NIKE NOT NICE

Corporate lying is bad. But allowing it is good (Jonathan Rauch, 6/10/03, Jewish World Review)

I could pack this article with lies and, legally speaking, you couldn't touch me. I could make up statistics, distort my research, trumpet misleading claims, or tell you that I drive a 2002 Lexus sedan with 18,000 miles on it, when in fact I drive a 1990 Chevrolet Cavalier wagon with 118,000 miles. Now, I have not in fact filled this article with lies, because I am a stand-up guy. Take my word for it. But the point is that, unless I commit libel or fraud, lying is legal.

Why? Because empowering the courts to act as roving truth commissions would overburden the legal system and chill public discourse. Centuries of hard experience with inquisitions and censorship boards and speech codes have proved that vigorous, uninhibited public debate is the only reliable way to sort truth from falsehood. The cure for bad speech is more speech. This is the great paradox at the heart of the First Amendment: To learn truth, allow lies.

All well and good. But there is that fraud exception. If I claim that my 1990 Cavalier wagon is a 2002 Lexus sedan during a conversation in which I happen to be selling you my car, I have left the First Amendment behind. I have committed an illegal act, and no one would assert otherwise. That is because my claim, in this particular context, would be "commercial speech": speech that, as David C. Vladeck, a law professor at Georgetown University, put it recently in an interview, is "directed at consumers describing the price or type of goods or services for the purposes of inducing a sale."

Also well and good. But what if, instead of misrepresenting my car, I try to raise its price with ads or articles claiming -- falsely or tendentiously -- that old cars are safer and more reliable than new cars? Am I committing fraud? Or am I stirring controversial ideas into the public debate? Or both?

If you think the answer is obvious, there is a seat waiting for you on the Supreme Court. This month, in the case of Nike v. Kasky, the Court will rule on a corporate-speech case that is as difficult as it is important.

It seems like markets will sort out the liars better than courts will, but, beyond that, what is the basis for damages in the Nike case? I bought stuff from a company that's not as nice as they said they were? So what? Posted by Orrin Judd at June 10, 2003 8:34 AM