Trial Lawyers Attack Free Speech

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"To anyone concerned about free speech, the failure of the Supreme Court to rule on a case brought by Nike Inc. is more than disappointing. It's a disaster. Just about the last people you'd want to put in charge of the First Amendment are trial lawyers, whose business is suing large companies on any available pretext," writes columnist Robert Samuelson in a brilliant analysis in today's Washington Post.

The case was brought by an activist who wants to muzzle Nike's defense of its business practices and is supported by trial lawyers who hope to get rich by opening up a new bountiful vein of litigation dollars.

The First Amendment says "Congress shall make no law … abridging the freedom of speech, or of the press." Period, full stop, no exceptions. What part of "NO" does the Supreme Court not get? Pornography gets more protection than companies do. There is simply no reasonable constitutional basis for the Court to try to distinguish between "commercial speech" and all other types of speech. The Court has been accused of judicial activism of late–the Justices should get active here and toss out the commercial speech exception.

Samuelson adds, "Free speech, to be free, has to cover everyone, not just the politically fashionable." Amen, brother Samuelson. Amen.

NEXT: Combinatorial Explosion

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  1. I do think fraud should be illegal, but in reality it is fairly difficult in most cases for individual consumers to go after companies in fraud cases unless it was for something hugely significant to them (like they were screwed on a house or car or hurt by an incompetent doctor, for example). In really the market already does sort this out, for the most part, and you don’t have to look deeply into every product you buy, because companies don’t stay in business by screwing over customers.

  2. corporations are fictional people above the law! that is why CEOs are immune to laws that apply to you and i. name one CEO who went to jail! doens’t enron ring a bill you right-wing corporate puppets!

  3. Free speech has ALREADY been divided into two separate classes. The Supreme Court twice ruled back in the 90’s that there is this separate level of speech known as the “outer periphery” that can be subject to regulation and limitation if the government can prove such speech “causes harm”. Most people didn’t notice this because the “speech” at the time involved strip clubs.

    It’s not too much of a stretch for trial lawyers to say, then, that corporations that lie in thier advertising is “causing harm”, and thus should be regulated like strip clubs are.

  4. mona –

    What is the difference between a company declaring in an ad that their product is “organic” and another company declaring that their product is produced by workers who enjoy fair labor conditions? Until very recently, the term “organic” was essentially undefined and it carried/carries all sort of political baggage with it. The move to officially define “organic” in regards to the use of the term in advertising is an effort to reduce deceptive advertising and potential fraud by food producing companies. The term “fair labor practice” has been defined – not “officially” by the government,perhaps, but certianly by labor organizations and a general consensus of what constitutes fair labor has arisen. I would be willing to bet that most Americans would define fair labor practice as something akin to U.S. labor standards. Thus the term has lost much/most of its character of simple “opinion” or political viewpoint – at least in the minds of U.S. consumers – and has like the term “organic” become representative of a certian set of standards.

    In any case, since the terms “fair labor” and “reasonable working conditions” are likely to be interpreted by consumers to mean certian things (i.e. labor standards similar to U.S. standards), the inclusion of the terms in advertising is not simply a assertion of political views by the company but rather an assertion of a basic quality or property of the product just like any other marketing assertion (i.e. “natural”. organic” “more efective” etc.)

  5. Jim,

    But is that really what Nike is arguing? That their speech is protected on the grounds that they are making a value statement? If so, you’re right that we’re all barking up the wrong tree and the issue is no different from saying Wonder Bread tastes good (bleah!). But I thought that Nike wanted it thrown out of court based on the notion that they were engaged in political discourse and not commercial speech. I would think your argument might be based on a less fundamental issue and therefore require some actual time in court to argue the actual facts of the case (since what is opinion to one may be fact to another). Whether or not Nike’s statements were value judgments or based on more concrete criteria would be irrelevant, however, if they were protected under the 1st Amendment, which is what I think is what they’re arguing, and it’s certainly an important issue regardless.

  6. Enron was murdered by the stock market long before the government stepped in. The system works as intended, as far as I can tell.

    If you work for a company and commit specific crimes, you will go to jail, even if you did it in the name of your company. As far as I know, membership in a corporation is not immunity from personal responsibility for everything. In fact, working for a corporation makes you liable for things you are not liable for outside of work (You can’t be sued for sexual harrasment, for example, by hollering at women walking down the street from my car. Try the same thing at work and see how that pans out…)

    IMHO,the real reason why many CEOs and other corporate officers don’t go to jail is that they have deep pockets to begin with. Most trial lawyers and their clients would be much happier with a multimillion dollar settlement than the satisfaction that the evildoer is behind bars.

  7. are press releases and factsheets “commercial speech”?

    what is next, regulating how people representing companies are quoted in the media or banning company spokespeople from news programs (yeah…that will increase transperency)

  8. The Nike case should not as a question of whether “corporations” should enjoy the same First Amendment rights as individuals, but as a matter of whether speech can lose its First Amendment protections based on the identity and motive of the speaker. If Nike were just two guys selling shoes out of their garage, their liability under the California Supreme Court’s ruling would be no different than that of a multibillion international company. The California court said that speech is not entitled to full Constitutional protection if it is “commercially” motivated.

  9. I think the point that people are missing is that the California law allows ANYONE to sue a company for advertising THEY believe is misleading or false. What’s happening is that Nike is being attacked in the press for “unfair” labor practices abroad and they issued a press release contradicting these claims. Now they are being sued for “false” advertising.

    By allowing this sort of situation, California law puts companies in an untenable situation where they cannot defend themselves in the media. If company X gets bad press for any reason, they can no longer defend themselves in the press without being sued. In order to defend themselves they’ll then have to prove in a court of law that the claims they make are completely true, which may be impossible in some cases.

    For example, in the Nike case, they may follow all the International Trade guidelines out there. However, that doesn’t mean the guy running the factory in Singapore isn’t hiding the fact he has 7 year-old kids working under the table in a back room of the factory. Or some place making Nike knock-offs isn’t paying kids 25 cents for a 16 hour work day. I mean, those are Nike shoes being made through bad labor practices, aren’t they?

  10. “Congress shall make no law … abridging the freedom of speech, or of the press.”

    how the fuck does “no law” mean “everything but commercial speech” (and the 14th supercedes californial law)

  11. Go point anon @ 1:26. To revist the fraud issue. Instances of fraud can only take place when a contract between two parties is breeched. This is the only time government needs to step in a determine a wronged party.

