Amicus Curiae Brief — Nike, Inc. v. Kasky

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FEB 28 205

No. 02-575

Iu the Supreme Court of the V

OCTOBER TERM, 2002

NIKE, INC., et al.,

Petitioners,

Vv.

MARC KASKY,

Respondent.

On Writ Of Certiorari

To The Supreme Court Of California

BRIEF AMICUS CURIAE

OF THE CHAMBER OF COMMERCE

OF THE UNITED STATES OF AMERICA

IN SUPPORT OF PETITIONERS

ROBIN S. CONRAD KENNETH W. STARR

NATIONAL CHAMBER Counsel of Record

LITIGATION CENTER, INC. RICHARD A. CORDRAY

1615 H Street, N.W. KANNON K. SHANMUGAM

Washington, DC 20062 KIRKLAND & ELLIS

(202) 463-5337 655 Fifteenth Street, N.W.

Washington, DC 20005

(202) 879-5000

February 28, 2003

_———

WILSON-EPES PRINTING Co., INC. — (202) 789-0096 - WASHINGTON, D. C. 20001

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Base I. AFFIRMANCE OF THE RULING BELOW

oe WOULD RESULT IN THE IMMEDIATE AND

Sere NATIONWIDE SUPPRESSION OF SPEECH ON

= IMPORTANT PUBLIC POLICY ISSUES. .............:-0- 4

A. The Court’s Precedents Have Generated

Substantial Uncertainty And Confusion

Regarding The Definition Of “Commercial

ak baat Se eo | : 2 | : | B. The Test For Commercial Speech Devised By

Pe eee re SS 2 The California Supreme Court Is Extreme,

: Bae < Sf | C. The Test For Commercial Speech Applied Below

8 Dips Mer ages ( Would Suppress A Broad Range Of Accepted

Pea ere eee SG | And Beneficial Speech By Companies And

Ru ecatie : Re aN

THE COURT SHOULD HOLD THAT THE

“COMMERCIAL SPEECH” DOCTRINE ONLY

ADDRESSES ADVERTISING OF PRODUCTS OR

SERVICES OFFERED FOR SALE. ............:.:c:c00ee0000 12

A. The History Of The “Commercial Speech”

" Doctrine Demonstrates That It Addresses Only

Speech By Corporations More Generally. ..............12

B. Nike’s Discussion Of Its Business Operations

| And Labor Practices Should Not Be Treated As

C. If Nike’s Editorializing Is Found To Constitute

“Commercial Speech,” It Should Still Be Entitled

To The Highest Constitutional Protection

CONCLUSION

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TABLE OF AUTHORITIES

Page

Cases

44 Liquormart, Inc. v. Rhode Island,

Ee 14,17, 18

Bartnicki v. Vopper,

ae 8

Bates v. State Bar of Arizona,

I TD cctccctenssrsnennesevcssmseccsssceccscssveesseoooees 14

Board of County Comm'rs v. Umbehr,

EE 9

Board of Trustees v. Fox,

Eee 4

Bolger v. Youngs Drug Prods. Corp.,

ES 4,6,14

Central Hudson Gas & Elec. Corp. v. Pub.

Serv. Comm'n,

a 4,17

City of Cincinnati v. Discovery Network, Inc.,

Ee passim

Commodity Trend Serv., Inc. v. Commodity

Futures Trading Comm'n,

arr 5

Eastern R.R. Presidents Conference v. Noerr Motor

Freight, Ine.,

ee 10

First National Bank of Boston v. Bellotti,

cri crsarsacceneenennennsscemesecnccsusceces 8, 15, 16

Florida Bar v. Went For It, Inc.,

ccc crererrenemnsnncenenses 14

iV

Good News Club v. Milford Cent. Sch.,

a I neecicticatiensieciintaaianinlaiiecliiiieciictindaiadiite 16

Grayned v. City of Rockford,

I ait ilitiiaaacindalninelelsiticientiarie ta 20

Greater New Orleans Broad. Ass'n, Inc. v.

United States,

a Ss I ne nicatihinrrinatiaialtniaiisnineaiahis 18

Hustler Magazine, Inc. v. Falwell,

a ial eiaciaetceniieaeaitinaiaaiattieaaaaiiieataiial 9

Lorillard Tobacco Co. v. Reilly,

ee SE nicisnsiidsiieincnciapnsesictnnsntniuniitin 4,17, 18, 19

Metromedia, Inc. v. City of San Diego,

| _______—_—RE TTR T CT ae E 14

New York Times Co. v. Sullivan,

I itctniinttaninibinticssintenianipiiteenaniationes 9,17

NLRB vy. Gissel Packing Co.,

In aiid einierrielcaiititinealertintaaall 8

NLRB v. Virginia Elec. & Power Co.,

ee iciiseiiienhniciernitserianininersataiesintastaatiaaniatiaamiie 8

Pacific Gas & Elec. Co. v. Pub. Utils.

