The U.S. Supreme Court soon will judge whether the First Amendment protects CEOs as vigilantly as it does neo-Nazis on the march. A clear ruling in a case currently before the justices should replace the confusion that now surrounds commercial speech.
Companies today find themselves embroiled in worldwide controversies. Rather than simply sell their wares, businesses now must prove they are Earth-friendly, low-cal, and sweatshop free.
American enterprises usually struggle to fight these battles. Corporate expression is an oft-neglected stepchild compared to its beloved siblings, political and artistic statements.
As Eric Schippers of the Center for Individual Freedom in Alexandria, Virginia recalls, in 1942, the Supreme Court held in Valentine v. Chrestensen that “while corporations could freely engage in political and other protected forms of speech, the Constitution afforded no special protection to what it called ‘purely commercial’ speech.”
In this case, a businessman offered public tours of a submarine moored in New York’s East River. He skirted a state ban on commercial handbills by printing a one-page manifesto concerning local docking laws. On the other side, he ran an ad inviting customers to his submersible. The Court held that the Constitution prohibited a ban on all handbills, but presented “no such restraint on government as respects purely commercial advertising.”
From there, the Court set sail. It has tacked back and forth, allowing commercial speech here while trimming it there. It occasionally has imposed an elaborate, four-part “intermediate scrutiny test” to determine whether commercial-speech regulations are substantial, necessary, and extensive — all subjective factors.
While the Court in 1976 overturned Virginia’s ban on advertising prescription-drug prices, ten years later, it upheld Puerto Rican strictures against promotion of gaming. As it ruled, “the greater power to completely ban casino gambling necessarily includes the lesser power to ban advertising of casino gambling.”
Major companies, including ABC Inc., Hearst, and Newsweek, have asked the Supreme Court to pierce the fog that surrounds commercial speech.
These firms oppose a California Supreme Court decision that empowered San Francisco activist Marc Kasky to sue Nike over what he calls falsehoods in its press releases, newspaper pieces, and other communications that defend Nike’s allegedly harsh foreign labor practices. Kasky never claimed he was injured by Nike’s words. Nonetheless, California’s court would require Nike to surrender profits tied to declarations found to be false.
In an amicus brief, Bank of America, ExxonMobil, Microsoft, Monsanto, and Pfizer warn that “the effect of these California statutes on First Amendment freedoms is both immediate and grave, threatening all corporate speakers with civil and criminal liabilities for engaging in protected speech.”
This case has distracted Nike since 1998. CEO Phil Knight has stated his hope that “the company can redirect those critical resources that were diverted by the lawsuit towards its initiatives for continuously improving factory working conditions around the world.”
So, should companies be free to say what they wish about their products? Why not? Imagine that Anheuser-Busch claimed that a daily six-pack of Bud Lite reversed baldness. Hair-loss experts, consumer groups, and other brewers would laugh Bud off the stage. Furthermore, fraud laws already let parties deceived and injured by corporate lies receive compensation for their losses. Attorneys would bruise each other trying to represent anyone who developed a beer belly attempting to restore his hairline.
“Why should commercial speech be any different than political speech?” Cato Institute legal scholar Bob Levy wonders. “This legal dichotomy is without any foundation whatsoever.” He adds that “with political speech we don’t have the fraud remedy. Politicians lie all the time.”
Voters who sent Republicans to Capitol Hill expecting fiscal responsibility cannot sue for fraud when GOP congressmen spend like Democrats on speed.
Levy also notes that the First Amendment shields volatile speech such as flag burning, KKK oratory, and Eminem’s often-hateful rap lyrics. Yet the FDA prevents drug companies from discussing the secondary benefits of pharmaceuticals that doctors have popularized but federal bureaucrats have not approved.
Through the Nike case, the Supreme Court should padlock this hall of mirrors. It should find that corporations, consumers, and officials enjoy the First Amendment’s equal protection, subject only to fraud laws for companies that can’t handle the truth.
— Mr. Murdock is a columnist with the Scripps Howard News Service.