Amicus Curiae Brief — Nike, Inc. v. Kasky

MOTION FIL‘

NOV 1 2 Ae

Ow Petition For « Wait of CERTIORARI

TO THE SUPREME COURT OF CALIFORNIA

MOTION FOR LEAVE TO FILE BRIEF 4M/C/ CURIAE

AND BRIEF AM/IC/ CURIAE ON BEHALF OF THE

COUNCIL OF PUBLIC RELATIONS FIRMS, THE ARTHUR

W. PAGE SOCIETY, THE PUBLIC RELATIONS SOCIETY

OF AMERICA, THE PUBLIC AFFAIRS COUNCIL AND THE

INSTITUTE FOR PUBLIC RELATIONS IN SUPPORT OF

GRANTING A WRIT OF CERTIORARI

THOMAS H. CLARKE, JR Bruce P. KELLER

Ropers, MAJESKI, KOHN & BENTLEY Counsel of Record

333 Market Street, Suite 3150 MICHAEL R. PoTENZA

San Francisco, CA 94105 CHRISTOPHER W. DyBwap

(415) 543-4800 DeBevoise & PLIMPTON

919 Third Avenue

New York, NY 10022

(212) 909-6000

Attorneys for Amici Curiae

177349 g

COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

—

Oe a we re WL beter k

MOTION FOR LEAVE TO FILE

BRIEF AMICI CURIAE

Pursuant to Supreme Court Rule 37; the Council of

Public Relations Firms, the Arthur W. Page Society, the

Public Relations Society of America, the Public Affairs

Council and the Institute for Public Relations, through their

undersigned counsel, hereby respectfully move for leave

to file the following brief amicus curiae in this case

The petitioners have filed with the Court a letter consenting

to filing of all amicus briefs in support of either party.

Respondents have refused to consent.

Because this brief would materially assist this Court

in its consideration of the petition for a writ of certiorari,

amici respectfully request leave to file the attached brief.

Respectfully submitted,

THOMAS H. CLARKE, JR. Bruce P. Ketter

Ropers, MAJeSKI, KOHN & BentLey Counsel of Record

333 Market Street, Suite 3150 MICHAEL R. POTENZA

San Francisco, CA 94105 CHRISTOPHER W. DyBwaD

(415) 543-4800 - DeEBEVOISE & PLIMPTON

919 Third Avenue

New York, NY 10022

(212) 909-6000

Attorneys for Amici Curiae

TABLE OF CONTENTS

Page

Table of Cited Authorities 1

Interests of the Amici Curiae

Introduction 3

Summary of Argument 3

' Argument s

| l Factual Corporate Communications Are A

Vital Component Of Unfettered Debate On

Matters Of Public Concern \

Il. Public Relations Campaigns That Make

Important Contributions To Public Debates

Will Be Chilled By Kash 9

ll. An Enormous Amount Of Protected

Corporate Speech Will Be Chilled 16

[V. The Aasky Test Represents A Sea-Change

‘ That Restricts Previously Protected Speech

sean 16

PD Saeéuducecees , | 19

|

|

|

il

ll

TABLE OF CITED AUTHORITIES Cited Authorities

Federal Cases: Page Page

Board of Trustees v. Fox, 492 U.S. 469 (1989) 1] cree

. “ 2002, Pub.L. No. 107-204

Central H ai . Sarbanes-Oxley Act of ;

‘iene ae an ctric Corp. v. Public COO . ov ccckteccedcosessoccecessccessces §

" ion of , ork 7 1T ~

(1980) f New York, 447 U.S. §§

. reeeesveneeees eo 18 State Statutes:

Garris —

on v. Louisiana, 379 U.S. 64 (1964) __. 7 Cac. Bus. & Pror. Cope § 17200 ef seg.......--. 7

Joseph B _

11989) urstyn, Inc. v. Wilson, 343 U.S. 495 Cat. Bus. & Pror. Cope § 17500 ef seg........-. 7

Ee Pee a op Sipe, Soy 17

-. Other Authorities:

— oa & Elec. Co. v. Public Utils Comm 'n

75 US. 1 ” ,

(1986)... 2... eee, 17 AEI Conference on Productivity & the American

RAV - Economy - Part 1 (C-Span television broadcast,

v. St. Paul, S05 U.S. 377(1992) .......... 19 Octaboer 23. 2002) ....ccccccccccccccccccess 4

Riley v. Nat’ , , ——

(1988) atl Fed'n of the Blind, 487 U.S. 78] EpMUND M. Burke, Corporate COMMUNITY RELATIONS

+o 6eUtCnaseheeeubetsdwlweeneucs<. 1] COO... ccccvvescescevsscecesscoverseeses 8

In re RMJ, 455 U

55 U.S. 191 (1982) ....00. 18 Columbia’s School of International and Public

Virginia Shase Beard Affairs Course Catalog, INAF U9178.001 “Human

2 oar of Pharmacy v. Virginia Citizens Rights and Corporate Responsibility” ......... \

onsumer Council, 425 U.S. 748 (1976) . 18

_ - § Die After Taking Tylenol Believed to Contain

United _ :

States Constitution: Cyanide, New York TIMEs, Sept. 30,1982 ..... 12

First Am ; '

PD ovecucessccesessccaveawcecc passim Bonnie Harris, Jn Fast Food, Some See Fast Track,

Fourteenth Amendment .......___ ‘ Los ANGeLes Times, Mar. 12, 2001 .........--- 10

Harvard’s John F. Kennedy School of Government

Course Catalog, KSG BGP-232 “Business as a

8

Dalittash Rate”... ccccccccscccccsceseseees

iv

Cited Authorities

Gregg Hillyer, Monsanto Makeover, PRoGRESSIVE

Farmer, Feb. 2002

http: www.awpage.com/public/about/apabout/htm!

