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Ted Olson's Failed Defense of Commercial Speech
[April 21, 2003]

By S. M. Oliva

The U.S. Solicitor General is often called the “tenth justice” of the Supreme Court, and for good reason. Under Court rules, the Solicitor General may submit his views (that is, the views of the United States) in any case he chooses without permission from the Court or the parties. In some cases, the Court explicitly requests the Solicitor General offer his views. Beyond that, the Solicitor General often participates directly in oral argument, sharing time with the party whose side the government takes. Such will be the case on Wednesday, when Solicitor General Ted Olson will share the podium with Nike counsel Laurence Tribe in Nike v. Kasky.

But despite the fact Olson filed a brief supporting Nike’s desired outcome—reversal of a California Supreme Court decision denying First Amendment protection to Nike’s policy statements—the Solicitor General is actually working against Nike and the numerous parties that filed briefs in support of the company, including this organization. Nike seeks a broad declaration that statements it makes to newspapers, media, and the public are protected under the First Amendment from unrestricted lawsuits. The Solicitor General, however, wants the Supreme Court to dismiss this particular case against Nike on technical grounds, while remaining silent on the underlying free speech question. By maintaining a muddled picture of what rights companies enjoy under the First Amendment, the Solicitor General seeks to protect its real client—not the American people, but other agencies of the American government.

This case originated when Marc Kasky, a private California citizen, sued Nike for making misleading statements about its labor practices. Kasky would not normally have common law standing to sue Nike, because he alleged no injury to himself nor any personal knowledge that Nike’s statements were, in fact, misleading. But under a special state law, Kasky and every other California resident is deemed a “private attorney general” for purposes of initiating consumer fraud actions. The law, in effect, allowed Kasky to take his personal animus towards Nike and convert it into a state action. This novel view of standing was not addressed in the California courts, and the California Supreme Court’s decision allowing the case to proceed made no mention of the “private attorney general” nature of this action. Instead, the lower courts addressed only whether Nike’s statements were immune from suit under the First Amendment. Thus, the state courts proceeded under the theory that the state of California—in the corporeal form of Marc Kasky—was attempting to enforce its consumer fraud statutes against Nike.

The Solicitor General, as well as CAC, argues this “private attorney general” standing violates the federal Constitution. Admittedly, we brought this argument on different grounds. In CAC’s opening brief to the Supreme Court, we held that the Constitution’s requirement that all states maintain a “Republican form of government” preempt the type of anarchistic scheme created by California law. If the state is to be a lawful monopoly on the use of force, after all, it follows that the state cannot validly grant that monopoly power to every citizen without negating the grant itself. In other words, every individual cannot decide for himself whom to prosecute under the color of state authority; that duty must be left to representatives chosen through certain collective processes, such as elections or legislative oversight.

The Solicitor General takes a more common law approach, arguing that Kasky’s novel standing is inconsistent with traditional fraud actions, and that permitting him to pursue his claim against Nike would put the First Amendment at too great a risk. This is all well and good, but Olson’s reasoning then departs from CAC’s when he goes on to explain that the government itself should still maintain the power to regulate commercial speech in the basic manner Kasky seeks. Nike’s statements made in its self-defense should still be subject to a lesser constitutional protection than other forms of speech, the Solicitor General believes, but it is the government itself that should decide when Nike no longer enjoys First Amendment rights.

Much of the Solicitor General’s brief extols the virtues of the Federal Trade Commission, the agency charged with regulating interstate commerce. The FTC maintains extensive regulations dealing with commercial advertising, and often brings actions against firms which make allegedly “misleading” statements to induce consumers to purchase products. The Solicitor General argues the FTC, unlike Kasky, can successfully protect consumers while not offending the First Amendment:

The United States and the individual States have long recognized the need for direct government regulation of advertising to protect the public from false or misleading commercial statements. Sensible regulation promotes market efficiencies, because it frees consumers from the need to conduct individual investigations into the truthfulness of advertising and enables them to make commerical (sic) decisions with greater confidence than in a market where the mandate of caveat emptor alone controls. Congress and the States have accordingly enacted legislation to prevent deceptive or misleading advertising and to remedy, through government enforcement actions, injuries that cannot be effectively cured through private suits. As in the case of traditional common law actions, the traditional mechanisms of direct government regulation have inherent safeguards that avoid chilling protected speech.

