Court’s decision in Kasky v. Nike. 1

The Kasky case involved a public controversy over labor conditions in shoemaker Nike’s offshore factories.  The policy debate began in the grassroots, but turned into a widespread discussion, with media reports, protests and boycotts targeting Nike.

Nike responded with a public relations campaign that included letters to the editor, communications to universities around the country (many of which received sponsorship dollars from Nike) and numerous other press initiatives to counter the allegations of abuse in its factories.  What followed was Kasky’s lawsuit, alleging that Nike had engaged in false advertising by knowingly misrepresenting the truth about factory conditions in its communications with the press and university officials.  

In the state court decision, Nike’s public statements and press campaign addressing labor conditions in its factories were found to be commercial speech.  Nike thus faced the specter of being liable for any factual inaccuracies it might make in defending itself in the public debate around the company’s offshore labor practices.

In reaching this conclusion, the California Supreme Court adopted a three-part test notably broader than that used by the U.S. Supreme Court in Bolger.  The California court held that expression is commercial speech if:

1) The speaker is a commercial entity; and

2) The communication is intended for a commercial audience; and

3) The communication contains representations of fact about the commercial entity’s products or services. 2

This is an exceptionally broad test. It covers virtually any expression a commercial entity makes regarding its products and services.  Compare it to the advertising-centric approach of Bolger, where commercial speech is characterized by expression that:

1) Is in an advertising format;

2) Refers to a specific product; and

3) Is driven by an economic motive. 3

What Bolger left slightly unsettled was the extent to which all three prongs must be met.  In a footnote, the Court explained that corporate “image” advertising may still be commercial speech, stating: “For example, we express no opinion as to whether reference to any particular product or service is a necessary element of commercial speech.” 4  However, it is clear that an economic motive PLUS some combination of the other two elements – advertising format and reference to a specific format – must be met to satisfy the Bolger test for commercial speech.   

Unfortunately, rather than take the opportunity presented by Kasky to address whether the “advertising format” prong is also necessary for a finding of commercial speech, the Supreme Court dismissed the writ of certiorari as “improvidently granted.” 5

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Notes:

  1. Kasky v. Nike, 27 Cal.4th 939 (2002).
  2. 27 Cal.4th at 311-313.
  3. Bolger v. Youngs Drug Products Corp., 463 U.S. 60, 66-68 (1983).
  4. 463 U.S. 60, 68 (fn. 14).
  5. Nike v. Kasky, 539 U.S. 654 (2003) (the dissent of Justices Breyer and O’Connor contains a good discussion of why these Justices would have ruled in favor of Nike; id at 676-78).

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