(last visited Nov. 11, 2002) .................

http://www.bp.com/centres/press/hornchurch

media_resources/press_release/index.asp

(last visited Nov. 11, 2002)

Interview by PBS Frontline with Hugh Grant, CEO

of Monsanto, (Dec. 2000), at http: ‘www.pbs.org

wgbhvharvest/interviews/grant.html (last visited

PP MED -wcbedeiscecuncséadsoceus 13

Anthony Krulwich, Recalls: Legal and Corporate

Responses to FDA, CPSC, NHTSA, and Product

Liability Considerations, 39 Bus. Law. 757 ....

Let Nike Speak for Itself, USA Topay, Oct. 14, 2002

Tamar Lewin, Tylenol Posts an Apparent Recovery,

New York Times, Dec. 25, 1982 :

MacNeil/Lehrer Report: Cyanide Investigation

(PBS television broadcast, Oct. 1, 1982).......

Meredith May, Teachers Sizzle Over Fast Food

Fund-Raiser, San Francisco CHRONICLE, Oct. 15,

2002

Page

14,

10

Cited Authorities

McDonald’s Social Responsibility Report, available

at http://www.mcdonalds.com/corporate/social/

report/index.html (last visited Nov. 11, 2002) ..

Monsanto Company 2001 Annual Report, available

at http://www.monsanto.com. ............+.:

Monsanto Welcomes U.N. Report on Biotech’s

Benefits for Developing World ar http://

www.monsanto.com/monsanto/layout/media 01,

07-09-01 .asp (last visited Nov. 11, 2002) ......

Leo Mullin, Delta Airlines, Chairman & CEO

(C-Span television broadcast, September 25,

DT -<cccvdadebewesdbsesededdeasccbeness

Newshour with Jim Lehrer: Bridging the Gap

(PBS television broadcast, March 20, 1996) ....

Newshour with Jim Lehrer: Megamerger Masters

(PBS television broadcast, January 12, 2000) ...

Newshour with Jim Lehrer: Newsmaker: Phillip

Knight (PBS television broadcast, May 13, 1998)

eeseeeveeseeeeeseeeaeaeseeeeeaeeenaeeeeaeeaeeeeeean een eae eee

Newshour with Jim Lehrer: Return of Thalidomide

(PBS television broadcast, August 4, 1998) ....

Newshour with Jim Lehrer: High-Tech Workers

(PBS television broadcast, Apr. 3, 1998) ......

Page

1]

14

14

vl

Cited Authorities

Page

Pharmaceutical Innovation: the enabling conditions,

at http: /www.merck.com/overview/98ar/p6.htm

(last visited Nov. 11, 2002) 7 6

Harvey L. Pitt & Karl A. Groskaufmanis, When Bad

Things Happen to Good Companies: A Crisis

Management Primer, 1149 PLI/Corp 307 | 13

Precious Cargo, available ar http gm.com/ company

gmability/safety/child passenger safety

precious cargo/index.html (last visited Nov. 11.

2002) .

Milford Prewitt, Critics Slam Best-Seller Critique

of OSR, Nation’s RESTAURANT News, Jun. 11.

as

Speech by James Robbins, President and CEO.

Cox Communications (C-Span television

broadcast, October 22, 2002) ........ Pa wawot 4

Eric ScHLosser, Fast Foop NaTION (2001) ....... y

Regina Schrambling, Catching America With Its

Hands in the Fries, New Yor Times, Mar. 21,

2001 10

eee #@ © @

eeeespeeeaeseeeeaeeaneeneeeeaneneeneenbe

Michael Specter, The Pharmageddon Riddle,

THe New Yorker, April 10, 2000

Therapeutic Cloning Under Fire at http://www. lef.org/

magazine/mag2002/mar2002_cover west 01.html

EE isco civencddeive suns niaaas 15

l

INTERESTS OF THE AMICI CURIAE '

The Council of Public Relations Firms represents the

business of public relations and corporate communications.

Its 120 member firms include all of the ten largest firms and

over three quarters of the top 50 firms (measured by revenue)

in the world. Together, amici and its members represent every

facet of the public relations and corporate communications

industry. The mission of the Council of Public Relations Firms

is to build the business of public relations and corporate

communications by advocating to business professionals the

value of public relations as a strategic business tool, promoting

the benefits of careers in public relations to prospective

employees and assisting members and their clients in setting

the standards for the profession.

The Arthur W. Page Society, founded in 1983, 1s a

professional organization with approximately 300 members

consisting of chief corporate public relations officers of major

companies, as well as other leaders in the public relations

profession who are closely related to corporate public relations.