Comm'n of Cal,

I SP cnlinniicticirinctintanaiicnidaaiainieamnaiia 9, 14, 15, 16

Philadelphia Newspapers v. Hepps,

gk, RTE OER Es 8,9

Police Dep't of Chicago v. Mosley,

a SE eaciaiihacintincrsaiineibiimiiadaiihiaaiiniaiasiliabaas 16

R.A.V. v. City of St. Paul,

I 9, 16

Rosenberger v. Rector & Visitors of Univ. of Va.,

I eicititasiicastiersenetiatidodanieniiaineiatitiiassae 16

Rubin v. Coors Brewing Co.,

I isisiniatntaincnistiirhetintinnasiimastaasieitea nisin 19

Vv

Schenck v. Pro-Choice Network,

SID UB. 337 (ADIT) .nncceceesccescceccesncssscrccccsccccoscosenssessnesenes 9

Thomas v. Collins,

BZD UD. SEG (IDES) -nccccccccvsccccesccsccseccessscsseccssscsssesenssesoes 8

Thompson v. Western States Medical Center,

Ne EE 18, 19

Thornhill v. Alabama,

BIO UB. BB CIDOD) .....ccceceresccecccsecccsccccccccsscccssessenees 3,8,9

Turner Broad. Sys. v. FCC,

$12 U.S. G22 (1994) ..2..ccccececccceccsercccccsecccsesessosrssncsssnseses 16

Union of Needletrades Indus. & Textile Employees,

AFL-CIO v. The Gap, Inc.,

Cal. Sup. Ct. No. 300474...........ccccceeceeeeeeeneenenereneenennens 20

United States v. United Foods, Inc.,

le |. | _____ 4,5, 17,18

Valentine v. Chrestensen,

LS. 12, 13

Virginia Bd. of Pharmacy v. Virginia Citizens Consumer

Council, Inc.,

TELSTRA eS 4, 13

Zauderer v. Office of Disciplinary Counsel,

471 U.S. 626 (1985) ...........ccce-cscerereceeserecesseeseecsssneensssnes 6

Other Authorities

Jean Wegman Burns, Confused Jurisprudence: False

Advertising Under the Lanham Act,

79 B.U. L. Rev. 807 (1999)..........ccccccsesseessecsernensennerenees 5

Alexander Meiklejohn, Political Freedom: The

Constitutional Powers of The People (1948) .............-+. 16

Robert Post, The Constitutional Status of Commercial

Speech,

48 UCLA L. Rev. 1 (2000).................cccrcscrrerseerrcersenssees 5

vi

Laurence H. Tribe, American Constitutional Law (2d ed.

SEIT ciessieniaiciiitaniilnntaiatata a ial 14

Bill Ford’s Speech to Greenpeace, at www.ford.com/

en/ourCompany/environmentallnitiatives/environ-

mental Actions/billFordsSpeechToGreenpeace.htm

na nN a rtecieehicdicchininciai a ileal ete 11

Remarks by Raymond V. Gilmartin, Chief Executives Club

of Boston, at www.merck.com/newsroom/executive _

speeches/011900.html (Jan. 19, 2000). ........ccccceceeceees 11

Statement on GE Hudson River Efforts, at www.ge.com/

commitment/ehs/leadership/ehs_ hudson river.htm

EO ll

Statement on Global Climate Change, at www.chevron-

texaco.com/social_responsibility/environment/

global_climate.asp (last visited Feb. 27, 2003)............. 10

Terrorism Insurance Still On Front Burner For Insurers,

Lawmakers, Ins. J., at www.insurancejournal.com/

magazines/southcentral/ 2002/05/13/features/19079.

| EET ee anor ee ee ae 11

Update on Investigation, at www.unitedspace-

alliance.com/columbia/030207-1300.htm (last visited

SrTah SIGs TOTTI ishacrinisceieusiaiteieseeticenbinileadeldeadeaiai acai 11

ee ee ET re

INTEREST OF AMICUS CURIAE

The Chamber of Commerce of the United States of

America is the world’s largest federation of business

organizations and individuals. The Chamber represents an

underlying membership of more than three million

businesses of every size, in every sector, and from every

geographic region of the country. One of the Chamber's

primary missions is to represent the interests of its members

by filing amicus briefs in cases involving issues of national

concern to American business.'

The Chamber and its members have a strong interest in

this case because the California Supreme Court significantly

curtailed the freedom of speech by holding that most speech

by businesses is “commercial speech” subject to reduced

First Amendment protection. Just as petitioner Nike, Inc.,

discussed its overseas labor practices in the statements at

issue in this case, so too do other businesses frequently

discuss various aspects of their own operations in the course

of ongoing public policy debates. Indeed, those topics about

which individual businesses are best informed and have the

most to contribute to the public debate are often precisely the

subjects for discussion that would be curtailed by the ruling

below.

Under the California Supreme Court’s decision, all such

speech on topics of public concern could be subjected to the

reduced First Amendment protection accorded “commercial

speech,” and corporations could be held strictly liable for any

factual misstatements mistakenly made in the course of

public policy debates. The effect of the ruling below is thus

! Pursuant to Supreme Court Rule 37.6, the amicus states that no counsel

for any party authored this brief in whole or in part, and that no person or

entity, other than the amicus, its members, and its counsel, contributed

monetarily to the preparation or submission of this brief. The parties

have consented to the filing of this brief; pursuant to Supreme Court Rule

37.3, letters evidencing this consent have been filed with the Clerk.

2

to suppress corporations’ speech and discriminate against

them by holding that speech by corporations on important

public policy matters is subject to the reduced protection

accorded “commercial speech,” but speech by their

opponents is not. And this disparate and unfair treatment is

not limited to speech in California. Because corporations’

speech is increasingly disseminated on a nationwide and even

worldwide basis, the decision below would threaten not only

speech in California, but also speech elsewhere across the

globe. Therefore, the Chamber urges reversal of the Califor-

nia Supreme Court’s decision.

