WASHINGTON — The Supreme Court today dismissed a case against sneaker giant Nike Inc., which contended free speech protections extend to corporate advertising. The court said it never should have taken the dispute.
The action is not a ruling on the merits of Nike's claims, but it apparently means a California anti-globalization activist can continue a lawsuit against the company. Nike had argued that private individuals cannot use the courts to police what companies say about themselves.
The Nike case was the last announced for the current term. Six justices agreed to dismiss the case, and three said they would have ruled on it.
The court issued a one-sentence, unsigned order dismissing the case. Justice John Paul Stevens explained some of the reasons in a separate opinion. Stevens said the court did not need to delve into the complex free speech issues raised by the case now.
"This case presents novel First Amendment questions because the speech at issue represents a blending of commercial speech and debate on issues of public importance," Stevens wrote for himself and Justices David Souter and Ruth Bader Ginsburg.
Justices Sandra Day O'Connor, Anthony M. Kennedy and Stephen Breyer went on record saying the court could have resolved the case.
Shares of Nike rose 35 cents to $57.25 in late morning trading on the New York Stock Exchange.
A ruling in the case had been eagerly anticipated by big business, media companies and the public relations industry. The case arose from Beaverton, Ore.-based Nike's vigorous defense against allegations that it used Third World sweatshops to manufacture its athletic products.
Nike defended wages and conditions at Asian plants, run by subcontractors, where workers make tennis shoes and athletic wear with the distinctive Nike swoosh logo.
Nike wrote letters and issued press releases and fact sheets about its overseas labor conditions. It said such statements are part of the marketplace of ideas protected by the First Amendment and that it must be free to explain itself to customers, potential customers, or anyone else.
Nike's critics said the company's defense hoodwinked consumers and amounted to false advertising.
The Bush administration backed Nike in the case, arguing that a defeat for the company would turn private corporate critics such as activist Marc Kasky into censors or de facto government fraud-busters.
When the justices heard oral arguments in April, Kasky's lawyers said no one wants to stop Nike or other companies from speaking up. The point is that when a company speaks, it ought to tell the truth or pay the consequences in court, Kasky and his backers said.
Historically, advertising or promotional material get less protection than the contents of a newspaper or the words of a corporate critic like Kasky.
The San Francisco activist sued Nike five years ago, but his case has never gone to trial. The California Supreme Court ruled that the suit can go ahead, and Nike appealed to the Supreme Court.
Forty large media companies, including The Associated Press, joined conservative legal organizations, the Chamber of Commerce, the American Civil Liberties Union and other organizations to back Nike.
Corporate executives will refuse to talk about the safety of products, racial discrimination or environmental concerns about their industry if they fear their words will lead to a lawsuit, the media organizations said.
Kasky claimed that in 1996 and 1997, Nike made six misrepresentations about its employment practices in the Third World. Kasky cited a letter to the editor of The New York Times, a press release, other documents and a posting on Nike's corporate Web site.
None of the documents are an advertisement in the usual sense, but Kasky claims they still amounted to a misleading sales pitches.
The case is Nike Inc. v. Kasky, 02-575.
On the Net: Supreme Court: www.supremecourtus.gov/
Nike Inc. on the lawsuit: www.nike.com/nikebiz/nikebiz.jhtml?page52