Its goals are to strengthen the management policy role of the

corporate public relations officer; develop knowledge of

corporate management issues; educate the public about the role

of public relations management, encourage research that leads

to improvement in the corporate public relations function and

to introduce these concepts to scholars, teachers and students.

The Public Relations Society of America is the world’s

largest organization for public relations professionals.

Its nearly 20,000 members, organized into 117 chapters,

represent business and industry, technology, counseling firms,

government, associations, hospitals, schools, professional

services firms and nonprofit organizations. Chartered in 1947,

its primary objectives are to advance the standards of the public

relations profession and to provide members with professional

development opportunities through continuing education

1. Counsel for the Amici were the sole authors of this brief. No

person or entity other than Amici made a financial contribution to this bnef

2

programs, information exchange forums and research projects

conducted on the national and local levels.

Formed in 1954 at the urging of President Dwight D.

Eisenhower, the Public Affairs Council is one of the leading

associations for public affairs professionals. It provides unique

information, training and other resources to its members to

support their effective participation in government, community

and public relations activities at all levels. Nearly 600 member

corporations, associations and consulting firms work together

to enhance the value and professionalism of the public affairs

practice, and to provide thoughtful leadership as corporate

citizens.

The Institute for Public Relations, established in 1956 bya

senior group of public relations professionals, is devoted to

advancing the professional knowledge and practice of public

relations through research and education. It has supported more

than 200 research projects, ranging from what students of public

relations must study in order to understand the profession to

how new technologies affect the public relations profession, as

well as sponsored numerous competitions and awards to reward

excellence in the field.

Amici are in the business of advising and assisting

corporations regarding public communications. Amici assist

companies of all types to gather and disseminate information

related to their businesses and communities on all conceivable

topics, from investor relations, to philanthropic and community

outreach programs, to corporate crisis communications.

For decades, amici have relied on the First Amendment

protections available to all speakers, regardless of their identity,

to engage in robust public debate about issues of public concern

free from the risk of strike suits. This protection has become

even more vital over the last several decades, because, as Arthur

Page’ put it, it has become increasingly true in our information

2. Arthur Page, who was the first chief corporate communications

officer to sit on the board of directors of a major U.S. corporation

(Cont'd)

3

age that “all business in a democratic country begins with

public permission and exists by public approval.” http://

www.awpage.com/public/about/apabout/html (last visited

Nov. 11, 2002). Because the California Supreme Court’s

decision will have an unfair, unprecedented and materially

chilling impact on the ability of companies and amici to speak

on issues of public concern, amici urge the Court to grant

certiorari and decide this matter on the merits.

INTRODUCTION

Amici support Nike’s argument that the California Supreme

Court’s holding that Nike’s responses to allegations that it

engaged in unfair labor practices abroad amount to commercial

speech conflicts with this Court’s precedents. Amici submit this

brief to make the Court aware of the importance of the decision

below and the way it has chilled, and will continue to chill,

vigorous debate on a wide range of public issues.

SUMMARY OF ARGUMENT

The California Supreme Court incorrectly held that claims

asserted under California’s unfair competition and false

advertising laws on the basis of letters to the editor, press releases

and other corporate communications may, consistent with the

First Amendment, give rise to strict liability. It based this

conclusion on its sui generis, three-part definition that

“commercial speech” is any “representation{] of fact”: (1) made

by “commercial” speakers “engaged in commerce”; (2) to an

audience that may include potential purchasers or that may report

on the issue to potential consumers; (3) about a topic related to

“business operations.” Kasky v. Nike, Inc., 45 P.3d 243, 247,

256 (Cal. 2002).

This is a test of astonishing breadth that, because it expressly

singles out factual representations, amounts to an Orwellian

(Cont'd)

(AT&T), is credited with having established the profession of corporate

communications.

4

preference for debate without the benefit of facts. That cannot

be squared with the First Amendment because this new test

sweeps within its scope amy factual statement, including letters

to the editor and opinion editorials; statements published on

web sites; media presentations; press releases; television

appearances; appearances on the Newshour with Jim Lehrer’;

C-Span appearances‘; indeed, any public statement made by a

company about a topic related to what that company does. As a

result, the press as a whole—from a newspaper’s business

section to CNN’s Lou Dobbs and CNBC—will suffer a dearth

of information because silence will become the prudent course

of action for business executives and spokesmen.

This will result in the compelled self-censorship of an

enormous amount of protected speech on important matters of

3. See, e.g., Newshour with Jim Lehrer: Newsmaker: Phillip Knight

(PBS television broadcast, May 13, 1998) (Phillip Knight, CEO of

Nike, discussing Nike and globalization); Newshour with Jim Lehrer:

Return of Thalidomide (PBS television broadcast, August 4, 1998)

(John Jackson, CEO of Celgene, on the FDA’s decision to give limited

approval to Thalidomide, and Celgene’s possible marketing of the drug);

Newshour with Jim Lehrer: Bridging the Gap (PBS television broadcast,

March 20, 1996) (Aaron Feurstein, CEO of Malden Mills, discussing

corporate responsibility and the wage-profit gap; using examples from

Malden Mills); Newshour with Jim Lehrer: Megamerger Masters (PBS

television broadcast, January 12, 2000) (Steve Case, CEO of America

Online, and Gerald Levin, CEO of Time Warner, discussing the

impending AOL Time Warner merger and how the consolidation was in

the public interest).