    In the case of purchasing lima beans, no contract has been initiated (besides a social contract). Therefore, there is no right to interpretation. If the buyer has the producer sign a contract of quality or performance (i.e. a warranty or guarantee), then they have a claim. Likewise, when you sign a check or pay by credit card, you are signing a contract that promises to pay. It’s the reason you are held liable for such forms of payment.

    In a free market, the producer has no obligation to performance or reliability other than to maintain its reputation. That is why buying a can of lima beans that taste bad or is not even lima beans is not fraud.

  12. Brian,

    just because people have a certain idea in mind about what a concept like ‘organic’ or ‘fair labor practice’ means does not mean this is a cut and dried issue. Opinions can still reasonably differ, even if the majority thinks it means one thing. Again, this then is a debatable idea that is the type that is traditionally protected by the first amendment. Personally it disturbs me that the government is getting involved in defining these things. That does not mean that these definitions aren’t important or could not be relevant in a fraud case. Private organizations are more than capable of providing and certifying standards without government involvement.

    A good example is the definition of ‘Kosher’ food products. Jacob Sullum did a good write up on that topic a few months back, about someone suing over the definition of “Kosher” and the state essentially considering defining a religious concept legally. This should make anyone posting here nervous. Apparently within the Jewish community itself there are several competing ideas about what constitutes ‘Kosher’ and different organizations certify to different standards. People informed enough to have an opinion can look to purchase products certified by the organizations they trust. It would or should only be considered fraud if a company puts ‘certified Kosher by Rabbi XYZ’ if in fact Rabbi XYZ hadn’t certified it. Just saying it is ‘Kosher’ then becomes a matter of opinion and the discriminating consumer has to be more careful. The market thus can provide whatever level of detail and accuracy the consumers demand, and accomodate differences of opinion, without these things having to be decided by government fiat.

  13. Patriot,

    Not sure if I’m following you there. Are you saying that fraud only happens in the case of a signed contract? So you don’t believe in implied contracts? And if I take a can of lima beans out of a score without paying for it, is that not stealing because I never signed a contract saying that I would not do that?

  14. ?Absolute tosh-nothing is being destroyed here-they simply have to head back to court.?
    I don?t know if this would be true for NIKE, but yes, Gwen, it?s true for my company. We have an entirely unlimited budget and can spend and spend on lawsuits or whatever without having to cut things (like jobs) elsewhere.

    We?re entirely financed by nuisance lawsuits! You say those eggs are over easy! Hah! I’m calling my lawyer – Shoney’s owes me BIG TIME.

  15. Xmas,

    Are you saying that the law puts the burden of proof on the defendent and that they must meet a standard of absoluteness?

  16. Fyodor:

    I do not believe in enforcable implied contracts. An implied contract exists when a purchase is made. However, if the product is not satisfactory then the implied contract is broken and the buyer does not have to deal with that producer again. They can also make others aware of the poor product. That is why many producers bend over backwards to make consumers happy — they want to protect their reputation.

    As for the stealing issue, clearly this is not the same thing. You have taken another person or entity’s property and you can be held liable for that action. Just as the producer would be if they can to your house and took the can of lima beans from you after you rightfully purchased them.

    I’m not every transaction needs a contract. I’m saying that an implied contract should not be interpretted by the government. It should be interpretted by the market.

  17. that last one was me, sorry

  18. fyodor:

    Good point. If there is no contract like Patriot says, then that is a 2-way street. You could sell me total shit for my money, or i can take your goods for no money. They are both wrong for the same reason; one end failed to hold up their end of the bargain. There must be some type of implied contract in the transaction of buying and selling or you don’t even have a market, just chaos.

  19. Patriot,

    I would think offhand that there’s a big difference between some general sense of unsatisfactoriness on the part of a consumer and selling something under patently false premises. The reason I bring up the theft scenario is to show that it’s necessary to have implied rules that are enforceable.

    But anyway, we’ve made our points. I’ll chew on yours.

  20. It’s Gwyn,actually,Lizard,not ready for that sex-change quite yet,and as I am a Welshman and we are notoriously unsentimental,you’re going to have to do a bit better than recounting your normal business expenses to get my tear ducts going.

  21. Brady:

    How is stealing an implied contract? If the producer says you may have a good for no money and knows you are taking it, then you you can. That is an implied contract.

    If you purchase something that turns out to be crap, you should have built that skepticism into pricing or bought from a producer that has a good reputation. Chances are that producer wants to protect that reputation and will replace the good, or risk a damaged reputation and weakening sales.

  22. Patriot:

    Here’s an example of what I mean. You want to sell me a can of beans. I want to buy them, let’s say for $5. The transaction is a 2 way process; I buy and you sell. The reason either of us proceed on this transaction is that there is some assumption of equal worth between the 2 items (your can and my money) based on what we’ve agreed to.

    Let’s pretend you sell me pebbles instead of beans. You have violated the principles of buying and selling, and have, in essence, stolen my money. The good you were offering me was not what you sold me.

    To make you understand my point, let’s evolve to modern times and assume that I do not have cash, but a hot check. You are assuming that the check is worth $5, but, in fact it is worth 0. We make the transaction and I get the can that presumably has beens in it for free. I just stole them from you under the same principle above.

    That is how stealing can be an implied contract.

  23. “name one CEO who went to jail! ”

    Sam Waksal

  24. soon the list will include jack welch formerly o GE, dennis kozlowski of tyco, and bernie ebbers of worldcom. several people involved in the stock fraud thing like grubman are not allowd to practice anymore.

  25. Ah, but a check is actually a contact. But your hot check IS a contract.

    Again, if the can has rocks in it, you should have bought from someone else, you should have paid less than the actually worth of the beans, you should seek replacement, you should never buy from the seller again, and/or you should tell everyone you know that they are rocks instead of beans.

  26. If a beer company runs an ad stating that its product will make me irresistible to the opposite sex, can I sue if that doesn’t happen? What if the ad just implies it? If you find this example absurd, I refer you to the tort-slope of the last twenty years.

