Two months ago, I was alerted to a case in California in which an attorney was suing Nike for grossly misrepresenting its record on sweatshops in a public relations campaign. I wrote at the time that while the case seemed to have substantial merit, there was a loophole in the law big enough to drive a train through, and Nike seemed to be headed straight for it. They claimed that press releases, letters to newspapers, and public statements by Nike executives -- even though they were clearly false -- were not commercial speech, and so enjoyed full free speech protection under state and federal law.
An appeals court had agreed with Nike, and the case made it as far as the California Supreme Court. Now I've just learned from my friend Al Meyerhoff -- the attorney who filed a $1 billion lawsuit against The Gap and Tommy Hilfiger, among others, for sweatshop abuses in Saipan -- that the Supreme Court has ruled that Nike can indeed be sued for false advertising.
Because the messages in question were directed by a commercial speaker to a commercial audience, and because they made representations of fact about the speaker's own business operations for the purpose of promoting sales of its products, we conclude that these messages are commercial speech for purposes of applying state laws barring false and misleading commercial messages. ...
In response to ... adverse publicity, and for the purpose of maintaining and increasing its sales and profits, Nike ... made statements to the California consuming public that plaintiff alleges were false and misleading. Specifically, Nike and the individual defendants said that workers who make Nike products are protected from physical and sexual abuse, that they are paid in accordance with applicable local laws and regulations governing wages and hours, that they are paid on average double the applicable local minimum wage, that they receive a "living wage," that they receive free meals and health care, and that their working conditions are in compliance with applicable local laws and regulations governing occupational health and safety. Nike and the individual defendants made these statements in press releases, in letters to newspapers, in a letter to university presidents and athletic directors, and in other documents distributed for public relations purposes.
There exists abundant evidence that Nike's claims are simply false. I recommend you read this article from Mother Jones on the case, which includes the damning evidence of a cover-up exposed in a leaked memo from Ernst & Young, which Nike had hired to audit its factories. That memo details findings of unsafe conditions in many factories, a fact Nike denied publicly in its publicity campaign.
This case could prove to be the foundation for a consumer revolt against other corporations that use their high profile and access to media to lie about their repulsive business practices. It could also close for good that loophole, which could have allowed such unrestricted greenwashing that consumers would have been essentially unable to learn the truth about the products they buy.
It's a great day for consumers, and for the irrepressible Mark Kasky, who brought the suit almost no one (including me) seemed to think he could win. How good it feels to be proven wrong!