4. See, e.g., Leo Mullin, Delta Airlines, Chairman & CEO (C-Span

television broadcast, September 25, 2002) (Mr. Mullin discussed the

financial well-being of the airline industry and what must be changed in

order for airlines to survive); Speech by James Robbins, President and

CEO, Cox Communications (C-Span television broadcast, October 22,

2002) (discussing the cable industry); AEI Conference on Productivity

& the American Economy—Part | (C-Span television broadcast, October

23, 2002) (a panel discussion on the economy including Dick Davidson,

Chairman & CEO, Union Pacific Corporation; Marilyn Carlson Nelson,

Chairman & CEO, Carlson Company).

5

public concern because the issues also happen to touch upon

the speaker’s “business operations”:

* Johnson & Johnson’s swift public response to Tylenol

cyanide tampering in 1982 would, under Kasky, expose it

to strike suits, see pp. 11-13, infra;

* McDonald’s would no longer respond to its critics, such

as Eric Schlosser and his book Fast Foop Nation,

see pp. 9-11, infra;

* Monsanto and other companies would no longer add their

perspective to the debate regarding crop modification,

see pp. 13-15 infra;

¢ Advanced Cell Technology and other companies would risk

suit by entering the public debate on cloning, see p. 15,

infra;

¢ General Motors and other companies would no longer

comment on the pros and cons of airbags for child safety.’

* Technology companies would no longer comment on the

need for “green card” quota increases to bring specialists

into the United States.°

5. See, e.g., Precious Cargo, available at http://gm.com/company/

gmability/safety/child_passenger_safety/precious_cargo/index.html

(last visited Nov. 11, 2002) (“Another reason to restrain children

properly, in a rear seat, is the vehicle’s frontal air bags, which are designed

to restrain adults. Air bags have to inflate very quickly, faster than a

person can blink an eye, and with great force. Serious injury, and even

death, can result for anyone—especially a child—who is up against, or

close to, a frontal air bag when it inflates.”).

6. See, e.g., Newshour with Jim Lehrer: High-Tech Workers (PBS

television broadcast, Apr. 3, 1998) (T.J. Rodgers, CEO of Cypress

Semiconductor, stating “We hire ail the Americans we can get” but that

green cards still needed for foreign engineers and specialists because

there are not enough American engineers to keep pace with the demand

for expansion. Rodgers also stated: “I promise that every time I get one

of those engineers I will create five more jobs right here in America for

Americans to build and sell those products”).

6

¢ Drugand biotech companies would no longer comment on

the effect of the Food and Drug Administration approvals

process on the flow of their new products to the market.’

* British Petroleum would no longer claim that its solar and

wind powered service station was “the world’s most

environmentally friendly service station” for fear that

because it sells gasoline, it would not be deemed sufficiently

sensitive to the environment for activist groups.*

This list is by no means exhaustive of the potential ill effects of

the California Supreme Court’s new take on the First

Amendment. Because the Kasky test covers any utterance where

consumers might be present or might be expected to receive the

information through media outlets, corporate speech will

disappear from every medium of communication with the public.

This new and sweeping test, when coupled with the

concededly broad scope of California’s unfair competition and

false advertising law, will reverberate far beyond California’s

borders. The Kasky test applies to speech made outside of the

state whenever the speech is reported—by third parties, the press,

or otherwise—in-state. See Kasky, 45 P.3d at 256 (liability

attaches even when speech directed to “reporters or reviewers”

who repeat the message to potential buyers). Other aspects of

California’s broad unfair competition and false advertising law

virtually guarantee that companies doing business in

California—and their agents—will face potentially costly strike

suits. California law allows any citizen, without even a showing

7. See, e.g., Pharmaceutical Innovation: the enabling conditions,

at http://www.merck.com/overview/98ar/p6.htm (last visited Nov. 11,

2002) (“It is critical that the U.S. Food and Drug Administration approve

safe and effective new medicines in a timely fashion, so that people

who need them will get them as quickly as possible”).

8. See http://www.bp.com/centres/press/hornchurch

media_resources/press_release /index.asp (last visited Nov. 11, 2002)

(describing its service station in Hornchurch, England as “the world’s

most environmentally friendly service station”).

7

of reliance or deception, to bring “private attorney general”

actions for restitution and injunctive relief. The challenged

statement need not even be false as long as consumers are

“misled” by it. Cat. Bus. & Pror. Cope § 17200 et seq. and id.,

§ 17500 et seq. The remedies available to these “private attorneys

general” —making restitution to consumers and a Court-ordered

“corrective” speech campaign—further chill protected speech.

All of this strikes amici particularly hard. As a USA Today

editorial reported, “if the Kasky reasoning stands, then the

public-relations industry . . . might as well shut down.” Let Nike

Speak for Itself, USA Tobay, Oct. 14, 2002. As troubling as the

Kasky decision may be for advertisers and advertising agencies,

at least there is a well-developed body of law (federal and state)

that provides guidance regarding when advertising is false and

subject to litigation. No such rules exist for the corporate speech

that amici help create and disseminate because, prior to the

California Supreme Court’s decision, that speech correctly was

considered to be fully protected, core speech regarding matters

of public concern. This makes it difficult, if not altogether

impossible, for amici and their clients to anticipate where the

California courts will draw the line between “misleading” and

non-actionable statements.