    RK Jones

  27. i find these vicious, ad hominem attacks on reason writers Ronald Bailey now, julain sanchez was recently attacked for being mexican, and i kid you not)
    o be inappropriate and ugly. it makes me feel sad and ashamed that there are people who feel that way, and libertarianism is one place i go to try escape all that.

    btw Mr. Bailey: i live in c’ville and noticed your essays in local mag the Hook. so whats up? d’you know Jim Lark? i was just chatting with him yesterday. it’d be fun to have a discussion sometime.

    i

  28. sorry about the redundancy! i have terets of the fingers.

  29. I want to Amen! Jim’s statement:

    If Nike says its shoes are made by robots in Oregon, when in fact they’re made by kids in China, and enough people believe Nike and make economic decisions based on that statement, that is a form of fraud. If Nike says that kids making shoes in China are employed in accordance with “fair” labor practices, and somebody else says the practices are “unfair”, then Nike is just expressing an opinion.

    Another thought: It would be nice if we could live in a world where “bad people” were banned from making “bad statements” if there were some objective and fair way to identify “bad people” and “bad statements.” But we all know how tricky regulation of speech winds up being, and we all know that “good people” (i.e. the rest of us) could easily be labeled “bad people” and denied their freedom of speech. If the price of free speech for the rest of us is a little slippery Clintonesque double-speak by Nike, well, so be it. The alternative is far worse.

    Final thought: the very existence of fair-labor advocacy groups that lambast Nike proves that we have a functioning marketplace of ideas.

  30. speaking of labor groups lambasting nike: ALF-CIO came out with an amiucus brief, pro-Nike, as did ACLU. so its a relief to know that only some, not all, of the left is openly totalitarian.

  31. The old saw about commercial speech was that the left hates it because it’s commercial and the right hates it because it’s speech (this was, of course, before the left started hating speech as well).

  32. I’m not surprised by this decision of the California Supreme Court,the same cloth ears who upheld the judgement in the sham civil suit against Mr. Simpson.Happy Birthday,OJ!!

  33. Patriot:

    OK, what if i give you a counterfeit $5 bill.

  34. Britney Spears now isn’t a virgin!

    http://reuters.com/newsArticle.jhtml?type=entertainmentNews&storyID=3056474

    she sells CDs right? I am going to sue here for making false commercial speech. Her goody goody image was a lie.

  35. I think the AFL-CIO basically realizes that if someone is required to subject Nike’s labor practice claims to a truth test, so will the AFL-CIO’s… call me cynical but I don’t think they’re a friend of liberty. They pretty much said so themselves that they fear a victory for the activists could prevent them from saying a lot. Still, point taken, not everyone on the left fails to see the larger implications of corporate speech repression.

    Thoreau: amended, I think I can stand by that as well. I just couldn’t resist the opportunity to lampoon the fact that the likeliest market for overpriced sneakers probably places a much higher priority on how cool they look in them than in whether their production methods are policially correct. I would also endorse your additional thoughts on the topic.

  36. Anon at 2:50, some hardcore libertarians would argue they’re all counterfeit, anyway. Just spend the damn thing.

  37. I would just buy lima beans in glass jars, then.

  38. Jim,

    The market for really cheap sneakers also probably places zero value on how politically correct they are made.

    If there is a market for “politically correct sneakers”, the door’s wide open for people to get in.

  39. Good point anon @ 2:50.

    In the instance of counterfeit notes the seller has no right to pursue money at a later time. This becomes a criminal offense. It must be pursued under counterfeit laws that should exist.

    The seller must build this skepticism into pricing and defend against such counterfeits (i.e. those markers to test bills). That is why it is the charge of the government to provide a difficult note to falsify.

    Everyone fears a sense of healthy skepticism in transactions. But in truth, it would help sellers defend their product more, as well as, force sellers to slowly develop a strong reputation in order to make a profit. The get rich quick people couldn’t make a dime if people thought they weren’t being protected by the government at all times.

  40. anon @ 3:07

    If everything were as simple and obvious as beans vs pebbles, this theory would work. the world we live in is more complex than this.

  41. People who sell lima beans in glass jars shouldn’t throw in stones!

    (This joke was supposed to follow anon 3:07’s post, but the server crashed. Corporate America sucks…)

  42. Patriot:

    How can you on one side be for conterfeit laws (I was the anon 2:50), but be against false advertising.

    That is a contradiction.

  43. the above should read

    “but be against false advertising laws”

  44. This list of comments have gotten too long, I forgot what I was going to say! Oh yeah, how about AK judge Savell and his pot ruling!

    Damn, wrong day again!!!

  45. Patriot,

    I don’t think anyone’s disputing your assertion that sellers have an incentive to have a good reputation. The question I think is before us is why is an implied contract any different than a signed one. After all, sellers who sign contracts have the same incentives. What makes that different?

    Y’know, I just read in the paper today that a local football player is being held for sexual assault — for the third time! On three different women! I would hope that the gals around here would catch on that this guy’s trouble, but should they have no recourse to the law just cause they didn’t caveat emptor? Okay, I’m sure there’s plenty of differences you can find, but my point is that depending on the market to minimize rip offs doesn’t help someone who’s been ripped off. And while there are incentives not to rip someone off, it can and will still happen.

    And I think you’re failing to work with us on the stealing as violation of implied contract issue. I don’t have to sign my credit card most of the time nowadays. The point is that implied rules of conduct work both ways, and theft is an implied rule of conduct that we all agree is enforceable by the law. Ultimately it comes back to: why are implied contracts different from signed ones? I think you’ve only brought up the issue of abstractness, but the terms of an implied contract can be very clear. Hell, what if I take your money and leave town without giving you squat? Of course no one who knows will do business with me, but that doesn’t do you any good, I’ve still stolen from you.

    Oh well, we’re all stuck in our opinions and I’m sure you’ll repeat what you’ve already said. But I just don’t see why a clearly implied contract is any different than a signed one.

  46. I have to disagree with you, Patriot. Turn the buy-sell transaction around and your inconsistency is clear. Think of it this way–you’re using counterfeit beans to buy my real money. That’s a fraud and is theft of my property. If you’re asserting that it’s not OK to steal the beans, you can’t then assert it’s OK for you to steal from me by selling me pebbles marketed as lima beans.

  47. Brady:

    I’m not sure that it is a contradiction in advertising laws and counterfeit laws, but my response is this:

    In my mind (warped as it is), counterfeit laws are more along the lines of copyright laws, which I also support.