SUMMARY OF ARGUMENT

For many years, the Court has sent conflicting signals on

the definition of “commercial speech” and has allowed the

lower courts to take divergent approaches on this issue. In

this case, the California Supreme Court used that latitude to

create yet another test for determining whether speech is

“commercial,” one that is both breathtakingly broad and

deeply menacing to our system of free expression.

According to that court, “commercial speech” includes all

statements of fact: (i) by persons engaged in commerce

(including all businesses); (ii) to an audience including actual

or potential purchasers of their products (which, in the case

of a company like Nike, include almost all Americans); (iii)

on commercial matters (which include nearly all matters on

which corporations have any reason to speak). See Pet. 17a-

20a.

Whatever the correct test may be, this surely is not it.

From its inception, the “commercial speech” doctrine was

designed to broaden the First Amendment’s reach by

granting limited protection to product advertisements that

were previously held to be entirely unprotected. In sharp

contrast, the California Supreme Court has now employed

the “commercial speech” doctrine to restrict the First

Amendment’s protections by subjecting speech at the core of

the First Amendment — including speech on important pub-

3

lic policy matters such as globalization, environmentalism,

escalating health care costs, and so on — to the reduced level

of protection accorded “commercial” speech. This makes no

sense. As this Court explained long ago, speech about

business operations and labor conditions is “indispensable to

the effective and intelligent use of the processes of popular

government to shape the destiny of modern industrial

society.” Thornhill v. Alabama, 310 U.S. 88, 103 (1940).

The California court’s analysis points powerfully to the

need to clarify the definition of “commercial speech.” In

particular, the Court has often stated that this doctrine

properly addresses only the advertising of products and

services for sale, rather than all speech by corporations. The

Court should clearly reaffirm this approach. Otherwise,

speech that lies at the core of the First Amendment would be

relegated to its periphery. If general discussion about a

company’s business operations and labor conditions were

subjected to the same kind of restrictions that apply to speech

proposing a commercial transaction, the predictable result

would be to impede and impoverish public debate on

important policy issues.

This Court’s authoritative guidance on the definition of

“commercial speech” is much needed by the entire business

community. As matters stand, this longstanding uncertainty

regarding the definition and treatment of commercial speech,

exacerbated by the California Supreme Court’s decision,

threatens to chill speech on important public policy matters.

That should not be. Moreover, the increasingly nationwide

and even worldwide scope of corporate speech means that

corporations are effectively bound by the law that applies in

the least protective jurisdiction. As a result, this Court can

no longer afford to defer this issue yet again and should take

this opportunity to clarify that restrictions on commercial

speech are inapplicable to corporate speech on matters of

public concern.

4

ARGUMENT

I. AFFIRMANCE OF THE RULING BELOW

WOULD RESULT IN THE IMMEDIATE AND

NATIONWIDE SUPPRESSION OF SPEECH ON

IMPORTANT PUBLIC POLICY ISSUES.

A. The Court’s Precedents Have Generated

Substantial Uncertainty And Confusion Regarding

The Definition Of “Commercial Speech.”

In its prior commercial speech cases, the Court has set out

at least three different tests for determining whether speech is

in fact “commercial.” The Court has “usually defined”

commercial speech as “speech that does no more than

propose a commercial transaction.” United States v. United

Foods, Inc., 533 U.S. 405, 409 (2001); accord Board of

Trustees v. Fox, 492 U.S. 469, 473-74 (1989); Virginia Bd. of

Pharmacy v. Virginia Citizens Consumer Council, Inc., 425

U.S. 748, 762 (1976). At times, however, the Court has

applied a more expansive test, under which “expression

related solely to the economic interests of the speaker and its

audience” is treated as “commercial.” Central Hudson Gas

& Elec. Corp. v. Pub. Serv. Comm'n, 447 U.S. 557, 561

(1980). And the Court has articulated yet another test, which

considers three factors: whether the communication was an

advertisement, whether it referred to a specific product or

service, and whether the speaker had an economic motivation

for the speech. See Bolger v. Youngs Drug Prods. Corp., 463

U.S. 60, 66-67 (1983). Puzzlingly, under this last test,

speech is not necessarily commercial even if all three factors

are met, and speech can be commercial even if all three

factors are not met. Sec id. at 67 & n.14.

The Court itself has acknowledged the inconsistency and

indeterminacy of these and other precedents in this area. See,

e.g., Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 554-55

(2001); City of Cincinnati v. Discovery Network, Inc., 507

U.S. 410, 422-23 (1993). The Court, however, has thus far

5

chosen not to resolve this inconsistency or to give clearer

guidance on these points. See, e.g., United Foods, 533 U.S.

at 410; Discovery Network, 507 U.S. at 416.

As commentators have noted, this Court’s “attempts to

define ‘commercial’ speech” are “more ad hoc than the

source of any real guidance.” Jean Wegman Burns,

Confused Jurisprudence: False Advertising Under the

Lanham Act, 79 B.U. L. Rev. 807, 831-32 (1999); sec also

Robert Post, The Constitutional Status of Commercial

Speech, 48 UCLA L. Rev. 1, 5 (2000) (noting that the

“boundaries” of the commercial speech doctrine are “quite

blurred”). In light of this continuing uncertainty, lower

courts have either adopted one of the various tests set out by

this Court, or simply formulated one of their own.

