BUSINESS
ETHICS
Corporate speech should not be governed by First Amendment
Mark
Reutter, Business Editor
(217) 333-0568; mreutter@illinois.edu
5/1/03
CHAMPAIGN,
Ill. — A law professor at the University
of Illinois at Urbana-Champaign has called upon the U.S. Supreme Court to hold
corporations accountable for statements they make about their environmental
and labor practices.
Cynthia A. Williams is the principal author of an amicus curiae or "friend
of the court" brief in Nike v. Marc Kasky, which is before the high court.
The case centers on whether statements made by the athletic shoemaker concerning
its use of overseas labor should be broadly protected under the First Amendment
as "political speech" or be considered less-protected "commercial
speech" subject to state consumer protection laws.
In her brief, Williams argued that granting full First Amendment protection
to corporate speech would jeopardize disclosure and reporting requirements imposed
by all government agencies, including antifraud regulations by the Securities
and Exchange Commission, and make it easier for companies to sidestep demands
for accurate information by investors, nonprofit organizations and consumers.
She also argued that Nike’s position that its public statement regarding
its labor practices are covered by First Amendment protection would threaten
investors’ ability to obtain information from corporations on many issues
of public concern.
"Nike or any other company should not be able to ‘plead the First’
so that the truth of the facts they assert about their social and environmental
records cannot be tested in litigation – just as they would not be able
to plead the First to preclude an examination of their statements of fact about
their financial results of operations or about product quality, price or safety,"
she argued in the brief, which was filed by Domini Social Investment LLC, KLD
Research & Analytics, and Harrington Investments.
"While the government has no role to play in winnowing false from true
political ideas, it has a role to play in ensuring that facts of commercial
significance are accurate," Williams noted, adding, "When a commercial
entity states facts about its own products or operation in order to influence
purchasing decisions about either the product or the company’s stock,
that is and should be understood to be commercial speech."
The case stems from a 1998 suit filed by Marc Kasky that Nike’s claims
that it paid high overseas wages and protected workers from physical and sexual
abuse amounted to "false advertising" under California law. The lower
state courts agreed with Nike that its statements were protected as noncommercial
speech, but the California Supreme Court ruled in Kasky’s favor. Nike
then appealed the case to the highest court, which heard oral arguments on April
23.
Nike’s position, if affirmed by the Supreme Court, could have implications
for securities laws and stockholder rights, according to Williams, because it
is "alarmingly broad, potentially affecting companies’ statements
about nearly every aspect of a corporation’s business, from its treatment
of stock options to compliance with environmental regulations."