The Kasky decision inevitably will stymie public relations

professionals’ ability to assist corporations maintain an open

dialogue with the public and engage in the “uninhibited, robust

and wide-open” public debate that was previously thought to

be protected by the First Amendment. Garrison v. Louisiana,

379 U.S. 64, 75 (1964). This Court should issue a writ of

certiorari and reverse the California Supreme Court’s erroneous

decision.

8

ARGUMENT

I. FACTUALCORPORATE COMMUNICATIONS ARE

AVITAL COMPONENT OF UNFETTERED DEBATE

ON MATTERS OF PUBLIC CONCERN

Corporate speech is vitally important to a functioning

democracy. As corporations and the communities in which they

reside have become more closely linked over the past two

decades, the public has come to expect a new level of civic

engagement from corporations. See EpMuNnD M. Burke,

CorPORATE COMMUNITY RELATIONS xiv (1999) (“The public

environment in which companies operate today ... is far

different than it was just 20 years ago. There are dramatic and

far-reaching changes in the expectations of communities and

societies today that define and influence how a company can

operate”). Public relations professionals facilitate this interaction

between the public and companies by providing factual

information on topics of interest to both groups.

Indeed, the public has made clear that its preference is for more

openness and communication from companies, not less.

See, e.g., Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204

(instituting several measures designed to increase corporate

transparency). —

Just as with other participants in public affairs, corporate

speech and advocacy plays a significant role in informing public

debate and shaping public opinion and policy. As a result,

government school curricula recognize the increased role

(and expectations) of business in American democracy.

See Harvard’s John F. Kennedy School of Government Course

Catalog, KSG BGP-232 “Business as a Political Actor”

(describing course designed to analyze the important role that

“(bJusinesses play . . . in the public policy processes of capitalist

democracies”); see also Columbia’s School of International and

Public Affairs Course Catalog, INAF U9178.001 “Human

Rights and Corporate Responsibility” (describing course

9

designed to analyze the “complex questions arising out of the

interaction of business activities and human rights . . . ”’).

Il. PUBLIC RELATIONS CAMPAIGNS THAT MAKE

IMPORTANT CONTRIBUTIONS TO PUBLIC

DEBATES WILL BE CHILLED BY KASKY

For decades, corporate and non-corporate speech on the

same topics have appeared together in all of the media

traditionally associated with First Amendment purposes:

(a) editorials and letters to the editor, (b) paid-for advertised

editorials in newspapers, magazines, and other publications,

and (c) appearances on news shows and at other public forums.

Often, as is the case here, corporations speak in response to

speech critical of them. That critical speech, whether by design

or because of lack of access or resources fully to research the

issue, often leaves out important facts vital to a comprehensive

presentation of the issues involved.

For example, in 2001, Eric Schlosser released Fast Foop

Nation, a best-selling social-cultural critique of the fast food

industry. The book criticized several aspects of the fast food

industry, such as: its contribution to low-wage, unskilled jobs;

its role in the dramatic increase in rates of obesity, and,

its role in the homogenization of American neighborhoods.

See Eric Schlosser, Fast Foop Nation 3-10 (2001). Although

the book criticized the industry as a whole, it focused in

large part on the practices at McDonald’s. Faced with a

damning critique of all facets of its business, McDonald’s

vigorously argued the book provided an incomplete picture.

See, e.g, Milford Prewitt, Critics Slam Best-Seller Critique

of QSR, Nation’s Restaurant News, Jun. 11, 2001, at 4

(“The real McDonald’s bears no resemblance to anything

described in that book. The author is wrong about our people,

wrong about our jobs and wrong about our food. He also

completely ignores our values, which is not surprising since

he never contacted us for any information whatsoever”).

Other reviewers also questioned the accuracy of the account.

10

See Regina Schrambling, Catching America With Its Hands in

the Fries, New York Times, Mar. 21, 2001, at Fl (“Some

reviewers have accused Mr. Schlosser . . . of playing fast and

loose with the facts”).

In order to fill-in the gaps that it felt were missing,

McDonald’s engaged in the traditional response — counter

speech of its own — to present a fuller account of its business.

See, e.g., Bonnie Harris, Jn Fast Food, Some See Fast Track,

Los ANGELES Times, Mar. 12, 2001, at Cl (describing how

many Latinos view McDonald’s and other restaurant chains as

a key to long-term financial security, and quoting McDonald’s

spokesman Walt Riker as stating, “We’ve always disputed the

idea that fast-food jobs are dead-end jobs, and our Hispanic

workers are evidence of that. We value their work, and we’re

continuing to encourage their advancement through training and

other programs”); see also Meredith May, Teachers Sizzle Over

Fast Food Fund-Raiser, SAN Francisco CHRONICLE, Oct. 15,

2002, at Al (in response to criticisms that McDonald’s

encourages obesity, McDonald’s spokeswoman pointed out that

it was the first major fast food restaurant to introduce salads

and reduce the fat content of its products).

