The Reclaim Democracy website has all the background on the case that anyone could want. Even though they clearly have an agenda on the subject, they link to court documents and other primary documents, so you can still make up your own mind. Additionally, Mordant1123 provided these links:
The first two courts that heard the case agreed with Nike. The California Supreme Court decided for Kasky and reversed the lower decisions. This excerpt from the
decision explains the court's logic:
The issue here is whether defendant corporation's false statements are commercial or noncommercial speech for purposes of constitutional free speech analysis under the state and federal Constitutions. Resolution of this issue is important because commercial speech receives a lesser degree of constitutional protection than many other forms of expression, and because
governments may entirely prohibit commercial speech that is false or misleading.
Because the messages in question were directed by a commercial speaker to a commercial audience, and because they made representations of fact about the speaker's own business operations
for the purpose of promoting sales of its products, we conclude that these messages are commercial speech for purposes of applying state
laws barring false and misleading commercial messages. Because the Court of Appeal concluded otherwise, we will reverse its judgment.
Our holding, based on decisions of the United States Supreme Court, in no way prohibits any business enterprise from speaking out on
issues of public importance or from vigorously defending its own labor practices. It means only that when a business enterprise, to promote
and defend its sales and profits, makes factual representations about its own products or its own operations, it must speak truthfully.
Unlike our dissenting colleagues, we do not consider this a remarkable or intolerable burden to impose on the business community. We
emphasize that this lawsuit is still at a preliminary stage, and that whether any false representations were made is a disputed issue that
has yet to be resolved.
It is important to notice that the California Supreme Court is not ruling on if Nike, Inc. made false statements; the court is just
rejecting Nike's defense that the freedom of speech makes the whole case irrelevant.
After the California Supreme Court made this ruling, Nike, Inc. appealed to the US Supreme Court. The US Supreme Court initially
agreed to hear the case. After considering the case, the US Supreme Court made the statement that "the writ of certiorari was improvidently granted," which means that they should not have decided to hear the case. Court-watchers interpreted this as a sign that the Supreme Court would prefer to wait until a lower court actually makes a decision before the US Supreme Court gets involved.
A lower court may now rule for or against Nike, and the case again may get appealed back up to the US Supreme Court. At that point, it is possible that the US Supreme Court may consider for itself the idea that the freedom of speech protects commercial speech.
With all that background established, for a minute, just forget what is constitutional, or legal, or what can be logically deduced from the conditions, and think about this case just in the framework of right and wrong. This case is really about a corporation that was faced with consumers that were unhappy with the methods it used to produce its goods. Then the firm responded to the irate consumers with misleading statements. When activists pointed out the flaws, the firm claimed that it can say whatever it wants, true or untrue, and not have to be held to any standards of truthfulness because the First Amendment freedom of speech protects them.
Keep in mind that this is a corporation that we're talking about, not a human being. Restricting the rights of a corporation does not necessarily have any effect on our rights.
The real question here is: should we allow a corporation to mislead concerned citizens?