Friday, September 12, 2003

Capitalism and the Law: 'Nike' means ‘victory’ no more

Skip Oliva examines the Nike free speech case settlement at Initium.

In settling with Kasky, Nike has ratified the constitutional segregation of commercial speech, even if the settlement technically admits no legal fault and establishes no formal legal precedent. We have seen time and again how a single settlement empowers the parasites of the American trial bar to file greater and bolder complaints. It is only a matter of time, perhaps just days or weeks, before other major companies (including those that filed briefs in support of Nike) find themselves at the mercy of California’s citizens, each of whom possess the power under state law to sue any company they dislike for whatever reason.

Defenders of Nike’s decision will offer pragmatic arguments. They’ll claim the cost of refuting Kasky’s claim through discovery, trial, and another round of appeals is too much for Nike to bear, and that it’s in the best interest of Nike and its shareholders to pay Kasky off now and live to fight another day. This form of pragmatism is known as appeasement: If we give our enemy what he wants now, maybe he’ll leave us alone.

Yet reason dictates that appeasement almost always leads to more appeasement, and ultimately to wholesale capitulation. Whatever short-term benefit Nike gained from this settlement will be lost under the weight of the numerous lawsuits that are sure to come from other opponents of the company. Nike’s own press release justifying its settlement with Kasky underscores this point: Nike says that due to the difficulties posed by the California law, it has decided not to issue its corporate responsibility report externally for 2002 and will continue to limit its participation in public events and media engagement in California. What could possibly be more important to Nike than its freedom to participate in public events and media engagement in California, or any other state in the union?
If I owned Nike stock, I'd sell it, on the grounds that a company of Nike's resources that does not defend its right to communicate in a free nation does not take itself or its responsibility to its shareholders seriously. Nike's freedom ought to be a paramount concern. Nike's failure to see the case brought against it to its proper end is a serious moral breach that will wreak economic havoc against both it and anyone else who speaks from an economic motive.

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