    The government is the sole producer of paper notes; therefore, they have the ability to pursue anyone who falsifies such bills. If a buyer can convince a seller to accept monopoly money as a form of payment they can do so, as long as they don’t present the paper as US Mint (copyright infringement).

    It is important to note that the seller does not have a right to pursue the counterfeiter, the government does.

  48. I often notice an anti-consumer bias in supposedly pro-market commentary. In any sale there is a buyer and a seller. Libertarians generally agree that the seller should not be subject to burdensome gov’t regulations, and if the buyer fails to make payment the seller should have the right to sue for reimbursement.

    But if the buyer says “the seller failed to make delivery, or didn’t deliver what he said he’d deliver” some libertarians seem to say “Well, too bad for you.”

    Now, I’m not saying that every dissatisfied consumer should be able to sue because the product wasn’t as good as it was supposed to be. Anybody who thinks that drinking beer will help you score with two hot chicks tearing each other’s clothes off is delusional. But if the can of beer says “This is beer” and you open it up and it’s a mixture of piss and suds, surely you should be entitled to a refund.

    Remember that the economic benefits of the free market can only be obtained when buyers and sellers are informed, and when contracts (implicit or explicit) are meaningful and enforcable. (adding all the obvious caveats that disputes over implicit contracts should be regarded with more skepticism and reluctance than disputes over explicit contracts)

  49. thoreau: do you think this ruling has increased transparency in the market? i don’t

  50. Thoreau wrote: “But if the can of beer says “This is beer” and you open it up and it’s a mixture of piss and suds, surely you should be entitled to a refund.”

    Why do you deserve a refund? You knew you were buying Coors Light!

  51. P:

    I think Bitter explained the inconsistency well. The problem is you refuse (and get to literal) with method of payment.

    Swiping a credit card, entering credit card in a web transaction, passing money, giving a check…all of these payment methods have laws associated with them to minimize seller risk and penalize buyers that falsify their end of the bargain.

    So, on the other end, why should laws not exist to protect the buyer on the other side of the transaction against false advertising? Your only argument is that “word of mouth” should suffice. This is a global and electronic economy, making your claim insufficient. Alternatively, why would you not make the same argument on the other end, saying sellers should tell all of their buddies that someone gave them counterfeit?

    You theory does not present a free market, but a sellers’ market by putting all the risk on the buyer. Of course price fluctuations, etc., would allow this economy to possibly exist, but it definitely would not be an efficient marketplace.

    I don’t think i could make anything clearer, so I’ll just say that we disagree and leave it at that.

  52. Thoreau wrote:Anybody who thinks that drinking beer will help you score with two hot chicks tearing each other’s clothes off is delusional. But if the can of beer says “This is beer” and you open it up and it’s a mixture of piss and suds, surely you should be entitled to a refund.

    This is clearly an advertisement, thus not protected by the 1st Amendment and it clearly suggests a link between attractiveness and beer consumption. This is either true or it is not. If not, I repeat my question, can I sue? If not, why?
    And this is a relatively easy question to answer. The question before the court in the Nike case is whether or not their treatment of workers was fair. Are the courts really appropriate venues in which to resolve an issue as subjective as the meaning of the word fair?
    RK Jones

  53. Brady and Fyodor:

    All right my last effort as well.

    The difference being that implied contracts are too open to interpretation; whereas, a good written contract should not be. An example:

    You purchase a DVD player. It doesn’t work. Should you be able to sue for compensation? Okay, maybe, but what about 6 months from now? Is there still an implied degree of performance? What if you drop it, but it’s not noticeable to the naked eye? Should they replace it?

    In some cases the seller will replace the object with no questions. Why? To protect future cash flow. Simple NPV. If they don’t replace it then you don’t have to buy from them and can do everything legal to inform others. But the bottom line is, they don’t have too if they don’t want. There is no need for the government to step in and interpret here.

    Now if you have a warranty for one year and the producer doesn’t find replacing the product to have a positive NPV. Do you have an explicit contract stating what obligation the seller has? Yes. In this instance you can never buy from them again and do everything legal to inform others, but you can also get the government to interpret the contract because it is explicit.

    You all make very good points and I agree that a truly free market is not easily obtainable. But I will continue to fight for one. Thanks for the debate.

  54. Brian et al.:

    First, what fun to do this rather than work — I should steer clear of this site when I have stuff to do, like amend corporate bylaws. (For a non-profit that all non-libertarians should even approve of.)

    Ok, “organic” is a quality of food, inherent to the product. The FDA has spoken as to what this means in terms of labeling, and I can live with a regulation like that, since it is necessary for the consumer often to know exactly what they are ingesting. But notions of “fair labor” are utterly political ideas that do not go to any inherent quality of the product — as another here has noted, this is a subjecive, opinion statement. Fraud, as others have said, is and should be illegal — you cannot lie with impunity about the inherent properties of what you are selling. But political “lies” are not the proper domain of our courts, where there is no such thing as “truth” and for very good reasons.

    Nike was attacked by people who dislike its labor policies– a perfectly acceptable political strategem. Nike has responded defending the political attack, an attack which is meant to impact its sales every bit as much as Nike’s defense is meant to shore them up. Fair for both sides.

    Or do you think organizations that call boycotts against Corp. X for nefarious practice Y should be subject to libel or other suits? I do not, not if the attack is a political opinion rather than a demonstrably false fact claim( a false fact would be, say, “Corp. X uses swine feces in its hot dogs” as opposed to an opinion such as “Corp. X hates Mother Earth or it would not decry and oppose regulations A, B, and C and argue it could not continue production at its present quality if these were adopted.” In this hypo Corp X is saying the absence of the regulations is necessary to the product it makes — should that constitute a false advertisement if a court things Corp X is wrong about that claim? )

    The First Amendment greatly limits libel and slander actions, as well it should, and it should also inhibit the kind of suit here against Nike. What consitutes fair labor, and a political defense in response to a political attack, are fair game in a nation that enshrines the absolute protection of ESPECIALLY political speech.(Note: I do not argue that only political speech merits protection, but merely observe that the speech by Nike here IS such speech which has always enjoyed the highest level of virtually absolute protection.)

  55. Brady,

    Then use an example that can’t be reduced so easily. Something expensive, like a house, where the need to buy repeatedly is so low that the buyer requires satisfaction the only time he “enters into contract”.

