BEAVERTON, Ore. — Nike Inc. announced today that it has settled a commercial-speech case it took to the U.S. Supreme Court, agreeing to pay $1.5 million to a worker rights group in Washington, D.C.
Marc Kasky, a San Francisco labor activist, had sued the Beaverton-based athletic shoe and clothing giant, accusing it of false advertising for claiming the company was protecting labor rights at overseas contract factories that make footwear for Nike.
The California Supreme Court had ruled that Kasky could sue Nike on the false-advertising claim, prompting the company to ask for a review by the U.S. Supreme Court. But after hearing oral arguments, the high court refused to tackle the issues in Nike v. Kasky and sent the case back to the California courts.
At that time, Kasky and his attorneys hailed the Court's action as a victory for labor rights despite strong support for Nike by 40 large media companies, who argued the First Amendment right to free speech could be diminished by letting the lawsuit proceed.
As part of the settlement, Nike has agreed to pay the Fair Labor Association $1.5 million to boost efforts to improve factory conditions and monitoring. The association, formed in 1999, promotes a code of conduct based on international labor standards, monitors labor practices and coordinates public reports on factory conditions.
"Mr. Kasky is satisfied that this settlement reflects Nike's commitment to positive change where factory workers are concerned," said his attorney, Patrick Coughlin.
Kasky and Nike agreed it was better to improve factory monitoring and conditions than continue with their legal battle, Coughlin said.
Nike spokeswoman Maria Eitel said the settlement reflects the company's commitment to workers at factories around the world.
"We have learned a great deal in the five years since this case was first filed about the challenges we and others face in addressing issues in manufacturing environments," Eitel said.
Despite the long court fight, the issue of whether the advertising in question was false has never been addressed in court, said Jim Carter, Nike's chief attorney.
Nike did not say whether the statements were true or false in the settlement, and admitted no liability.
The case was filed in April 1998 and was dismissed by a trial judge and the California Court of Appeal before the California Supreme Court ruled in favor of Kasky. The U.S. Supreme Court, after accepting Nike's appeal and then turning it away, returned the case to a California trial judge.
The Fair Labor Association includes 179 universities, human rights organizations, consumer groups and various companies.