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Court Says Nike Can Be Sued Over Ads

May 2, 2002

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SAN FRANCISCO (AP) _ The California Supreme Court ruled that Nike Inc. can be sued by a man who claims the company broke advertising laws with an ad campaign that defended the wages, treatment and safety conditions of workers at overseas factories.

In a split decision Thursday, the court overturned a lower court ruling that said Nike’s efforts to quell accusations of worker mistreatment did not constitute commercial speech.

``Our holding, based on decisions of the United States Supreme Court, in no way prohibits any business enterprise from speaking out on issues of public importance or from vigorously defending its own labor practices,″ the court wrote. ``It means only that when a business enterprise, to promote and defend its sales and profits, makes factual representations about its own products or its own operations, it must speak truthfully.″

Nike attorney David Brown said he may ask the U.S. Supreme Court to review the case. ``We’re greatly disappointed with it because we feel that Nike’s position is legally the correct one,″ Brown said.

The highly publicized lawsuit claims Nike’s 1996-1997 campaign in defense of its wages, treatment of workers and health and safety conditions at Asian plants run by contractors was misleading.

The lawsuit says Nike falsely stated that it guarantees a ``living wage″ to all workers, that its workers in Southeast Asia make twice the local minimum wage and are protected from corporal punishment, and that it complies with government rules on wages, hours and health and safety conditions.

Those claims are refuted by studies by labor and human rights groups and a January 1997 audit by the firm of Ernst & Young, commissioned by Nike, according to the lawsuit filed by Marc Kasky on behalf of Californians. Among other things, the audit found employees in a Vietnam shoe factory were exposed to a cancer-causing substance and suffered a high incidence of respiratory problems, according to the lawsuit.

Kasky helps manage a foundation that preserves Fort Mason, a former San Francisco military base-turned-recreation area. His attorney, Alan M. Caplan, said the ruling will hold companies ``to the standard of telling the truth.″


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