Until the California Supreme Court’s decision, a corporation

like McDonald’s right to defend itself and its shareholders from

criticism and to present a complete record was grounded on the

same unfettered First Amendment protection that the critic

enjoyed. In granting critics First Amendment protection in

attacking a company while simultaneously denying that same

protection to the company in responding to those allegations,

the Kasky decision impermissibly favors speech from a particular

viewpoint. See R.A.V. v. St. Paul, 505 U.S. 377 (1992). Indeed,

McDonald’s response to Fast Foop Nation dramatically

illustrates the unworkability of the Kasky test; literally every

statement McDonald’s made in response—no matter what the

issue—concerned its “business operations,” because that is

li

precisely what the book attacked.’ Under the Kasky regime,

however, McDonald’s would be forced to make the Hobson’s

choice of either staying silent in the face of this criticism, or

risking a potential suit for defending itself publicly.

The Kasky decision also creates a false dichotomy between

fact and opinion and suggests that corporate statements on

issues of public concern can receive First Amendment protection

only if they are pure opinion. This false dichotomy between

fact and opinion makes the decision even more unworkable.

See, e.g., Board of Trustees v. Fox, 492 U.S. 469 (1989);

see also Riley v. Nat'l Fed'n of the Blind, 487 U.S. 781,

796 (1988). This element of the Kasky decision strikes at

the heart of amici’ business because companies look to

amici to maintain open lines of communication with the public.

Amici assist in researching fully the facts surrounding a given

issue and design strategies efficiently to deliver this information

to the public. The importance of this free flow of information

cannot be overstated.

It is difficult to think of a more stark example of the public

benefits that can flow from the free flow of corporate speech

than Johnson & Johnson’s response to the Tylenol cyanide crisis.

In the fall of 1982, seven people who had taken Tylenol died

from cyanide contained in the capsules. In the hours following

the first news of the crisis, Johnson & Johnson made the crucial

decision to communicate everything it knew to the public.

As George Frazza, Johnson & Johnson’s General Counsel at

the time, stated: “[w]e decided we were going to communicate,

to be active... We were determined to find out what the facts

were, and whether we liked them or not, communicate them

9. In responding to the concerns raised by Fast Foop Nation,

McDonald’s has made numerous factual statements concerning its

“business operations.” See, e.g., McDonald’s Social Responsibility

Report, available at http://www.mcdonalds.com/corporate/social/report/

index.html (last visited Nov. 11, 2002) (“Employees are respected and

valued”; “Employees receive work experience that teaches skills and

values that last a lifetime”; “Pay is at or above local rate in marketplace”).

12

without gloss to all of our constituencies.” See Anthony

Krulwich, Recalls: Legal and Corporate Responses to FDA,

CPSC, NHTSA, and Product Liability Considerations,

39 Bus. Law. 757, 767 (1984). As a result, Johnson &

Johnson maintained an open dialogue with the press and

public throughout the crisis. See, e.g., 5 Die After Taking

Tylenol Believed to Contain Cyanide, New York Times,

Sept. 30, 1982 at Al2 (Lawrence Foster, a Johnson & Johnson

spokesman, describing what information had been learned from

authorities and Johnson & Johnson’s method of distribution);

see also MacNeil/Lehrer Report: Cyanide Investigation

(PBS television broadcast, Oct. 1, 1982) (Dr. T.N. Gates, medical

director of Tylenol, appearing as one of the guests and discussing

the manufacturing and distribution of Tylenol in the context of

the cyanide crisis).

Johnson & Johnson’s forthrightness with the public not only

saved the Tylenol brand and perhaps even Johnson & Johnson

itself, it contributed to the way American consumer goods are

packaged and labeled to be tamper-resistant. See Tamar Lewin,

Tylenol Posts an Apparent Recovery, New York Times,

Dec. 25, 1982 at A30 (quoting a market researcher’s conclusion

that Johnson & Johnson’s recovery due to “forthright manner”

in dealing with the public during the Tylenol crisis).

Kasky’s regime of strict liability, however, would inhibit this

open communication. Under Kasky, if a company makes a broad

statement or unintentionally publishes incorrect information

concerning its distribution practice (undeniably part of its

“business operations”), the prescribed corrective action is so

punitive that it may dissuade companies from communicating

in the first place.'° The harsh results of suppressing this openness

10. During the cyanide crisis, Johnson & Johnson made many

Statements about its “business operations” that would potentially be a

basis for liability under Kasky. See, e.g., McNeil/Lehrer Report: Cyanide

Investigation (Dr. Gates’ comments that “We are confident . . . that our

security, our quality assurance procedures «/e such that this — _

(Cont'd)

13

are difficult to overstate: Johnson & Johnson’s swift public

communications literally are credited with saving human life.

Of the eight million capsules recalled after Johnson & Johnson

began its campaign, seventy-five were found to contain cyanide.

See Harvey L. Pitt & Karl A. Groskaufmanis, When Bad Things

Happen to Good Companies: A Crisis Management Primer,

1149 PLI/Corp 307, 309.

Debates on some of the most important issues of our time

have been shaped and influenced by corporate speakers and

public relations professionals such as amici. To illustrate the

_ importance of corporate speech, and without purporting to be

exhaustive, amici provide the following additional examples

of campaigns that would be chilled, if not squelched altogether,

under the Kasky regime.

