Kasky v. Nike, Inc., 27 Cal. 4th 939 (2002)

In a 4-3 decision, the California Supreme Court upheld claims filed against Nike pursuant to California Business & Professions Code Sections 17204 (unfair competition) and 17535 (false advertising). Acting on behalf of the California consuming public, plaintiff alleged that Nike had made false and misleading statements concerning the working conditions in Asian factories where Nike products are manufactured. Nike filed a demurrer in response to the first amended complaint based on its right to free speech under the United States and California Constitutions. The trial and appellate courts held that since Nike’s statements were noncommercial speech, they were entitled to the greatest measure of protection under the constitutional free speech provisions and dismissed the action. The majority of the California Supreme Court disagreed, holding that since Nike had engaged in commercial speech concerning its labor practices when it made the allegedly false statements, the lower courts had erroneously dismissed the claims based on the constitutional defense.