In this case, the California Supreme Court took the latter

approach and held that “commercial speech” includes all

statements of fact: (i) by persons engaged in commerce; (11)

to an audience including actual or potential purchasers of

their products; (iii) on commercial matters. See Pet. 17a-

20a.2 Although the California Supreme Court represented

that this test was consistent with this Court’s “commercial

speech” jurisprudence, the test bears only the most

superficial relationship to the Central Hudson definition of

commercial speech as “expression related solely to the

economic interests of the speaker and its audience.” 447

U.S. at 561. It thus well illustrates the Seventh Circuit's

concern about “the incredible breadth of the Central Hudson

test if taken to its literal extremes.” Commodity Trend Serv.,

Inc. v. Commodity Futures Trading Comm'n, 149 F.3d 679,

684 (7th Cir. 1998). The test adopted below also seems to

2 Remarkably, the California Supreme Court suggested that its novel test

applies only for some purposes, and that some other unspecified test

might apply in other cases. See Pet. 17a. It thus not only added a new

“commercial speech” test to the jurisprudential mix, but signaled the

future proliferation of even more tests.

6

draw on the broad discussion in Bolger of situations in which

the speaker has an “economic motivation” for engaging in

speech that relates in some more general way to its products

and services. See 463 U.S. at 66-68. Indeed, the court below

justified its broad formulation of the test for commercial

speech by concluding that all discussion and debate about the

business operations of a particular corporation. constitute

“product references” for purposes of the Bolger test. See Pet.

13a-15a, 18a-19a.

The California Supreme Court clearly recognized that the

confusing and contradictory nature of this Court’s case law

provided it with the opportunity to venture out on its own and

craft an entirely new definition of “commercial speech.” It

expressly quoted this Court’s prior statements about “the

difficulty of drawing bright lines” in dealing with

commercial speech, Pet. 15a (quoting Discovery Network,

507 U.S. at 419), and that “the precise bounds of the category

of” commercial speech are “subject to doubt,” id. (quoting

Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626,

637 (1985)). As this case amply illustrates, the current

muddled state of the law is emboldening lower courts to

strike out on their own and fashion improperly broad

definitions of what constitutes “commercial speech.”

B. The Test For Commercial Speech Devised By The

California’ Supreme Court Is Extreme,

Unworkable, And Unprecedented.

Not only is the California Supreme Court’s definition of

“commercial speech” inconsistent with this Court’s prior

definitions, it also is inconsistent with this Court’s First

Amendment jurisprudence more generally. In particular, the

ruling below denies full constitutional protection to virtually

all Speech by corporations on matters involving their

business operations or labor conditions. Even where such

speech touches on matters of acknowledged public concer,

and even where it is tinged with direct political or legislative

overtones, it will be entitled only to lesser protection.

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7

If the California Supreme Court’s decision is allowed to

stand, the consequent vacuum that will occur in public

discourse is undeniable. Matters relating to corporations’

business operations and labor conditions constitute nearly all

matters on which corporations have reason to speak. They

also include the very matters on which corporate speakers are

the best informed and thus best able to contribute to a

meaningful discussion on issues of public concern. In this

instance, Nike spoke generally about its business operations

overseas, in the context of an ongoing public policy debate,

without ever mentioning any of its products or services,

much less offering any prices or terms of sale. See Pet. 3a-

4a. Denuding the public square of corporations’ involvement

in robust debate would disserve the public by preventing a

fair and complete treatment of most business issues.

Moreover, the California Supreme Court’s test for

commercial speech is seemingly not limited to speech by

corporations. Indeed, any individual engaged in commerce

who attempts to speak on commercial matters to an audience

that includes actual or potential customers would be swept

within its broad ambit. See id. at 17a-20a. Thus, lawyers

who engage in an informative debate before a local business

group on the topic of tort reform would be covered if their

audience included any actual or potential clients. Doctors

who speak to a local civic association on their concerns about

rising malpractice rates and what could be done about them

would be covered if the audience included any actual or

potential patients. Any or all of the participants in such a

public forum could be held strictly liable for any factual

misstatements in the course of their discussion.

This breathtakingly broad test is clearly out of step with

long-established First Amendment principles. Decades ago,

the Court squarely held that self-interested speech

“concerning the conditions in industry and the causes of

labor disputes,” much like the speech at issue here, is not

only protected by the First Amendment, but is “indispensable

8

to the effective and intelligent use of the processes of popular

government to shape the destiny of modern industrial

society.” Thornhill v. Alabama, 310 U.S. 88, 103 (1940).

Other cases agree that speech relating to a corporation’s

business operations — especially speech relating to its labor

conditions, like Nike’s speech here — is fully protected. See

NLRB vy. Gissel Packing Co., 395 U.S. 575, 616-17 (1969);

Thomas v. Collins, 323 U.S. 516, 531-32 (1945); NLRB vy.

Virginia Elec. & Power Co., 314 U.S. 469, 477-78 (1941).

In a number of other contexts, moreover, the Court has

broadly emphasized the need to protect the publication of

information on issues of “public concern,” without excluding

issues involving business operations and labor conditions. In

Bartnicki v. Vopper, 532 U.S. 514 (2001), for example, the

Court permitted the publication of information, even though

it had been illegally obtained, because it concerned important

collective-bargaining negotiations that were pending at the

time, and “negotiations over the proper level of

compensation for teachers . . . were unquestionably a matter

of public concern,” id. at 535. Similarly, in Philadelphia

Newspapers v. Hepps, 475 U.S. 767 (1986), the Court noted

that allegations of illegality in the manner in which a

franchising company’s principal stockholder conducted his

business likewise involved matters of public concern, and

comments made about them were thus subject to heightened

protection under the First Amendment, see id. at 775-78.