    In cases like this, there is usually an inspection to ensure satisfaction, and the seller has the buyer’s finances checked extensively before the deal is finalized. There is no “implied” contract when the stakes are high, only when the stakes are low. But the point is exactly the same.

    With Nike shoes, the stakes are low for buyer and seller. And shoes are one of the few examples where you almost always try before you buy!

    I could trade a pair of shoes for a case of beans. The government’s proper role in this transaction should probably be, “We don’t care.” If you didn’t inspect the case of beans before you made the trade, and it turned out to be a case of feces, you don’t know how to make a proper trade. (Think Billy Beane and Kenny Williams, if you’re a baseball fan.)

    Let me put it this way. When you buy/sell a house, a title company is typically involved. The last house I sold, I lost all my money because the STATE shut down the title company 2 days later and the check bounced. Both sides agreed to use this title company, and we had the “full faith” of the state of Illinois that the title company was on the square. 2 days later the state says the company isn’t on the square. Should I be pissed at the title company for being frauds, of at the state for negligence in their duties? Or is it my fault that I trusted the state in the first place?

    (I did recover 90% of my money eventually. Took legal action and several months. But I’ll never enter into an “implied” contract with the government ever again.)

  56. aagh i thought you guys were gonna quit it already with these long, screen consumign screeds!

  57. To clarify, my beer example was mostly in response to some of the tangents that this discussion has gone off on: The extent to which consumers should have legal recourse against objectively false claims.

    In regard to the ORIGINAL subject, Nike’s statements on labor practices, I vigorously agree that Nike should have the unqualified, unconditional right to say that their labor practices are “fair”. Subjective statements like that cannot possibly be examined in light of false-advertising laws or anti-fraud laws.

    But at some point the discussion got off onto questions like “If somebody clearly labels a jar with the statement ‘This jar contains lima beans’ and instead it contains gravel, can/should the consumer sue?” My example of “Saying a can has beer when it doesn’t” vs. “Saying beer will help you score hot chicks when it doesn’t” was in regard to that question, not in regard to the ORIGINAL issue concerning Nike.

  58. I’ll end on saying that I agree with T. Nike should be able to make subjective claims of this kind without being sued.

    The conversation did get of topic, but it was a conversation that I found interesting to pursue with Patriot.

  59. Mona,

    For the sake of argument: would it still be a political issue that’s too subjective to be decided in court if Nike said publicly that they follow all applicable labor laws, and then a memo was found ordering managers to disregard local labor laws? That is, if they stated specific facts about their labor practices that could be verified as false?

  60. this headline is misleading. for one it’s about the CALIFORNIA supreme court and for two they did make a ruling, it was against nike.

  61. “Free Speech applies to everyone, including people who work for corporations.” No one is suing the people who work for Nike Inc. Libertarians have no problem with the concept of limited liability for corporate officers and employees; consistency requires that this principle be applied here, as well.

    Also, the comparisions between corporations and political organizations are facile; working for a corporation does not mean you support its positions on political issues, while joining an interest group does. You can leave a political organization at any time with no ill effects, while leaving a corporation has a significant economic downside.

    Finally, didn’t one or two of you once denounce Marxism for its support for the heresy that human beings can decide who has rights and who doesn’t? Humans are endowed by their creater with certain inalienable rights. The organizations we create, be they governments, corporations, or political organizations, do not have rights because their creator (people) do not have the ability to create rights, any more than they have the authority to deny rights. The State of California is not required to respect Nike’s alleged rights, any more than those of a stump.

  62. the first ammendment applies to humans.

    corporations are inhuman creations. they must also be stopped.

  63. when political donations and gifts count as “speech” saying “NO” doesn’t sound too bad.

  64. Last time I looked, all corporations were created by human beings. Additionally, they are just filled with human beings who work in them. But perhaps you were being ironic?

  65. Corporations may not be human themselves, but they are made up of humans. Like them or not, “big, evil corporations” (including Nike) employ a lot of hardworking people. As such, they allow a lot of people to put a roof over their heads and food on their tables, not to mention they generate a tremendous amount of tax revenue which pays for schools for their children. (There – hell hath officially frozen over. I used the phrase “for the children” in a halfway serious tone).

    Getting back to the issue at hand, the First Amendment and Free Speech. Free Speech applies to everyone, including people who work for corporations. Unfortunately, I’m not optimistic about this one, because in our society, enriching trial lawyers has recently taken precedence over anything and everything, including the Constitution and the Bill of Rights.

  66. Ronald-

    Because automobiles were created by humans, and some people work from their vehicles, does not make cars human. Consequently, cars don’t qualify for freedom of speech.

  67. Those wicked trial lawyers couldn’t have gotten anyplace unless this false advertising law had been passed in the first place,and that’s the problem with your price controls on civil trials and fee-limiting schemes in the first instance,Mr. Bailey.Smart lawyers will always find a way round dumb lawyers(state legislators)-this is in the nature of things.Excuse me,I’m so emotionally affected by the plight of Nike,it’s hard to continue.

  68. all corporations were created by human beings

    so are all nations and all terrorist groups for that matter. and your point is? by your argument a corporation should be allowed to publish whatever misleading financial statements they want because it’s protected under free speech. so too should government be allowed to falsify data. it’s speech of course. sometimes the truth supersedes speech, especially when it’s used to lie.

    in a world of perfect information, it’d all be sorted out in the end. but in the meantime, before we achieve omniscience, we have judges. the supreme court can interpret the law however they want, in this case they decided to favor individual speech. interpret that as you will and speak freely.

  69. newspapers are not human, so it doesn’t have free speech

    press releases are not human, so it doesn’t have free speech

    blogs are not human, so it doesn’t have free speech

  70. emails are not human, so it doesn’t have free speech

    NGOs are not human, so it doesn’t have free speech

    charities are not human, so it doesn’t have free speech

    the green party not human, so it doesn’t have free speech

  71. letters are not human, so it doesn’t have free speech

    flyers are not human, so it doesn’t have free speech

    sound waves are not human, so it doesn’t have free speech

    movies are not human, so it doesn’t have free speech

  72. Don’t get so caught up in the fact that it’s Nike that you ignore the broader issue.

    This is anti-capitalism (a non-thing) acting to destroy a component of the free market – communication (a real thing).

