Closely held corporations are persons: the Supreme Court's correct and intuitive holding in Burwell v. Hobby Lobby Stores, Inc.

• Author: Martorana, Mary Elizabeth

INTRODUCTION

The Religious Freedom and Restoration Act ("RFRA") states: "Government shall not substantially burden a person's exercise of religion even if the burden results from a rule of general applicability...." (2) In Burwell v. Hobby Lobby Stores, Inc., the Supreme Court held that closely held for-profit corporations are considered "persons" under this act. (3) In so holding, the Court cleared up previous disagreement among several lower courts as to whether closely held corporations should be given this title and the protection that it affords. (4) The Court also held that the contraceptive mandate promulgated under the Patient Protection and Affordable Care Act (ACA), 124 Stat. 119 (2012), as applied to closely held for-profit corporations, substantially burdened the free exercise of religion for the purposes of RFRA as the mandate did not satisfy the least-restrictive means test that RFRA requires. (5)

Congress enacted RFRA three years after the Supreme Court decided Employment Div., Dept, of Human Res. of Ore. v. Smith. (6) In that case, the Supreme Court rejected prior First Amendment freedom of religion precedent, which required the government to prove it was using the least restrictive means to accomplish a compelling governmental interest if it was going to substantially burden the free exercise of religion. (7) Instead, as recognized in Burwell, the Court in Smith held that under the First Amendment, "'neutral, generally applicable laws may be applied to religious practices even when not supported by a compelling governmental interest.'" (8) Congress responded to this decision by enacting RFRA, which reinstated the strict scrutiny test for First Amendment freedom of religion cases and reasoned, "laws [that are] 'neutral' toward religion may burden religious exercise as surely as laws intended to interfere with religious exercise." (9) Since RFRA has been enacted, there has been debate about what the purpose of this Act truly was and which "persons" Congress intended the Act to protect. (10)

This debate has particular significance as it relates to the Department of Health and Human Services' (HHS) regulations promulgated under the ACA. Under these regulations, many companies that meet certain criteria are required to furnish "'preventive care and screenings' for women without 'any cost sharing requirements.'" (11) Some of the contraceptive methods that are required under this preventative care and screening have been the center of much controversy because of the religious implications they have for many companies and the owners that are bound by them. (12)

In Burwell, the Greens and the Hahns owned closely held for-profit corporations bound by the HHS contraceptive mandate. (13) Both families are Christian, do not believe in abortion, and believe that four of the contraceptive methods required by these regulations cause abortions. (14) Therefore, they asserted that the mandate was a substantial burden on the corporations' practice of religion. (15) The Court agreed with the Greens and the Hahns on this point. (16) Because the Court held that the corporations are considered "persons" under RFRA and that their freedom of religion had been substantially burdened, it then turned to the strict scrutiny test. (17) In order to overcome this strict scrutiny, the HHS contraceptive mandate must be the least restrictive means to accomplish a compelling governmental interest. (18) The Court assumed that the mandate was aimed at a compelling governmental interest but found that this mandate was not the least restrictive means of accomplishing this purpose. (19)

While the Court's declaration that closely held corporations are persons under RFRA is correct, the Court's reasoning and rationale behind its other holdings seems to leave some unanswered questions. This Note first discusses why the Court in Burwell is correct in its pronouncement that corporations are persons under RFRA and why the opponents of this decision are misguided. Second, this Note addresses the Court's finding of a substantial burden on the free exercise of religion. Third, this Note argues that the Court's assumption of a compelling governmental interest was flawed and imprudent. Along with that argument, this Note points out the problem with the alternative least restrictive means that the Court relied on when it concluded that the HHS contraceptive mandate was not the least restrictive means to accomplish a compelling governmental interest. Finally, this note concludes with a summary of the issues and arguments.