Finally, in First National Bank of Boston v. Bellotti, 435 U.S.

765 (1978), the Court reasoned that speech by a corporation

on an upcoming referendum on taxes was “at the heart of the

First Amendment’s protection,” id. at 776, and therefore

applied strict scrutiny to, and ultimately struck down, a state

law restricting corporate expenditures for such issue

advocacy in election campaigns, see id. at 795. Like the

speech in all of those cases, the speech at issue here informs

the public about matters of public concern, and therefore

should be fully protected.

9

Other cases supporting the proposition that speech about

matters of public concern is fully protected are legion. See,

e.g., Schenck v. Pro-Choice Network, 519 U.S. 357, 377

(1997) (“commenting on matters of public concern” is one of

the “classic forms of speech that lie at the heart of the First

Amendment”); Board of County Comm'rs v. Umbehr, 518

U.S. 668, 685 (1996) (First Amendment protects against

termination of government contract for solid waste disposal

based on “speech on a matter of public concern,” including

county landfill rates); R.A.V. v. City of St. Paul, 505 U.S.

377, 421 (1992) (Stevens, J., concurring) (“[s]peech about

public officials or matters of public concern receives greater

protection than speech about other topics”); Pacific Gas &

Elec. Co. v. Pub. Utils. Comm'n of Cal., 475 U.S. 1, 8-9

(1986) (plurality opinion) (utility company’s discussion with

its customers of topics like energy conservation implicates

“*matters of public concern’ that the First Amendment both

fully protects and implicitly encourages”). And the Court has

repeatedly held that incorrect statements on matters of public

concern, no less than correct ones, are protected, on the

ground that errors are inevitable in such debates. See, e.g.,

Hustler Magazine, Inc. v. Falwell, 485 U.S. 46, 51-52

(1988); Hepps, 475 U.S. at 772-73; New York Times Co. v.

Sullivan, 376 U.S. 254, 271-72 (1964).

As the Court has aptly observed, “[f]reedom of discussion,

if it would fulfill its historic function in this nation, must

embrace all issues about which information is needed or

appropriate to enable the members « * society to cope with the

exigencies of their period.” Thornhill, 310 U.S. at 102. The

ruling below is entirely out of harmony with this fundamental

First Amendment principle. For this reason alone, the

California Supreme Court’s decision should be reversed.

10

C. The Test For Commercial Speech Applied Below

Would Suppress A Broad Range Of Accepted And

Beneficial Speech By Companies And Individuals.

Because the California Supreme Court significantly

curtailed the freedom of speech by holding that most speech

by businesses is “commercial speech” subject to reduced

First Amendment protection, its holding should not be

allowed to stand. Under the ruling below, speech on public

policy matters such as labor, environmental, and economic

issues involving a company’s operations can readily be

classified as mere “commercial speech.” A_ substantial

amount of protected speech is therefore jeopardized. Just as

Nike discussed its overseas labor operations in the statements

at issue in this case, other businesses frequently participate in

the public debate by making statements about aspects of their

corporate operations and corporate affairs. Indeed, this

participation is often intimately connected with broader

efforts to influence public policy through legislative or

regulatory action. See, eg., Eastern R.R. Presidents

Conference v. Noerr Motor Freight, Inc., 365 U.S. 127

(1961) (publicity campaign conducted by railroads against

truckers, which helped persuade governor to veto legislation,

held not to violate antitrust laws, based in part on free speech

concerns). For example:

e Energy companies, such as ChevronTexaco, express

their views on whether or to what extent their

operations cause or contribute to global climate

change, and the role of their operations in any

changes. See, e.g., Statement on Global Climate

Change, at www.chevrontexaco.com/social_respon-

sibility/environment/global_climate.asp (last visited

Feb. 27, 2003).

e Corporations involved in the United Space Alliance,

which manufactured the Columbia for NASA’s

Shuttle program, publish updates on the investigation

- le 7

« A &

ll

currently underway into the recent tragedy. See, e.g.,

Update on Investigation, at www.unitedspace-

alliance.com/columbia/030207-1300.htm (last visited

Feb. 27, 2003).

Health care providers and drug manufacturers, such

as Merck, discuss the causes of their rising health care

and drug prices, and the form of regulation or

deregulation that will best control those prices. See,

e.g., Remarks by Raymond V. Gilmartin, Chief

Executives Club of Boston, af www.merck.com/

newsroom/executive_ speeches/011900.html (Jan. 19,

2000).

Insurance companies, such as AIG and General Re,

state their positions on the feasibility of providing

terrorism insurance and the economic need for

legislative action. See, e.g., Terrorism Insurance Still

On Front Burner For Insurers, Lawmakers, Ins. J., at

www.insurancejournal.com/magazines/southcentral/

2002/05/13/features/19079.htm (May 13, 2002).

Automobile manufacturers, such as the Ford Motor

Company, join the public debate over whether and to

what extent automobile emissions cause pollution and

health effects, and the costs and feasibility of

requiring further reductions in automobile emissions.

See, e.g., Bill Ford’s Speech to Greenpeace, at www.

ford.com/en/ourCompany/environmentallnitiatives/

environmental Actions/billFordsSpeechToGreenpeace

-htm (Oct. 5, 2000).

