This is a case whereby Nike as company was sued by Kasky a civil rights activists for its public relations campaigns. This is a case whereby in 1998, Mark Kasky filed a lawsuit against Nike company in California state court. Nike is the biggest producer of sportswear world wide. It is therefore a company that is known everywhere in the world. It has grown into a full multinational company thanks to its marketing strategy which has achieved tremendous results. To maintain its good image and reputation, the company had invested so much in advertising and promotion of its brand. This was so because he felt that the company had been involved in unfair and illusory practices.Kasky had gone to court under the California Law for unfair competition and advertising practices. This was as a result of Nike going out tot the public and carrying out campaigns in countering allegations that the rights of workers in the factories of Nike had been compromised. Before this particular lawsuit it was emerging from various news sources that there were poor working conditions at the factory of Nike and this was in the overseas factories. The company had responded to the reports by issuance of press statement s denying the allegations. Nike also reacted to the reports by writing letters to the University presidents and the directors of athletics while at the same time carrying out campus visits trying to deny the allegations. The officers of the company also spoke out in public in defense of the name of the company. Just like any other marketer, Nike utilized low cost labor from other countries so as to minimize the costs of production. The actual production equipments of Nike are found in South Korea and Taiwan. Majority of its products are manufactured in China, Thailand and Indonesia. The company had to cultivate the spirit of good working conditions and adherences to the already established labor laws that concern the minimum wages. This was to be achieved in all the Asian countries that were involved in the manufacturing of its products. Compliance to the local labor laws that concern, proper working relations, minimum wage, number of working hours and others was supposed to be signified by the contractors in charge signing a memorandum of association to ensure that this is achieved in the countries producing Nike products. In the press statements that responded to the allegations of violation of labor laws , Nike addressed itself to a number of concerns. First of all it underscored that workers in Asian countries received protection from physical and sexual abuse.this pertained especially for the female workers. That all the workers in the local factories were being paid in accordance eighth the local labor laws that govern the wages and the number of working hours.
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Those workers were receiving a pay which was equivalent to double the applicable local minimum wages. The statements also mentioned that the workers were getting free meals and basic healthcare and that their working conditions complied to the existing local labor laws and regulations that governed their occupational health and safety.
Mark Kasky who was a resident of Indonesia went to court and sued Nike pointing out that the statements amounted to marketing travesty In his accusation Kasky claimed that all the efforts that were put forth by Nike in an attempt to clean up its image were all aimed at increasing the number of sales for their products through the use of this marketing strategy. That in the overseas factories the operations had not improved to the minimum standards required.
The plaintiff in this case alleged that Nike with its public relations campaigns had made a number of misinterpretations with its labor practices. That the workers who are involved in the production of Nike products are not put to corporal punishment and other issues like sexual abuse. Saying that the products made by Nike are done so while observing governmental laws that concern the number of working hours and the wages the workers are supposed to be paid.
That all Nike products are produced in accordance with the existing laws and regulations that protect the safety conditions and health of all the people involved in the manufacturing process.
Another misinterpretation of the law regards the statement that Nike guarantees a living wage for all those people who are involved in the making of its products. Nike had been accused of making a false claim that the company was involved in good business while observing the moral standards. The Plaintiff alleged that Nike was involved in unlawful business practice while violating the Business and professions code section 172000 by misinterpretations just mentioned above. Nike was also under accusations of participating in unfair business practices while in the meaning of section 17200. There was still another accusation concerning false advertising while in violation of the Business and professions Code section 17500. The Plaintiff therefore sought a court injunction asking Nike to pour out all the money which was acquired as a result of the unfair business practices which occurred in violation of section 17200 of the law.
The plaintiff therefore brings out the legal issues in this case when he claims that the defendant violated sections of the law while in the course of carrying out the business operations such as advertising and other promotions. The mentioning of sections such as 17200 and 17500 which are found in the constitution of the country brings out the point that law should have been followed all through The issue of unfair business practices which were undertaken by Nike company while in disregard of the law all make up the legal part of the case.
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The mentioning of the Plaintiff that when Nike tried to clean up its image by utilizing the methods they used this to some extent lead to increase in thee sale of the companies products.
In this case the rights of an individual are protected towards expression and use of language.However as for companies; there is limited protection as regards to commercial speech. This refers to the use of speech that is likely to exaggerate the outlook or appearance of the product all aiming at increasing the number of sales. There is no protection by the law as concerns such kind of practice.This in itself is a legal issue that was instigated by the plaintiff as he accused the defendant.
