Snapshot: In 1998, a lawsuit was filed against Nike in California state court alleging unfair and deceptive practices for failing to disclose poor working conditions at Nike's overseas supplier factories. The Court held Nike's statements were commercial speech and subjected to less protection than non-commercial speech. Nike and the plaintiff settled the case and Nike agreed to strengthen workplace monitoring.

Factual Background

Prior to the lawsuit, various news reports alleged poor working conditions at Nike’s overseas supplier factories.  In response, Nike issued press releases and other public statements rebutting the allegations.  Nike's statements claimed that workers who make Nike products are protected from physical and sexual abuse, they are paid in accordance with applicable local laws and regulations governing wages and hours, they are paid on average double the applicable local minimum wage, they receive a “living wage”, they receive free meals and health care, and their working conditions are in accordance with applicable local laws and regulations regarding occupational health and safety.  

Legal Argument

Marc Kasky alleged that Nike had engaged in unfair and deceptive practices under California’s Unfair Competition Law and False Advertising Law. Specifically, Kasky alleged that Nike’s public statements regarding the working conditions in its overseas suppliers’ factories contained false information and material omissions of fact. 

Legal Proceeding

Marc Kasky filed suit against Nike in California state court in 1998. Nike claimed that the lawsuit was barred by the US Constitution’s First Amendment guarantee of free speech.

The trial court agreed with Nike and dismissed the claim.  Kasky appealed, and the California Court of Appeals affirmed the lower court’s ruling.  Kasky appealed further to the California Supreme Court, which reversed the lower courts’ rulings and held that Nike’s statements were commercial speech which is entitled to less constitutional protection than non-commercial speech.  Following the California Supreme Court’s ruling, Nike appealed (petitioned for certiorari) to the US Supreme Court, which agreed to hear the appeal. 

In 2003, the US Supreme Court issued a decision in this case stating that it had granted certiorari improvidently and dismissed the case, which effectively let stand the California Supreme Court’s ruling.

Latest Update

Several months after the US Supreme Court decision, Nike and Kasky agreed to settle the case for $1.5 million.  The settlement involved investments by Nike to strengthen workplace monitoring and factory worker programmes.

- “Nike's Big Ticking-Off”, Duncan Campbell, Guardian [UK], 17 Nov 2003

- “Nike Settles Speech Case”, William McCall, Associated Press, 13 Sep 2003

- “Supreme Court Won't Rule in Case About Nike and Anti-Globalization”, Anne Gearan, Associated Press, 26 Jun 2003

- Nike: NIKE, Inc. and Kasky Announce Settlement of Kasky v. Nike First Amendment Case, 12 Sep 2003

- ReclaimDemocracy.org: Kasky v. Nike [background on case and links to legal documents]

- US Supreme Court: Nike v. Kasky, 26 Jun 2003

- Supreme Court of California: [PDF] Kasky v. Nike , 2 May 2002