Manufacturers, such as General Electric, discuss the

topic of environmental discharges and the effects that

any discharges have had on rivers and other natural

resources. See, e.g., Statement on GE Hudson River

Efforts, at www.ge.com/commitment/ehs/leadership/

ehs_hudson_river.htm (last visited Feb. 27, 2003).

12

Under the California Supreme Court’s decision, all of this

speech could be subjected to the reduced First Amendment

protection accorded “commercial speech,” and corporations

and their employees could be held strictly liable for any and

all factual misstatements made in the course of heated and

fast-moving debates. Such treatment marks a serious intru-

sion on the freedom of speech.

il. THE COURT SHOULD HOLD THAT THE

“COMMERCIAL SPEECH” DOCTRINE ONLY

ADDRESSES ADVERTISING OF PRODUCTS OR

SERVICES OFFERED FOR SALE.

A. The History Of The “Commercial Speech”

Doctrine Demonstrates That It Addresses Only

The Advertising Of Products And Services, Not

Speech By Corporations More Generally.

This case presents an especially useful vehicle for clearing

up the widespread confusion about the definition of

“commercial speech.” While line-drawing in this area may

be difficult in some respects, this case turns on an obvious

line: only speech that in some way advertises the attributes

of products or services for sale should be considered

“commercial speech,” and speech that merely relates to

business operations or other matters of public concern should

be accorded full First Amendment protection.

The history of the “commercial speech” doctrine strongly

supports this distinction. The now-familiar doctrine was

crafted to grant limited protection to product advertising, not

to limit the protection already applied to other types of

speech by corporations. Specifically, this Court developed

the modern “commercial speech” doctrine in the 1970s in re-

sponse to its earlier holding that “the Constitution imposes no

. . restraint on government as respects purely commercial

advertising.” Valentine v. Chrestensen, 316 U.S. 52, 54

(1942) (emphasis added).

13

In Virginia Board of Pharmacy, the Court gave birth to the

“commercial speech” doctrine by overruling Valentine and

holding that “commercial speech, like other varieties, is

protected.” 425 U.S. at 770. In doing so, the Court could not

have been clearer that by “commercial speech,” it was

referring only to the same kind of product advertisement at

issue in Valentine:

[T]he question whether there is a First

Amendment exception for “commercial

speech” is squarely before us. Our pharmacist

does not wish to editorialize on any subject,

cultural, philosophical, or political. He does

not wish to report any particularly

newsworthy fact, or to make generalized

observations even about commercial matters.

The “idea” he wishes to communicate is

simply this: “1 will sell you the X prescription

drug at the Y price.” Our question, then, is

whether this communication is wholly outside

the protection of the First Amendment.

Id. at 760-61 (emphasis added).’ From its genesis, therefore,

the “commercial speech” doctrine was designed to address

speech that does not “editorialize on any subject,” “report

any particularly newsworthy fact,” or “make generalized

observations . . . about commercial matters.” /d. Instead, it

was designed only to provide some protection, albeit limited,

to speech that does “no more than propose a commercial

transaction.” /d. at 762 (internal quotation omitted).

3 In Valentine, an individual circulated a handbill that advertised his

commercial exhibition of a submarine. After he was told he could not

distribute such material under city law, he then reprinted the handbill,

adding a protest of the city’s wharfage policies on the back. The Court

rejected the argument that the discussion on the back of the handbill

constituted protected speech, but only because it found this discussion to

be an intentional “sham” included solely for the purpose of evading the

ordinance. See Valentine, 316 U.S. at 53-55.

14

The Court has never departed from this understanding. To

the contrary, the Court has repeatedly recognized that the

advertisement of products or services, as opposed to general

discussion of business operations or other matters of public

concer, is the sine qua non of “commercial speech.” Thus,

in the early years after Virginia Board of Pharmacy, the

Court made clear that “commercial speech” is speech that

“serves to inform the public of the availability, nature, and

prices of products and services.” Bates v. State Bar of

Arizona, 433 U.S. 350, 364 (1977); see also Metromedia,

Inc. v. City of San Diego, 453 U.S. 490, 507 (1981) (referring

to “commercial speech” as “commercial price and product

advertising”). More recently, too, this Court has confirmed

that “‘[t}he entire commercial speech doctrine . . . represents

an accommodation between the right to speak and hear

expression about goods and services and the right of

government to regulate the sales of such goods and

services.” 44 Liquormart, Inc. v. Rhode Island, 517 US.

484, 499 (1996) (plurality opinion) (quoting Laurence H.

Tribe, American Constitutional Law § 12-15, at 903 (2d ed.

1988)) (emphasis added and omitted).

In keeping with this established understanding of the

commercial speech doctrine, this Court, in sharp contrast

with the approach taken by the California Supreme Court,

has “always been careful to distinguish commercial speech

from speech at the First Amendment’s core.” Florida Bar v.

Went For It, Inc., 515 U.S. 618, 623 (1995). For example,

while a manufacturer’s speech about the attributes of a

specific product is “commercial” regardless whether it is

linked to a public debate, see Bolger, 463 U.S. at 67-68, an

energy company’s speech to its customers about energy

conservation more generally is not, see Pacific Gas, 475 U.S.

at 8-9 (plurality opinion). The latter speech “extends well

beyond speech that proposes a business transaction . . . and

includes the kind of discussion of ‘matters of public concern’

—

15

that the First Amendment both fully protects and implicitly

encourages.” /d. (internal citations omitted).

B. Nike’s Discussion Of Its Business Operations And

Labor Practices Should Not Be Treated As

“Commercial Speech.”