    Make no mistake about it – It’s destruction – it’s looting without even a hint of altruistic motives these types of things usually put on for a public face. This time it’s just blatant, naked destruction for the sake of destruction. It’s Nihilism.

    This action should be digusting to anyone who professes any affinty for “free minds & free markets” as an ideal – and the U.S. Constitution as that ideals realization. It’s a clear attack on both.

  73. Absolute tosh-nothing is being destroyed here-they simply have to head back to court.I hope they engage better lawyers than Mr. Tribe,for their sake.The lawyers are simply taking advantage of the opportunity the State has been good enough to provide.

  74. Corporations may not have constitutional rights, but the human beings making them up, do. (So do owners of cars.) Corporate spokespersons therefore, even when testifying on behalf of the coporation, are protected from incriminating themselves.

    The Sup.Ct.ruled that the NAACP did not have to release its membership list for the good reason that the associational rights of the individual human beings making it up would then be imperiled. Groups, including corporations, are made up of individuals who still retain their rights even when they are within the group.

  75. Political parties are not human, so they don’t have free speech.

    Hollywood is not human, so it doesn’t have free speech.

    The AARP is not human, so it doesn’t have free speech.

    The NRA is not human, so it doesn’t have free speech.

    The NAACP is not human, so it doesn’t have free speech.

    PETA is not human, so it doesn’t have free speech.

    TV shows are not human, so they don’t have free speech.

    The news media is not human, so it doesn’t have free speech.

    Colleges and universities are not human, so they don’t have free speech.

    Law firms that lawyers work for are not human, so they don’t have free speech.

    Come to think of it, no one has free speech. Everyone should just shut the fuck up and bow down to anti-free speech activists.

  76. It’s truly disheartening to watch people enter the lottery that is corporate lawsuits and the public supports every move. Where did this anti-capitalist mentality come from? Government interference causes a recession that costs jobs and everyone blames the capitalists. Fantastic. Put the blame where it belongs people. The government.

    The Supreme Court Justices should be forced to take some economics lessons. Perhaps they would begin to support the entities that truly drive our economy. Separation of government and the market is the only way to go here.

  77. You’d probably be even more upset,Patriot,if you’d read Mr. Bailey’s piece in Reason entitled “Ambulance Chasers Under Attack”-he thinks we need more laws and state involvement in civil suits.

  78. The problem here comes down to the question of when does a corporate press release or statement cross the line from mere corporate expression to advertising. If Nike takes out a full page ad in the NY times which says ” Recently we have been accused of exploiting workers in the manufacture of our product. This is not true. We adhere to all international larbor standards, etc. etc. etc.” then I think it could safely be considered mere expression. The truth of their statement is, of course, open to question and they should be publically reproached if they are lying, but I see no conflict with truth in advertising laws. However, if they take out ads or launch an ad campaign based on a “Nike: Good Labor Practices Make for Great Products” theme, then it’s clearly in the realm of advertising. As such, if it can be proven that the ads contain falsehoods (i.e. that Nike really does exploit workers in sweatshops) then Nike would clearly be in violation of the truth in advertising laws. I believe that such laws are needed and benefit the consumer and are a tolerable and appropriate limit on free speech.

  79. “The Supreme Court Justices should be forced to take some economics lessons”

    how about constitutional law lessons?

    but i forgot, the republic is now whatever judges say it is.

  80. I agree with the last poster. When has the lack of a “reasonable constitutional basis” prevented this Court from doing anything?

  81. why am I sickened when ever I read a post by Ronald Bailey? gee maybe it could be because it is far rightwing corporate dribble. while the US goverment is actively surpressing anti-war and progressive speech, I should shed a tear for a corporation that lives off the stolen $weat of its workers? I say boo hoo for Nike.

  82. Brian- one’s opinion about labor practices, including an entity’s own such practices, is a quintessentially political opinion, and political speech enjoys the highest level of constitutional protection. By contrast. making fraudulent claims about the properties of one’s goods or services is not protected because, among other things, that is not a political statement.

    Comments about laws, from labor policy to copyrights, should enjoy absolute protection; there is no such thing as “truth” per our First Amendment jurisprudence when it comes to political opinion. Ane entity claiming to practice good labor policy may not be doing so in the opinion of 90% of the population, but it is still entitled to its opinion, however dubious that opinion may strike you.

    Political speech and its high value were the driving concern of the founders. Almost any mere idea can, of course, be characterized as political, but reasonable people can see that claiming, say, one’s widget always gets stains out, when in fact it never does, is primarily a lie about a commodity’s properties with little if any possibility of contributing to the community’s discussion of ideas. Claims about what constitutes good labor practice or proper copyright law, however, are manifestly the stuff of political discussion.

  83. Brian hit the nail on the head. The real debate is what constitutes an advertisement.

    False advertising must have restrictions, along with other documents released by corporations (i.e. financial statements). You are an anti-consumer if you don’t think this is so. While in an ideal world no one would try and dupe another, but false advertising is fraud, which must be regulated.

    There is a difference between free markets and anarchist markets!

  84. God forbid anyone defend corporations that pay your salary T Hop (provided you aren’t on welfare, and even then they still provide your livelihood). Grow up and realize what really drives human innovation and our economy.

  85. “I should shed a tear for a corporation that lives off the stolen $weat of its workers?”

    If this is the kind of “progressive” speech you claim is being supressed – consider it a gift.

  86. Jeff Schmidt – it’s “progressive” to argue that all corporations are evil, America is evil, Bush is evil, 9/11 was a big conspiracy on the part of the Republicans and evil corporations to get more Middle East oil. It’s also “progressive” to argue that only “progressive” speech is protected by the First Amendment. “Non-progressive” speech, such as the speech uttered by the PR department of Nike, is not protected according to progressives.

  87. The Supreme’s, both this court and previous ones, have been “distinguishing” types of speech for decades. This current non-ruling is not surprising when considered against the court’s rulings with regards to “Political” speech.

  88. mona –

    I agree except when statments about labor practices are employed as part of an advertising or public relations campaign. In these cases, the “political” statement or statement of opinon becomes a statement about the properties or qualities of the product on par with statements about the effectivness etc. of the product. They become part of the selling message which is meant to motivate peole to buy the product (as Tribe argued)As such, I believe that they should be subject to the truth in advertising regulations.