The argument is that since the FTC has only limited resources, it will focus its enforcement efforts on only the most egregious violators, whereas private actions like Kasky’s could theoretically clog the courts with trivial arguments. This is fine in theory, but in practice the FTC is an agency far more prone to conduct witch-hunts than malcontents like Kasky. The FTC, in fact, has perfected the art of elevating minor issues into federal cases. The FTC routinely censors speech—in the form of coerced “consent orders”—which it personally dislikes. Just last week, the FTC censored an organization whose ethics code did not meet the approval of FTC staff lawyers, despite the fact no consumer was ever injured by the code’s allegedly illegal provisions. Marc Kasky could only dream of such unfettered, unchecked power.

Here’s just one example of the FTC’s approach to advertising regulation. The FTC currently has a case pending against Steve Garvey, a former Major League Baseball pitcher who once hosted an infomercial touting a weight loss product. In the commercial, Garvey testified to his personal successful experience in using the product. The FTC decided that the product’s manufacturer couldn’t prove its claims to their—meaning the FTC’s—certainty. The issue was not whether the manufacturer lied, but whether it could disprove the FTC’s arbitrary decision that they were lying. The FTC brought suit not just against the manufacturer, but against Garvey as well, arguing that his personal experience was insufficient basis for him to make any public assertions about the product. Garvey was effectively penalized because he personally could not prove the manufacturer’s claims to an absolute metaphysical certainty. To the average consumer, such a standard is unreasonable; people understand Garvey’s role is that of a celebrity endorser. But since the FTC presumes consumers lack the basic intelligence to think for themselves, this common sense viewpoint did not prevail. This philosophy—state paternalism—infects the Solicitor General’s view of the Nike case. Olson argues consumers can make no informed decisions for themselves, and that only government regulation can ensure a properly functioning market.

The Solicitor General’s real client in this case is not the American people, but the FTC. If the Court grants the broad relief sought by Nike and CAC, the FTC could find its own ability to skirt the First Amendment compromised. For this reason, the Solicitor General improperly asks the Court to ignore the underlying First Amendment question, and rule only on the standing issue. CAC’s position is more logically consistent: the Court has an obligation to answer both questions in Nike’s favor.

This is not to say courts should never refrain from discussing substantive claims when standing cannot be established. There are times when such judicial restraint is appropriate. But this case calls for a more activist approach. For one thing, the California Supreme Court ruled on the First Amendment issue without ever addressing the standing problem. Thus, should the Supreme Court reverse only on standing, the lower court’s erroneous First Amendment doctrine would essentially remain good law, at least within California. This would send a dangerous signal to other courts that an overly restrictive view of corporate free speech rights is constitutionally justified. It would also be a signal to activist state attorneys general—a group even more prone to attack free speech than the FTC—that they could turn any minor corporate statement into a massive fraud case. In effect, a ruling on the terms proposed by the Solicitor General could actually make things worse for Nike in the long run.

But because the Solicitor General’s views tend to carry great weight with the Court, Olson’s disjointed and duplicitous argument may carry the day, at least with some justices. Justices O’Connor and Kennedy, in particular, are prone to favor concrete-bound arguments that avoid any semblance of abstract legal principle. These justices would much rather give Nike a narrow victory while avoiding any effort to alter the Court’s already incoherent commercial speech doctrine. Originialists will hail this as “judicial restraint,” but in fact it’s nothing more than judicial abdication. While judges should always rule to decide the case before them, they must not avoid articulating basic legal principles to clarify the common law. Had John Marshall and his colleagues taken that approach 200 years ago, the principle of judicial review itself would never have been fully integrated into our constitutional system, thus robbing the American people of their last line of defense against government infringement of individual rights.

Ted Olson has been a fine solicitor general, and on many cases he’s represented the rational and constitutional viewpoint. But in this case, he’s put the interests of federal regulators ahead of the people—that includes corporations like Nike—and in doing so attached the prestige of his office to a dishonorable and irrational view of government power and individual rights. The Court would be wise to respectfully hear the solicitor general at oral argument this Wednesday, and then to respectfully adopt the reasoning proposed by Nike and CAC in rendering judgment.

 

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