Nike’s speech in this case evidently addresses matters of

public concern, and thus merits full First Amendment

protection. Far from advertising the attributes of its shoes or

other products, Nike was merely responding to public

criticism relating to globalization — an issue that has re-

cently been the subject of major protests worldwide, includ-

ing here in the Nation’s capital. Nike was not engaging in

brand-name advertising containing representations about the

quality or cost of its products, and indeed made no references

to specific products or services at all. Accordingly, this

speech is far removed from the advertising at issue in cases

such as Virginia Board of Pharmacy.

To be sure, the California Supreme Court suggested that

Nike’s speech would not have qualified as “commerciai

speech” if Nike had discussed international labor issues

generically without referring to specific facts about its own

operations. See Pet. 26a. But that is no more plausible than

requiring a lawyer to draft a brief without mentioning any of

the facts in the case. Opinions naturally flow from facts, and

are certainly more persuasive when they are grounded in

facts. The public would in no wise benefit from a constitu-

tional rule that encouraged Nike to assert conclusions without

disclosing underlying facts. Under such a bizarre regime, the

public would receive less information from Nike and would

have less basis for undertaking an intelligent assessment of

Nike’s statements. As this Court has noted, “public debate

must not only be unfettered; it must also be informed.”

Bellotti, 435 U.S. at 783 n.18 (internal quotation omitted).

The net effect of the California Supreme Court’s rule

would be to subject speech by businesses on important public

16

policy matters — but not competing speech by their oppo-

nents — to the reduced protection accorded “commercial

speech.” In this case, anti-globalization campaigners would

be allowed to speak on an unqualified basis, but Nike’s

speech on the same issues would be restricted. In effect, this

rule merely discriminates on the basis of the identity of the

speaker, in violation of the well-established principle that the

government may not “license one side of a debate to fight

freestyle, while requiring the other to follow Marquis of

Queensberry rules.” R.A.V., 505 U.S. at 392; see also

Bellotti, 435 U.S. at 777 (“The inherent worth of the speech

in terms of its capacity for informing the public does not

depend upon the identity of its source, whether corporation,

association, union, or individual.”); Pacific Gas, 475 U.S. at

8 (noting that “(t]he identity of the speaker is not decisive in

determining whether speech is protected” and adding that

“{cJorporations and other associations, like individuals,

contribute to the discussion, debate, and the dissemination of

information and ideas that the First Amendment seeks to

foster”) (internal quotation omitted).

The principle that the government must remain neutral

among speakers is but a corollary of the broader neutrality

principle in First Amendment jurisprudence, which

recognizes that there is “an ‘equality of status in the field of

ideas,’ and government must afford all points of view an

equal opportunity to be heard.” Police Dep't of Chicago v.

Mosley, 408 U.S. 92, 96 (1972) (quoting Alexander

Meiklejohn, Political Freedom: The Constitutional Powers

of The People 27 (1948)). Thus, for example, the Court has

long held that government regulations that discriminate on

the basis of viewpoint are presumptively unconstitutional.

See, e.g., Good News Club v. Milford Cent. Sch., 533 U.S.

98, 106-12 (2001); Rosenberger v. Rector & Visitors of Univ.

of Va., 515 U.S. 819, 828-30 (1995); Turner Broad. Sys. v.

FCC, 512 U.S. 622, 641-43 (1994); R.A.V., 505 U.S. at 392.

17

Suppressing speech on a matter of public concern merely

because the speaker is a corporation would run contrary to

our “profound national commitment to the principle that

debate on public issues should be uninhibited, robust and

wide-open.” Sullivan, 376 U.S. at 270. Because Nike’s

speech had no connection with the sale of specific goods or

. Services, and did not even promote the attributes of its goods

or services, it should not be treated as “commercial speech.”

C. If Nike’s Editorializing Is Found To Constitute

“Commercial Speech,” It Should Still Be Entitled

To The Highest Constitutional Protection.

Even if this Court concludes that Nike’s speech is “com-

mercial,” that should not be the end of the matter. In the

past, this Court has “followed an uncertain course” not only

as to the definition of “commercial speech,” but also as to the

level of protection to which “commercial speech” is entitled.

See Lorillard, 533 U.S. at 574 (Thomas, J., concurring in part

and concurring in judgment). In some cases, this Court has

held that the “mere fact” that speech is commercial “does not

in and of itself dictate the constitutional analysis that should

apply to decisions to suppress [it].” 44 Liguormart, 517 U.S.

at 501; see also Discovery Network, 507 U.S. at 424 (stress-

ing that courts should not “place too much importance on the

distinction between commercial and noncommercial

speech”). But in other, mostly older cases, the Court has held

the “commercial speech” label to be dispositive of the level

of protection accorded the speech. See, e.g., Central Hudson,

447 U.S. at 561-66.

In three of its most recent “commercial speech” cases, the

Court has only added to the uncertainty. In United Foods,

the Court noted that precedents which “accord less protection

to commercial speech than to other expression” have “been

subject to some criticism.” 533 U.S. at 409-10 (citing

opinions of Stevens and Thomas, JJ.). But the Court

concluded that it “need not enter into the controversy”

18

because the restriction at issue in that case could not be

upheld under any standard. /d. at 410.

