Speech suit may clarify our rights

Monday, March 25, 1996 | 11:59 a.m.

SOME good may come of the protracted labor dispute between the Santa Fe hotel-casino and the Culinary Union. A legal question on free-speech may be resolved.

The 40,000-member Culinary was told last week it must stop distributing fliers critical of the performance of Commercial Bank of Nevada, 2820 W. Charleston Blvd. One of the bank's directors, state Sen. Sue Lowden, R-Las Vegas, also is a co-owner of the Santa Fe. The attorney general's office told the union it was violating state law by disseminating derogatory information about that bank.

If the union did not stop distributing the fliers, the AG warned criminal charges could be filed. The union has refused to stop and now has filed a suit in federal court, claiming Attorney General Frankie Sue Del Papa is trying to restrict free speech.

Del Papa, who is sworn to uphold state law, informed the union of the violation after a complaint was filed with the Financial Institutions Division of the Nevada Department of Business and Industry.

The question comes down to whether a bank is subject to the same rules regarding free speech as other institutions. Nevada law says it isn't. The statute says that anyone who "willfully or maliciously" makes derogatory statements about a bank's financial condition is guilty of a gross misdemeanor.

The obvious intent of the 1971 law was to prevent damaging rumors that once caused runs -- or panics as they were called -- on banks for more than a century. During the Depression, President Roosevelt declared a bank holiday to give financial institutions a breather from a stampede of account withdrawals by panicked customers. Even so, many banks did not survive.

A federal court may discount the need to protect banks against the right of a union, or anyone else for that matter, to speak its mind. It also is arguable whether banks need special protection as they did 60 years ago. Today, deposits are insured, protecting depositors from being wiped out.

If the law is upheld, it could place a pall on business transactions. Prospective buyers of bank stock could be in violation for comparing the performance of various banks in the state and passing the information on to others.

If the court sets the law aside, banks will still have recourse to civil libel actions, just like anyone else. The best defense to defamation -- established in cases like the 1964 New York Times vs. Sullivan ruling -- is whether the information is provable. Interestingly, Nevada's law makes no reference to whether the derogatory material may be true or not.

The Culinary claims the information on its fliers comes from the Federal Deposit Insurance Corp. reports on commercial banks.

Regardless how the court rules on this, the union's intent is clearly to put pressure on the Santa Fe management to submit to its organizational efforts.

For other Nevadans, the fate of NRS 668.105, pertains to how the First Amendment will be applied in the Silver State. For them, free speech is too important to make special exceptions.