In order to defend itself Nike and the individual defendant went to court and filed complaint challenging why the Business and Professions Code 17200 and 17500 was not applicable in this particular case and why the complainant was blocked by the First Amendment of the United States and the article I, section 2(a) that is found in the California Constitution.
The defendant came up with the argument that the speech used in the course of defending the companies image from damage duet to the allegations that were made concerning labor practices were nothing but commercial speech and thus subject to the states trade practices law.
The moral argument presented by the defendant here is that there is no way the company could protect its name which was threatened by the allegation s , without using the good commercial speeches which sparked sympathy from the customers all over the world.
Morally the company was under an obligation to fulfill its social responsibility. This follows then that all that was undertaken including the commercial speeches were aiming at fulfilling social responsibility for the benefit of the public. Therefore the company was justified to carry out advertisements and promotions using the appropriate speeches as long as they did it in accordance with the business ethics laws. The defendant in this case was out on a public concern mission. This should be taken to mean that most of the commercial speeches the company engaged in all aimed at educating the public to ensure that they get the correct information concerning the company’s labor [policies and practices. Even though this endeavor might have attracted some profits to the organization this should not be taken as to have disregarded the law.
Therefore when we look at the defendant’s argument, one can mention that all the company was trying to do was for the goodwill of the public and at the same time help to save the good name and reputation of the company.The company had put in place all the necessary requirements to ensure that labor laws and other related legislations are not violated. For instance something like the contractors in the country that produces Nike products were made to sign memorandums of association to ensure that the company complies with the labor laws locally.
Other important things like spot check audits in the factories ensured that Nike was in compliance with the local labor laws. With this in place, the defendant argued that the company was not in a position to be in the state which was being portrayed by the younger reports.
The defendant in his argument also pointed out the importance of Nike as a global organization and its importance to the host countries. That the company has contributes in a significant way to economic growth in these host countries and it was not correct to associate the company with improper working relations that could affect its reputation and good name.
The defendant argued that the speech that was used to clean up the name of the company was non commercial and therefore called for the dismissal based on this because it was not a violation of the law. Based on matters of public concern, the speech by Nike could be viewed to be a fully protected speech based on the broader definition of commercial speech by the Supreme Court in California. The Supreme Court in California defined commercial speech in a broader sense encompassing material which does not directly have an influence on the government’s regulation of trade.The statements made by Nike to a lesser extent touched on some sort of relations with public transactions.
On the other hand the plaintiff was of the view that Nikes speech qualified as commercial because of a number of reasons. One of the reasons he mentions is that the speech by Nike gave the public/consumers some information that was likely to influence their purchasing behavior.
In this context therefore he alleges that the court finds the defendant guilty for the misinterpretations made in reaction to the reports that were coming from the media concerning the state of affairs within the factories involved in the manufacturing of Nikes products. That the public relied so much on factual information fed to them by various organizations and were protected by the law against people who can be viewed to be misleaders who use language to make false statements with their own selfish interests. Nike in the speech presented to the public was not in the interest of the public because it all focused not on public matters but on how the manufacturing of its products and therefore tended to influence the consumers into purchasing of Nikes products leading to more profits for the company.
This follows then that because the speech made was commercial then some sections of the law governing the behavior of businesses were violated by Nike in the course of trying to protect its name from damages.
In conclusion it is vital to mention the point that the plaintiff in this case who is the civil rights activist Mark Kasky throughout his argument he brings out the legal issues on how sections of the law were violated by the speeches delivered by the defendant in public while in the course of trying to protect the image of the company. He capitalizes on the fact that the speech were not meant to benefit the public but rather targeted on increasing the sales volume for the Nike company products. Therefore it is expected that the jury in this case should have based on the legal issue to determine this case. The major problem in the case was determining whether the speech by Nike can qualify to be put under commercial or non –commercial.
The defendant argues from an ethical point of view asserting that the company protected the interests of the workers in the said countries and that the speech delivered to the public could not be considered to be for the sake of the company alone but also to the interest of the public by gaining in terms of knowing what is right about the state of affairs in the factories that produced Nike products. From the Supreme court it emerges clearly that the distinction between commercial and non-commercial speech is not very clear and thus more light needed to be shed on the matter before arriving at a conclusion as to whether the defendants speech was commercial or not. Both the legal and the ethical issues have been adequately addressed by this particular case. This case formed the foundation for finding the clarity between commercial and non-commercial speech in this respect. It also set out the pace on whether organization in their public relations campaigns can be held accountable if instances of inaccuracies in their speech crop up.
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2007 Annual Report, p. 2 (PDF), Nike, Inc., Web.