  89. I would point out that the SCt has not ruled on the merits of this case yet; it is first going to let the case go to trial and see what happens. There is an argument that it should have acted immediately (i.e., even the prospect of litigation chills speech, so you don’t want to permit activist groups to threaten corporations with an expensive and embarrassing trial). But in any event, the case is not over.

  90. As some Reason editors like to point out, the magazine includes a wide range of things under the rubric of libertarian thought. In the case of Mr. Bailey, it’s libertarianism-as-return-to-feudalism, in which whoever shows title to a chunk of land or has the best-armed thugs can do whatever they want, peasants be damned.

    A straightforward question to Mr. Bailey: setting aside the shaky ground of defining “corporate speech” as somehow different from “speech”, do you think there should be stringent, punishing penalties for false advertising or other patently false speech presented as true?

    While I look for an answer, I’d like to put out there the idea that the special legal distinctions made for “corporate speech” and other corporate activity are with us because of the fairly recent invention of the “fictional person”, in which a corporation’s owners, employees and officers are largely immune to prosecution for things their “corporation” does. If Phil Knight personally owned a factory in Burma staffed by 10-year-old girls doing piecework 14 hours a day, 6 days a week without bathroom privileges and ran ads or sent yearly letters to partners stating he adhered to international labor standards, he might go to jail. If Nike owns or contracts out to the same factory, it’s all but impossible to go after Knight or the employees who wrote or placed the ad. The only recourse is to take it up with the company–and a company can’t go to jail. A civil suit th monetary damages is all there is right now. One good argument for the case that damages should not be artifically capped by law is that the size of a penalty on a fictional person tantamount to sending a real person to prison is going to vary according to, yes, the size of the fictional person’s pockets. Otherwise, crime that a real person would be deterred from becomes simply a smart business expenditure that can be quantified. This is oversimplifying, but I daresay that if we got rid of the shield provided by the concept of a fictional person, we wouldn’t need wobbly constructs like “commercial speech” to compensate for the liability gap it creates.

  91. First of all we shouldn’t have advertising regulations. In a free market, a compnany’s reputation is everything. Because there is no law to “defend” the consumer, skepticism is built into pricing and the decision process. If it is discovered that a company is producing a defective product or is defrauding the customer, it will suffer the consequences (i.e. Arthur Anderson). This will lead to more cautious consumerism, as well as more open producers. These laws only came about because people were tired of having to think about their purchase decisions. Now they are being abused as a means for lawyers to pocket hefty fees.

    I don’t blame the lawyers. I blame the “consumer protection” laws.

  92. T Hop,

    So freedom of speech only applies to those with whom you agree? The best thing I ever heard uttered by Noam Chomsky (“Never trust the state” is second best!) was when he said that freedom of speech is meaningless unless is applies to speech one finds abhorrent.
    I concur that Brian has parsed the significant components of tise issue. In an impossibly ideal world, it would be clear when speech crosses the line from protected general expression to being part of a commercial contract which would make unkept promises fraud. I’d say if you’re not in the visible process of convincing someone to buy your product, you’re protected.

    But before we all get bent out of shape over the SCOTUS’s action, perhaps we should address Gwyn Thomas’s claim that nothing has been decided? Seems I remember the SCOTUS decided not to hear the case based on some sort of judicial proceeding issue, not because they decided against Nike’s logic. Just as Jacob Sullum and others here have criticized SCOTUS’s reasoning to arrive at decisions otherwise favored, perhaps SCOTUS had good reason to do what it did that has nothing to do with accepting the reasoning of those who have sued Nike? I don’t know myself one way or another, but it seems worth considering before simply condemning SCOTUS.

  93. Pundits, going back to at least Thomas Paine, have been railing against those terrible trial lawyers for hundreds of years, and somehow the republic still stands.

  94. ?Where did this anti-capitalist mentality come from?

    Government interference causes a recession that costs jobs and everyone blames the capitalists. Fantastic. Put the blame where it belongs people. The government.?

    Patriot, certain individuals in government, who are reading your post right now, are laughing their ass off.

    “The government” doesn’t do anything. Only specific individuals do. And those individuals are laughing at what you say, because they’re safely ensconced behind that elusive non-entity called the “government.”

    Until we have actual names of SPECIFIC INDIVIDUALS whom we can hold responsible for this rot, there ain’t much you can do about the “government.”

    Those individuals “working” in gubmint offices couldn’t care less what we say here, or on the radio, or on TV, or on the internet, or in any magazine — because until we have actual names of SPECIFIC INDIVIDUALS whom we can hold accountable, there ain’t much you can do with or to “government.”

    They’re as anonymous as I am.

  95. Brian – A company’s publicly proclaimed political opinions about itself are not amenable to judicial decision-making. Not in any context. It is not up to judges to decide whether a labor practice can fairly – as a political opinion — be described as good or beneficient. There is no barometer whereby the courts can or should be assessing such partisan claims.

    The remedy for such “false” commentary is for consumer and other political advocacy groups to counter with their own, opposing speech. Run some ads purporting to show heinous conditions in Nike shops, if you like. But it is a very dangerous step to ask our courts to begin deciding what is politically true, no matter the context, including a PR or advertising one.

    If it were otherwise, many of Oliver Stone’s movies, as well as some of Roger Moore’s fodder — from which they make handsome profits peddling their political “truths” – can be stopped by litigation. The only thing to suffer will be speech rights.

  96. Non-entity

    Would you like me to post the names of every member of congress for you (except Ron Paul or course)?

  97. folks, the sky is not falling. Filling a can with pebbles and writing “Lima Beans” on the label is not protected speech. Me sewing a bag and writing “Prada” on it is not protected speech. And Nike telling its customers that their products are made in a way that they are not is also not protected speech.

  98. CT:

    Those should be (except the Prada one, b/c that’s trademark infringment).

  99. Patriot,

    Interesting point, but I believe the inclusion of fraud as an actionable offense under libertarian philosophy is based on the notion that if you contract with someone under false premises, you have in effect stolen from that someone. And I’d go along with that.

    s.m. koppelman,

    Interesting point too, but on what basis might your Phil Knight go to jail for saying in ads or letters that his labor practices are different from what they are? Unless you’re raising some issue other than what I’m already aware of, the issue still comes down to whether his false claims amount to selling his product under false premises, and the question remains, as Brian pointed out, whether this is what Nike did. Myself, I don’t think so.

