Essay on Nike and Labor Laws (Nike Inc. vs. Kasky)

After a barrage of assertions that the company was abusing and underpaying employees at its international manufacturing locations, Nike was forced to defend itself in 1996. Nike responded to the allegations by taking a number of steps doing press releases among others. Furthermore, the Nike Corporation commissioned an investigation into labor conditions at Nike manufacturing plants by former United Nations Ambassador Andrew Young in 1997 as an additional measure. After touring 12 facilities, Young wrote in his report that he found “no evidence of widespread abuse or exploitation of workers,” though he did hear “positive comments about working conditions in the factories.”

Nike was sued in April 1998 by a California resident named Marc Kasky, who accused the company of engaging in bigoted and misleading businesses that were in desecration of the state’s False Advertising Law and Unfair Competition Law. Nike was found not guilty of the charges. Nike was found to have violated both of these statutes. According to Kasky, “Nike made a number of misleading representations and/or major omissions of fact” about the labor circumstances under which its goods were created to “maintain and/or increase its sales.” Nike was sued by Kasky for defamation. He claimed that he had suffered “no loss or damages of any kind whatsoever,” and that he had filed the complaint “on behalf of the General Public of the State of California, based on information and belief” in order to bring the case. It was Nike that filed an objection to Kasky’s complaint, appealing that the lawsuit was striped by the First Amendment and should be dismissed. When the demurrer was upheld, there was no time to file an amendment, and the case was dismissed by the trial court on that basis. A petition for judicial review was filed, and the California Court of Appeal upheld the decision, ruling that Nike’s claims were correct. The respondent’s second argument, that the trial court made a mistake by denying him leave to amend his complaint, was rejected by the California Court of Appeal, which determined that there was “no reasonable possibility” that the trial court made a mistake.

As a result, the case was appealed to the higher court, which inverted the decision by the lower courts and returned the case to the lower court for further consideration of the evidence. The court determined that “the messages in question are commercial speech” because they were directed at the general public and provided information about Nike’s business operations in order to encourage the purchase of their products. Despite this, according to a spokesman for the court, the lawsuit was still in its early stages, and the question of whether any misleading promises were made was still up for debate and had not yet been resolved. According to the petition, two issues were raised: the first was whether an organization partaking in a public debate could be held liable for accurate imprecisions on the basis that its remarks were “commercial speech,” and the second was whether such remarks “could affect consumers’ opinions about the business as a good corporate citizen and thereby affect their purchasing decisions.” The second question was whether the Supreme Court of California was correct in asserting that the remarks constituted commercial speech. Ultimately, it was determined that Kasky’s legal claims were founded on nine specific examples of Nike’s communications, which were taken into consideration by the California Supreme Court in reaching its decision in the case.

A federal issue was “finally decided” by the Supreme Court of California after much deliberation and deliberation, and that issue was whether the First Amendment protects speech from being challenged in court because it is “false or misleading.” Following the ruling by the California Supreme Court, Nike filed an appeal with the United States Supreme Court, which agreed to hear the case after deliberating for several months. All along, the Bush administration and business organizations backed Nike, claiming that if Kasky was successful, it would have a chilling effect on how companies portrayed themselves in the marketplace. Companies such as Nike and other multinational corporations should be held to a higher standard of honesty, according to the groups that advocated for greater corporate accountability.

In the aftermath, Nike was faced with the prospect of a lengthy and expensive courtroom battle, not to mention the negative publicity that would accompany the proceedings. If the case had been broadcast, it would almost certainly have been portrayed as a battle between Kasky, the lone campaigner for justice for people in the Third World, and the vast corporate machine. It was the Supreme Court of the United States that made the decision in this case in 2003, ruling that the Court had granted certiorari in an imprudent manner and dismissing the case, thereby effectively upholding the decision by the California Supreme Court of Appeal on the merits. Following several years of negotiations, they reached a settlement and agreed to pay approximately $1.5 million to the Fair Labor Association, which is responsible for monitoring employers’ treatment of their employees.

Reference

Nike, Inc. v. Kasky, 539 U.S. 654 (2003). (n.d.). Justia Law. Retrieved September 27, 2021, from https://supreme.justia.com/cases/federal/us/539/654/