In Lorillard, the Court recognized that a majority of the

Justices have criticized Central Hudson, but again concluded

that the restriction at issue failed even the Central Hudson

standard:

Admittedly, several Members of the Court

have expressed doubts about the Central Hud-

son analysis and whether it should apply in

particular cases. See, e.g., [Greater New Or-

leans Broad. Ass'n, Inc. v. United States, 527

U.S. 173, 197 (1999)] (Thomas, J., concurring

in judgment); [44 Liquormart, 517 U.S. at

501, 510-14] (joint opinion of Stevens, Ken-

nedy, and Ginsburg, JJ.); id. at 517 (Scalia, J.,

concurring in part and concurring in judg-

ment); id. at 518 (Thomas, J., concurring in

part and concurring in judgment). But here, as

in Greater New Orleans, we see “no need to

break new ground. Central Hudson, as ap-

plied in our more recent commercial speech

cases, provides an adequate basis for deci-

sion.”

533 U.S. at 554-55; see also id. at 571 (Kennedy, J.,

concurring in part and concurring in judgment) (emphasizing

that in view of the “obvious overbreadth” of the restriction at

issue, the Court was not required to “consider whether

Central Hudson should be retained in the face of the

substantial objections that can be made to it”); id. at 575

(Thomas, J., concurring in part and concurring in judgment)

(noting that “there is no philosophical or historical basis for

asserting that commercial speech is of lower value than

noncommercial speech”) (internal quotation omitted).

Most recently, in Thompson v. Western States Medical

Center, 122 S. Ct. 1497 (2002), the Court expressly noted

19

that “several Members of the Court have expressed doubts

about the Central Hudson analysis,” id. at 1504. Again,

however, the Court declined “to break new ground,” in part

because “[nJeither party . . . challenged the appropriateness

of applying the Central Hudson framework.” Jd.

The simplest way to resolve this case would be to hold that

Nike’s speech did not qualify as “commercial speech.” If

this Court were to conclude to the contrary, however, it

should also take this opportunity to confirm that “commercial

speech” is not invariably given a lower level of protection.

At least where speech by corporations implicates important

public policy matters, and does not even refer to the

attributes of goods or services offer d for sale, it should be

afforded heightened protection. Such an approach would

also be more consistent with the Court’s assertion that the

determination whether speech is “commercial” is “a matter of

degree.” Discovery Network, 507 U.S. at 423. Members of

this Court have frequently suggested that it would be

inappropriate to take an excessively rigid approach as to

whether speech is “commercial” or not. See Lorillard, 533

U.S. at 575 (Thomas, J., concurring in part and concurring in

judgment) (expressing “doubt whether it is even possible to

draw a coherent distinction between commercial and

noncommercial speech”); Rubin v. Coors Brewing Co., 514

U.S. 476, 494 (1995) (Stevens, J., concurring) (commenting

on the “artificiality of a mgid commercial/noncommercial

distinction”).

This case amply demonstrates the danger of automatically

subjecting all “commercial” speech to lower protection.

Under the California Supreme Court’s approach, Nike’s

speech will be entitled to no protection at all if it is later

determined to be inaccurate in any respect, and will be

entitled only to very limited protection even if it were stated

with complete accuracy. See Pet. 10a. Nor, as we have seen,

are the implications of this case limited to Nike. As matters

stand in California, most corporate speech may now be

20

treated as “commercial” speech. Companies in California are

therefore faced with the undesirable choice of remaining

quiet on important public policy debates, including those

involving their own operations, or facing strict liability for

any misstatements they may make in the context of heated

and fast-moving debate. The latter risk is far from trivial: at

least one other similar lawsuit has already been filed in

California against eighteen national and _ international

clothing suppliers and retailers. See Union of Needletrades

Indus. & Textile Employees, AFL-CIO v. The Gap, Inc., Cal.

Super. Ct. No. 300474.

And the implications of the California Supreme Court’s

decision are not limited to the State of California alone. The

increasingly widespread dissemination of corporate speech

means that the law applied in the least protective jurisdiction

effectively governs the national, and indeed worldwide,

statements of thousands of corporations. If California

aggressively punishes this kind of speech, then corporate

speakers that do business in California will effectively be

chilled from engaging in that speech at all.

The need to put an immediate halt to the Californ.a

Supreme Court’s effort to broaden the “commercial speech”

doctrine is plain enough. And the need for the Court to offer

more comprehensive guidance to the lower courts is equally

plain. The currently prevalent uncertainty as to when speech

will be treated as “commercial,” and what level of protection

“commercial” speech will receive, can only “inhibit the

exercise of [First Amendment] freedoms” by “lead[ing]

citizens to steer far wider of the unlawful zone . .. than if the

boundaries of the forbidden areas were clearly marked.”

Grayned v. City of Rockford, 408 U.S. 104, 109 (1972)

(internal quotation omitted). The Court should take this

opportunity to reconcile its confusing and contradictory

precedents, and thereby bring much-needed clarification to

this important corner of First Amendment law.

EY A AT AR OO OR ERC

21

CONCLUSION

For the foregoing reasons, this Court should reverse the

decision below and remand for the case to be dismissed.

Respectfully submitted,

ROBIN S. CONRAD KENNETH W. STARR

NATIONAL CHAMBER Counsel of Record

LITIGATION CENTER, INC. RICHARD A. CORDRAY

1615 H Street, N.W. KANNON K. SHANMUGAM

Washington, D.C. 20062

(202) 463-5337

KIRKLAND & ELLIS

655 Fifteenth Street, N.W.

Washington, DC 20005

(202) 879-5000

February 28, 2003