  100. Patriot, the above comment should open your eyes. Selling something under claims that it is something other than what it is is fraud. Fraud is stealing money. If you can explain how the above assumption is untrue, I’d be interested in hearing what you have to say.

    It is a rediculous claim to say that the market will just work things out naturally because the consumer would have to research what they are buying. Do you really think people are going to research everything from lima beans on up? It isn’t as straight forward as pebbles vs beans.

    Protecting false advertising is not protecting the kind of speach anyone should be worried about, and just really makes the whole argument silly.

  101. ct et al,

    “Nike telling its customers that their products are made in a way that they are not is also not protected speech. ” –

    If Nike says their product is made in Oregon by robots when in fact it is made in China by hand using child labor, then that clearly is a demonstrably false statement that may be important in deciding a fraud issue (assuming that the buyers in question care how or where their product is made. Since the vast majority of their shoes will be purchased by teenage boys, they could be sewn from live kittens for all their customers would care). However, if Nike says this manufacturing process is ‘fair’ to their workers and someone else says it is not, that is a value statement that is not really truth testable and should be protected speech because it’s someone’s opinion.

  102. Neither of the articles linked in the post say what the actual misleading statements are, or what the supposed facts are that contradict them. Is there a more specific link?

  103. When Nike sells you a shoe, the shoe itself is a physical object that the buyer expects to perform certain functions. It’s reasonable to say that Nike should be penalized if the shoe is defective.

    Someone said earlier: “If Nike says their product is made in Oregon by robots when in fact it is made in China by hand using child labor, then that clearly is a demonstrably false statement that may be important in deciding a fraud issue.” It’s not clear to me at all. What is “child labor”? If a 17-year-old works in a factory, is that “child labor”? If a worker’s other employment option was agricultural labor at lower wages, or no employment at all, is that “child labor”?

    Anyway, Nike is not going to flat out lie that their shoes are made by robots. They are going to say that their labor practices are fair. This is an idea. America has an unregulated market in ideas.

    If Nike can be held to an advertising fraud standard, why not other manufacturers such as book publishers? After all, many books feature demonstrably false statements. If activists can sue Nike, why can’t I sue the publishers of (choose one according to tastes) Ann Coulter or Noam Chomsky or Karl Marx?

  104. Agreed, Joe.

    And the sooner we can shut up corporations, including non-profits like Cato, AEI and Heritage (not to mention the ACLU, EPIC and People For the American Way), the better off the country will be. Only by removing these corporate voices from the body politic can we return to the pure politics that the framers envisioned, uncorrupted by competing interests.

  105. Joe:

    You state that people have inalienable rights. I would suggest the right to property is included in these inalienable rights. Many seem to think that after these corporations go public they are somehow autonomous entities. Little lesson in business – these companies have owners (shareholders, in many cases employees). These owners purchase stock and expect a return for their investment. And since the shareholders OWN the corporation, their property rights extend to the corporation.

    These companies are working for their shareholders. That is their interest group. They must do everything they can to maximize said owners’ wealth. If you want companies to stay out of politics, tell government to stay out of the economy.

    And about that tree stump, if it’s on someone’s property the State of California had better respect its rights.

  106. Stephen,

    I’m not arguing for a crusade against corporations, merely addressing a narrow question: do corporations have an inalienable right to free speech, as humans do, that the courts are bound to respect to the same degree as individuals’ speech.

    Patriot,

    The rights California should respect are those of the property owner, not the stump. And I agree that there are property rights. But property is not speech, and the type and degree of respect owed to them by the state are different.

  107. Fyodor,

    I’m not sure what you are trying to get at. However, in matters of opinion, which is what “fair labor practices” are, how can you have an absolute truth?

    By allowing someone to sue Nike for trying to defend it’s OPINION of their business activities against someone elses OPINION of their business activities leaves Nike at the mercy of their opponents. The law, as it stands, means that individuals can say as many negative things as they want, as often as they want, (as long as they aren’t libelous or slanderous) and Nike cannot refute them without the threat of a lawsuit.

  108. Joe,

    Jesse Walker addressed the issue of limited liability in a Reason article some time back. If I understood him correctly, he defended the practice of limited liability BETWEEN CONTRACTING PARTIES as something that frequently was spelled out in contracts before it was granted automaatically to corporations by law and that therefore extending it to corporations en masse was merely a simplification device.

    OTOH, he also mentioned (parenthetically, unfortunately) that limiting liability from THIRD PARTIES (ie, those affected by corporations’ actions in ways other than in dealing with them directly) was harder to defend.

    If you think about it, this is consistent with libertarian philosophy because you have a CHOICE whether to deal with a corporation directly but not whether you are affected as a third party.

  109. Xmas,

    I wasn’t “getting at” anything per se, just checking to see if I understood you correctly when you seemed to be saying that the rules of such litigation would favor those bringing the litigation visa vi the defendent. Now it seems that your basis for saying that is based on the “threat” of lawsuits. To play the devil’s advocate for a moment, the threat of a lawsuit is perfectly okay as long as the lawsuit that would result is justified. So that’s where the issue must be addressed.

    As I’ve somewhat addressed earlier in this thread, the argument on Nike’s behalf seems to have morphed from their speech being protected because they were not in the process of selling their product to their speech being protected because they were expressing a subjective opinion. I would have to agree that if all they said was that their labor practices were “fair,” then it’s as absurd to allow them to be sued as it is to allow any company to be sued for saying anything at all good about themselves or their product. But I’m skeptical that that’s all there is to it. Are there really no specific facts that they stated that could be disputed on a concrete basis? I haven’t read the case in detail so I don’t know, but I’m skeptical they’re being sued just for saying that they’re “fair.”

    Again, let me make clear that I still think their speech is protected as long as it was not made in the PROCESS of selling. I don’t buy that anything said on behalf of the corporation is commercial speech.

  110. fyodor,

    Commercial speech is not speech made by a corporation, rather than an individual. Things an individual says can qualify as commercial speech, and therefore be less protected than other things that individual may say. The whole corporate rights debate is a sidebar; what matters in making the commercial speech/free speech distinction lies elsewhere.

    I don’t know where I come down on this case, except that is should be decided based on proper principles, properly applied.

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