The timing was a bit curious. A little more than a week after the U.S. Supreme Court refused to rule on whether the First Amendment protected a Nike publicity campaign to
counter charges that Asian sweatshops made its footwear, People for the Ethical Treatment of Animals (PETA) filed a lawsuit in California Superior Court in Los Angeles against
fast-food chain KFC and KFC's parent, Yum Brands Inc., seeking an injunction to stop what it says are deceptive statements on the KFC Web site about how the chickens it sells are
treated.
The timing isn't lost on Jon Austin, a senior vice president in the Minneapolis office PR firm Fleishman-Hillard, who works on reputation management issues, internal
communications, crisis communications and labor relations. "The basic thrust of the argument is identical," says Austin, who before joining Fleishman-Hillard was the chief
spokesman for Northwest Airlines for 10 years. "Heretofore, language that would have clearly been considered protected free speech can now be attacked as commercial speech."
Rex Heinke, a First Amendment scholar and a partner in the Los Angeles office of law firm Akin, Gump, Strauss, Hauer & Feld, amplified Austin's comments, saying, "you'll
see substantial amounts of litigation" in light of both the California Supreme Court and the U.S. Supreme Court decisions on Nike v. Kaske.
After wending its way through the California courts for the last several years the Supreme Court on June 26 dismissed by a 6-3 vote Nike's appeal of a California Supreme Court
ruling requiring the company to stand trial on a citizen's complaint of consumer fraud and unfair labor practices. The ruling now means that the lawsuit filed against Nike by
activist Marc Kaske can go forward in California. For communications executives, it's important to pay attention to the heart of the California ruling that Nike's publicity
campaign could now be considered commercial speech, for which there can be a liability for statements deemed false or misleading. If Nike loses at the state level it will probably
seek review in the U.S. Supreme Court, and again raise the First Amendment issue. The process will take years to shake out.
But communications/PR executives can't sit back and wait for the legal process to unfold. They have to brace for the very real potential that -- if the California Supreme Court
decision is upheld -- any communications in California will not be entitled to broad constitutional protections.
Opinion is divided among PR pros on where communications executives go from here.
"By definition, the Supreme Court has put off any sea change" in how companies communicate in California, says Neal Flieger, GM and manager of litigation strategies in the
Washington, D.C. office of PR giant Edelman. "But it is incumbent for us on the agency side to make sure we're communicating to our clients that we understand the issues
[surrounding Nike v. Kaske] and hold ourselves to the highest standards in what we communicate."
Until the case is ultimately resolved "the fear is that a bunch of frivolous lawsuits could be filed and companies would have to expend money and time in court defending
themselves against statements that are clearly protected by the First Amendment," Flieger adds.
One remedy: corporate communicators and attorneys will have to come together and bury what has traditionally been an uneasy relationship. Austin, from Fleishman-Hillard, says
there has to be mechanisms to bring the two sides together. "Whether it's a blessing from the C-suite or the board it has to happen," he says. "You can't let legal people say, 'We
won't do any communications' and PR people can't pooh-pooh attorneys' concerns about what's being communicated. Companies are well served by both forces."
Still, because companies may now face a new legal threat because of the Nike v. Kaske situation they may simply decide to hunker down and -- when it comes to providing
sensitive communications or chiming in on corporate social responsibility issues -- say nothing rather than risk getting slapped with a lawsuit. Indeed, although the case has yet
to be resolved one consequence in the short-term may be that companies toss so-called "transparency" to the wind and resort to self-censorship.
"Some companies will view the decision as like putting on a muzzle," says Reed Byrum, president-CEO of the PRSA, which expressed severe disappointment with the ruling.
"Companies will now have to be much more strategic in their communications and use a deeper ascertainment in determining who their audience is and what is their sensitivity."
Harris Diamond, CEO of PR firm Weber Shandwick, the PR unit of the Interpublic Group of Cos., says "the danger is that companies will now use this an excuse not to say
anything, which is a bad thing. It's better to communicate than to not."
In a teleconference call last week sponsored by the Council of Public Relations Firms, Nike VP/corporate communications Kirk Stewart stressed that the case has already had a
"chilling effect" on Nike's ability to communicate in California -- the world's fifth largest economy -- mostly regarding CSR issues.
"We have got to balance the risk of further lawsuits with our ability to talk and our ability to do business in California," Stewart says. "Any company doing business in
California, and using any [media] vehicle or forum that's likely to reach California, I would suspect that general counsel would be wise to be a bit more involved in the language
that's used and how companies choose to communicate."
The High Court's decision was decidedly anticlimactic, considering that many PR pros thought the Court would dismiss the case outright on First Amendment grounds. Still, the
case will probably end up back in the Supreme Court, which gave no reason for its indecision. The Court punted the ball on procedural issues rather than on the merits of the case,
essentially telling the California courts that the case needs more clarity.
Contacts: Jon Austin, 612.573.3157, [email protected]; Reed Byrum, 512.619.0472, [email protected]; Harris Diamond, 212.445.8202, [email protected]; Neal
Flieger, 202.371.0200, x-758, [email protected]; Rex Heinke, 310.229.1030, [email protected]; Kirk Stewart, 503.671.3569, [email protected].
What Nike v. Kaske Means To You
Following the Supreme Court's dismissal of Nike v. Kasky, here are four real world recommendations for PR counselors working in the new environment:
1. Love your lawyer: Like it or not, the Court's action means lawyers are going to have more influence than ever over communications programs. This is a reasonable reaction so
don't fight it. Instead, work with the lawyers -- seek them out, explain the reasons for a communications program, its benefits and the risks of not proceeding. Challenge them to
find ways to balance the legitimate need for a communications program with the equally legitimate need for proper legal caution.
2. Prepare: Now more than ever, companies need to develop plans to respond to crises and issues. At a minimum, every company should conduct a risk-based assessment of likely
issues as a prelude to developing a viable crisis communications plan. Planning and preparation can minimize the costly mistakes that occur when people act in haste and under
pressure.
3. Know the facts: As careful as you and your clients are today about getting the facts right and documenting claims and statements, you should redouble those efforts; every
letter, every release, every press conference could be grounds for a deceptive advertising lawsuit. Verify, cross-reference, fact-check, ask the hard questions twice.
4. Check your own reality: Just because you can do something doesn't always mean you should do something. Use your colleagues - senior counselors not intimately involved in the
client team - as sounding boards for your plans and recommendations to clients.
Source: Jon Austin, Fleishman-Hillard