In the last several decades, advances in biochemistry and

genetics have created the ability to modify crops genetically.

A wide-ranging debate regarding the wisdom of genetic

engineering has taken place in the press, in academic circles

and in Congress. See Michael Specter, The Pharmageddon

Riddle, Tut New Yorker, April 10, 2000 (describing the

worldwide debate over biotechnology in agriculture).

Among other things, critics of the practice argue that

genetically modified agriculture, or “Franken-food,” will have

environmental consequences—such as gene migration and the

build-up of resistance to insecticides. See Interview by PBS

Frontline with Hugh Grant, CEO of Monsanto, (Dec. 2000),

at http://www.pbs.org/wgbh/harvest/interviews/grant.htm|

(last visited Nov. 11, 2002).

(Cont'd)

have happened in the process of the packaging—manufacture and

packaging of the product”; “We do have cyanide in our analytical

laboratories because it is required for certain tests . . . But it would not

be in any way accessible to the manufacturing process”, “Well, we're

shocked, we're dismayed, we've learned that medications can be

tampered with at the, we believe at the retail level”).

14

Corporate America has contributed its unique viewpoint to

this important debate. The Monsanto Company, a leading

provider of agricultural products (such as seeds genetically

engineered to be resistant to herbicides) with net sales of $5.46

billion in 2001,"' has taken perhaps the most public stance on

the issue. For example, in an interview on PBS’ Frontline,

Monsanto’s CEO Hugh Grant spoke both about the worldwide

benefits of agricultural biotechnology, such as reducing the

world’s use of harmful pesticides and the ability to provide foods

to developing nations, as well as the potential concerns about

~ genetic modification, such as gene migration and pest resistance.

See Interview by PBS Frontline with Hugh Grant, at http://

www.pbs.org/wgbh/harvest /interviews/grant.html.

Monsanto provides to the public a breadth of

scientific information that might not otherwise be available.

See, e.g., “Monsanto Welcomes U.N. Report on Biotech’s

Benefits for Developing World” az http://www.monsanto.com

/monsanto/layout/media/01/07-09-01 .asp (last visited Nov. 11,

2002) (sharing “fundamental scientific data” Monsanto and

others have developed using genetic modification).

Even Monsanto’s critics have applauded Montsanto’s

willingness to engage in this important debate and share its

perspective and knowledge on the issue. See Gregg Hillyer,

Monsanto Makeover, PROGRESSIVE FARMER, Feb. 2002 (praising

Monsanto’s “transparency’”); see also The Pharmageddon Riddle

(describing how Greenpeace invited Monsanto’s CEO to its

annual gathering to debate an opponent of genetic modification,

an invitation that Monsanto’s CEO accepted).

The Kasky decision, however, creates a strong incentive

for Monsanto to disengage from the debate. In debating with its

critics, Monsanto’s representations about its genetically modified

products would no longer be part of a fully protected exchange

of information on an issue of public concern, but rather

11. See Monsanto Company 2001 Annual Report, available

—at http://www.monsanto.com.

15

statements about “business operations” that could give rise to

liability. See, e.g., Interview with Hugh Grant (“From a food

safety point of view . . . these are technologies that have been

more widely tested than any other food product that came before

them in history . . . they are moving through the scientific

regulatory system in Europe with flying colors at the moment”).

Issues of great public debate also encompass scientific

advances in the field of medicine, and the ethical issues such

advances may raise. One such area is the science of cloning and

the possible medical uses for the technology associated with it.

As such advances came to the public’s attention, a vigorous

debate ensued concerning the ethical implications of

these scientific discoveries. See “Therapeutic Cloning

Under Fire” at http://www. lef.org/magazine/mag2002/

mar2002_cover_west_01.html (Mar. 2002) (“when he

[Advanced Cell Technology’s (“ACT”) CEO Dr. Michael West]

announced recently that ACT had taken the first step towards

human therapeutic cloning, he was suddenly criticized by

everyone from President Bush to the Pope”’).

Once again, corporations that have a financial interest in

cloning technologies have joined the public debate to add a

unique perspective on the issue. ACT, which initially made the

scientific breakthrough making cell cloning possible, has entered

the debate on these issues, taking a diametrically opposed view

to cloning’s critics. See id. (“No serious ethicist or embryologist

believes that a pre-implantation embryo is a human being.

We are not talking about creating a pregnancy. We are talking

about making a microscopic ball of cells with no body cells of

any kind”). It is precisely these representations about ACT’s

cloning process, especially in the form of the robust analogies

used by Dr. West, that would become fodder for strike suits

(as well as suits brought by political advocacy groups opposed

to human cloning).

16

iil. AN ENORMOUS AMOUNT OF PROTECTED

CORPORATE SPEECH WILL BE CHILLED

The public relations campaigns above demonstrate just a

few examples of campaigns that have communicated vital

information to the public on matters of importance. As disparate

as all of the campaigns and public statements described above

may be, they all share characteristics that illustrate why this

Court should grant certiorari: (1) all concern issues of great

public moment; (2) all involved the dissemination of facts related

to the company’s “business operations” and (3) the corporations

involved all stood to benefit financially as a result of the speech.