STATEMENT OF THE CASE

1. Procedural Posture

   Burwell is the combination of two cases, both of which that started in the lower courts. (20) In both cases, closely held for-profit corporations and the individuals who own them brought actions against the Secretary of HHS and other governmental agencies seeking declaratory and injunctive relief regarding the contraceptive mandate promulgated under the ACA. (21) These actions were based on allegations that the preventive services coverage included in the HHS contraceptive mandate for employers was unconstitutional and violated RFRA because it forced them to assist in providing abortion inducing drugs and devices to their employees. (22) While the plaintiffs lost in both cases at the district court level, the outcomes were different at the appellate court level. (23)

   In the first case, Hobby Lobby Stores, Inc. v. Sebelius, the district court denied the plaintiffs' motion for injunctive relief, holding that the corporations were not considered "persons" under the Act. (24) On appeal, the Tenth Circuit reversed and remanded the district court's ruling, holding that the plaintiffs' for-profit businesses were "persons" under RFRA and that the contraceptive mandate substantially burdened the exercise of religion. (25)

   In the second case, Conestoga Wood Specialties Corp. v. Sebelius, the district court denied the plaintiffs' motion for a preliminary injunction for the same reason as the other district court--they determined for-profit closely held corporations are not "persons" under RFRA. (26) On appeal, in a divided opinion, the Third Circuit affirmed the district court, holding "for-profit, secular corporations cannot engage in religious exercise" within the meaning of RFRA. (27) The United States Supreme Court granted certiorari in each case, and they were consolidated. (28)

2. Statement of the Facts

   In Hobby Lobby Stores, the plaintiffs were David and Barbara Green, their three children, and the two for-profit corporations that they exclusively owned. (29) The two corporations were Hobby Lobby Stores, Inc. and Mardel. (30) Hobby Lobby is a nationwide chain that includes 500 stores, employs more than 13,000 people, and started as an arts-and-crafts store. (31) Mardel is an affiliated business started by one of David's sons; it operates 35 Christian bookstores and employs about 400 people. (32) Because of the size of their corporations and the fact that Hobby Lobby elected not to retain grandfathered status for the group-health-insurance plans, the corporations and the Greens were subject to the HHS regulations promulgated under the ACA, and as a result, were required to follow the contraceptive mandate. (33)

   The Greens are a Christian family, which is seen in Hobby Lobby's statement of purpose. The statement of purpose expresses the Greens' commitment to "[h]onoring the Lord in all [they] do by operating the company in a manner consistent with Biblical principles." (34) Also in line with their Christian principles is the fact that the Greens choose to close Hobby Lobby on Sundays even though they estimate that it costs the company millions of dollars every year. (35) In addition to these actions, the businesses also refuse to engage in profitable transactions that support or promote alcohol use, they donate to Christian missions and charities, and they buy hundreds of full-page advertisements inviting people to "know Jesus as Lord and Savior." (36)

   Following Christian principles, the Greens believe that life begins at conception. (37) Because of this, they believed it was a substantial burden on their free exercise of religion to force them to facilitate someone in obtaining a contraception method that operates after that point. (38) They claimed that this is exactly what the contraceptive mandate forced them to do--facilitate someone in obtaining an abortion. (39)

   Like the Greens, Norman and Elizabeth Hahn and their three sons also believe that life begins at conception. (40) They are devout members of the Mennonite Church, a Christian denomination. (41) They exclusively run and own Conestoga Wood Specialties, a closely held for-profit corporation that employs 950 people. (42) Due to the number of Conestoga employees and other factors, the Hahns and their company were also subject to the HHS regulations promulgated under ACA and required to follow the contraceptive mandate. (43)

   Also like the Greens, the Hahns run their business in accordance with their Christian beliefs. (44) As evidence of this, the "Vision and Values Statements" of the company affirms that Conestoga strives to "ensur[e] a reasonable profit in [a] manor that reflects [the Hanhs'] Christian heritage." (45) They object to the same four contraceptive methods as the Greens and believe that the contraceptive mandate substantially burdens their free exercise of religion because they are required to assist someone in receiving an abortion. (46)

3. Supreme Court's Ruling

   In making its decision, the Supreme Court was asked to determine the following: 1) whether "person" within the meaning of RFRA included closely held, for-profit corporations; 2) whether the HSS contraceptive mandate, as applied to such corporations, substantially burdened the exercise of religion; and 3) whether the HHS contraceptive mandate survived strict scrutiny. (47) The Supreme Court held the following: 1) "person" within the meaning of...