Regulatory and global standards: Kasky vs. Nike affair

The court case of Kasky vs. Nike is one that had an enormous impact on the normative system and the role of non-state actors in corporate regulation. The case demonstrated the powerful application of consumer rights laws to monitor corporations, as well as the increased normative regulation of corporations through both legal and non-legal instruments to ensure their commitment to human rights. The case demonstrates the changing role of the state, as well as the broader issues it raises regarding globalization and the rise of multinational corporations. Taking these factors into account the following paper attempts to address the following question: how is the court case of Kasky vs. Nike an example of changing international norms, as well as the increased regulation of multinational corporations in relation to human rights?

Kasky vs. Nike is a legal case that reached the California Supreme Court involving Marc Kasky, plaintiff, and Nike Corporation, defendant. The case arose out of a context in the 1990s when many multinational corporations were coming under scrutiny for their human rights record by activist groups. Kasky, a consumer rights activist, attacked Nike's claims that it upheld human rights in its labor operations abroad (specifically in factories in South East Asia), arguing that these claims were false and violated consumer's right to truthful information under California law. Nike countered by arguing that its discourse did not constitute commercial speech and therefore was not subject to scrutiny as to its validity.

[...] Secondly, that regulation of corporations and businesses should be undertaken through private and public mechanisms.[vii] The appearance of extraterritorial regulatory mechanisms, such as the UN Global Compact, demonstrates a shift in the role of the state. Given the dramatic increase in transnational transactions and business dealings, unilateral enforcement is simply no longer sufficient for enforcing human rights legislation. States are obliged to evolve within this new framework as they are incorporated into a globalized economy that places an emphasis on international business activity. The regulatory power of the state is thus becoming more diffused as new multilateral actors proposing tools for human rights monitoring and regulation of labor practices become increasingly prominent.[viii] Kasky vs. [...]

[...] The counter-argument to these broader implications of Kasky vs. Nike was the assertion that holding corporations accountable for their social and environmental policies would have a "chill effect", or would dissuade companies from disclosing their practices to the general public. This theory is undermined however when one takes into consideration the important role of consumer credibility in a company's market performance, as well as the global increase in private investment that is based on social or environmental responsibility. Corporations increasingly have a motivation to regulate their actions (both internally and externally), to ensure a dedicated client base as well as a steady flow of private investment to further their commercial initiatives. [...]