If the Kasky decision stands, however, all of these

campaigns will be subject to strict liability. Monsanto, ACT,

and McDonald’s are all speakers “engaged in commerce.” Kasky,

45 P.3d at 311. Statements made during each of these campaigns

arguably concerned the “business operations” of each of the

companies. Finally, all of the campaigns—although some were

taken in part to affect legislation and other regulation—were

also in part to “promote . . . sales and profits.” Kasky, 45 P.3d at

247. In short, because a prudent CEO would no longer be willing

to risk speaking about any issue of public importance that also

touches upon the “business operations” or profitability of the

company the information flow to the public would be severely

circumscribed.

IV. THE KASKY TEST REPRESENTS A SEA-CHANGE

THAT RESTRICTS PREVIOUSLY PROTECTED

SPEECH

The broad language of the Kasky decision creates an illusory

distinction between “policy” discussion, and commercial speech

which the California Supreme Court now defines as any

statement about “actual conditions and practices” of the

business. This distinction is unworkable in practice. The end

result is that the test contains no limiting principles because it

falsely assumes that because a corporation always is, in part,

motivated by profits, that its speech is entitled to no First

17

Amendment protection. This is at odds with the Court’s

well-settled precedent. See, e.g., Joseph Burstyn, Inc. v. Wilson,

343 U.S. 495, 501-502 (1952) (speech is entitled to full First

Amendment protection notwithstanding it is undertaken by

“large-scale business conducted for private profit”).

The amorphous nature of the test also means that, as a

practical matter, there is no guidance for amici or others to

determine what corporate speech is entitled to First Amendment

protection. The risks under the Kasky regime are even greater

because amici often do not control the final presentation of press

releases and other communications to the public, the media does.

Cf. Kasky, 45 P.3d at 256 (statements made to reporters that are

passed along to consumers can be commercial speech). Prudent,

risk-averse companies will have no option but to decline

speaking in order to avoid the possibility of strike suits.

Indeed, for those corporations who enter the public debate,

California’s broad remedies impose another, even more chilling

threat. That law provides as a remedy for speech that, even

though true on its face, may mislead some, a “Court-approved

public information campaign” to compel a corporation to

“correct” editorials and other speech on matters of public

importance. Kasky, 45 P.3d at 250. In other words, under the

California Supreme Court’s test, not only would the

corporation’s speech be subject to a stricter standard of liability

than the speech of its critics, but the Company could be

compelled to finance a “public-information campaign” entirely

against its interest to address potential “confusion” on the

public’s part.

This is fundamentally at odds with the governing principles

of the First Amendment. See, e.g., Pac. Gas & Elec. Co. v. Pub.

Utils. Comm'n, 475 U.S. 1 (1986) (California Public Utilities

Commission’s order that PG&E permit the “extra space” in its

envelopes sent to customers to be used by a public interest group

to voice a point of view PG&E did not agree with held to violate

PG&E’s First Amendment right not to speak). It inevitably will

18

result in a lopsided debate dominated by corporate critics,

bereft of facts that reside exclusively with corporations.

The consequences to a fully informed public are difficult to

overstate, as Johnson & Johnson’s life-saving Tylenol campaign

graphically demonstrates.

The Court has taken care to review rulings that

disrupt settled practices in the area of commercial speech.

See, e.g., Central Hudson Gas & Electric Corp. v. Public Service

Commission of New York, 447 U.S. 557 (1980) (holding that a

New York Public Service Commission regulation and a recently

released Policy Statement interpreting the regulation that had

the effect of completely banning electrical utilities from

advertising violated the First and Fourteenth Amendments);

Virginia State Board of Pharmacy v. Virginia Citizens Consumer

Council, 425 U.S. 748 (1976) (holding that a newly-revised

provision of the Virginia Code that regulated a licensed

pharmacist’s ability to publish price information violated the

First and Fourteenth Amendments); Jn re RMJ, 455 U.S. 191

(1982) (holding that the newly-revised ethical rules of the

Supreme Court of Missouri regulating lawyer advertising

violated the First and Fourteenth Amendments). Because the

Kasky decision threatens to disrupt even a greater amount of

speech than the cases above—the decision affects every

corporation that does business in California—certiorari is

appropriate here.

In short, because corporations are entities whose decision

makers owe fiduciary duties to shareholders and owners, no

responsible corporate spokesman speaks on a company’s behalf

without being concerned about the effects the statements may

have on corporate sales and profits. Because all corporate speech

is, and should be, uttered in the interests of benefitting the

corporation in the eyes of potential consumers, the speech

restricting effects of the California Supreme Court’s test will

be enormous.

19

CONCLUSION

For the foregoing reasons, the petition for a writ of certiorari

should be granted.

Respectfully submitted,

Tuomas H. CLarKE, JR. Bruce P. KELLER

Ropers, Maseski, KOHN & BENTLEY Counsel of Record

333 Market Street, Suite 3150 MICHAEL R. POTENZA

San Francisco, CA 94105 CHRISTOPHER W. DyBwAD

(415) 543-4800 DEBEVOISE & PLIMPTON

919 Third Avenue

New York, NY 10022

(212) 909-6000

Attorneys for Amici Curiae