Whose religion matters in corporate RFRA claims after Burwell v. Hobby Lobby Stores, Inc.?

Author:Churchill, Spencer
Position:Religious Freedom Restoration Act of 1993

Some hailed the decision as a victory for religious liberty, establishing that the government cannot ignore religious convictions and force business owners to facilitate what they view as murder. Others decried it as a massive setback for the rule of law, establishing a loophole by means of which business owners can ignore the legal rights of others with impunity. In reality, the decision may have less to do with business owners than either narrative suggests, and may have broader implications for other corporate constituencies. Last Term, in Burwell v. Hobby Lobby Stores, Inc., (1) the Supreme Court held that the Religious Freedom Restoration Act (RFRA) (2) requires regulators to exempt closely held corporations whose owners have religious objections from a requirement to provide insurance coverage for four medications with the potential to prevent embryonic implantation. Although corporate standing served to vindicate the religious liberty of business owners in this case, the Court's reasoning justifies a right that is distinct from the rights of individual owners and that could potentially be grounded in the religious beliefs of a corporation's other constituencies. (3)

The background to the Court's decision is well known. The Department of Health and Human Services (HHS), pursuant to the Patient Protection and Affordable Care Act, (4) issued a regulation requiring employers to provide medical insurance covering various types of preventive care. (5) One of these types of preventive care was contraception. (6) Four of the forms of contraception had the potential to destroy embryos by preventing them from implanting. (7) The families that owned and controlled Hobby Lobby and Conestoga Wood, two closely held for-profit corporations, believed that life begins at conception and held a religious conviction that they should not facilitate the death of human embryos. (8) These families and their companies sought injunctions based on RFRA and the Free Exercise Clause (9) that would prevent this portion of the mandate from being enforced against them. (10) The Third Circuit denied Conestoga Wood's request for an injunction, the Tenth Circuit granted Hobby Lobby's request, and the cases were combined on appeal to the Supreme Court. (11)

Justice Alito, writing for the majority and joined by Chief Justice Roberts, Justice Scalia, Justice Kennedy, and Justice Thomas, held that the regulation's application to the corporations in question violated RFRA because it burdened a person's exercise of religion and was not the least restrictive means of furthering the governmental interest asserted to justify the burden on religious exercise. (12) As a threshold matter, Justice Alito rejected intent--and policy-based arguments that the companies lacked standing, using a textual approach to hold that RFRA applies to regulations of for-profit corporations like the plaintiffs and thereby "protects the religious liberty of the humans who own and control those companies." (13)

First, Justice Alito rejected the argument that for-profit corporations are not persons within the meaning of RFRA. The Dictionary Act defines "person" to include corporations. (14) Additionally, nonprofit corporations have established rights under RFRA, and no feasible definition of persons includes nonprofits while excluding for-profits. (15) For these reasons, Justice Alito held that for-profit corporations are persons within the meaning of RFRA.

Second, Justice Alito rejected the argument that for-profit corporations are incapable of exercising religion within the meaning of RFRA. The recognized right of nonprofit corporations to exercise religion forecloses any argument that corporations in general cannot exercise religion. (16) The argument that for-profit corporations in particular cannot exercise religion because the profit motive is exclusive of religious purposes fails also. The recognized right of sole proprietorships to exercise religion while seeking profit establishes a presumption that profit and religion may be jointly pursued. (17) Contrary to the position taken by some judges, for-profit corporations are not an exception to this general rule, existing only to make money: State law authorizes corporations to act for any lawful purpose, including religious purposes; many corporations have been observed to organize as for-profits and to engage in religious and charitable activities that do not maximize profit; and an increasing number of states recognize benefit corporations, which seek a public benefit and a profit at the same time. (18) Because corporations are persons and nothing about being a forprofit corporation prevents an organization from exercising religion, corporations are textually within RFRA's scope.

Turning to intent and policy, Justice Alito saw no reason to deviate from RFRA's text. He held that RFRA's protection was not intended to be limited to categories of actors expressly protected in pre-Smith decisions or to reflect any national tradition precluding protection of for-profits. (19) He also wrote that the decision would not lead to unacceptable consequences. Proxy battles over the religious identities of large, publicly traded corporations are not a concern because the Court's decision is limited to closely held corporations and because of the practical obstacles to a large corporation's assertion of a RFRA claim. (20) Difficulties in determining the sincerity of an asserted religious belief are familiar to courts and must be accepted as a result of Congress's decision to pass RFRA. (21) Finally, conflicts among owners about the conduct of a business are not a concern as such conflicts are also familiar to courts and are governed by the established framework of state law. (22) For these reasons, Justice Alito concluded that for-profit corporations have standing under RFRA.

After establishing that the corporations had standing, Justice Alito found that the portion of the HHS regulation in question substantially burdened the exercise of religion by directing "the Hahns and Greens and their companies" to violate their religious beliefs. (23) Exercising their religious liberty would have resulted in fines up to, in Hobby Lobby's case, $475 million per year. (24) This constituted a substantial burden.

Justice Alito rejected two arguments against the finding of a substantial burden. First, he rejected the argument that the plaintiffs could follow their convictions and save money by dropping insurance altogether and paying a $2,000 annual penalty per employee. This argument, Justice Alito wrote, had not been addressed by any of the parties, ignored the plaintiffs' religious conviction that they should provide health insurance, and did not adequately account for the costs of the proposed action. (25) Second, Justice Alito rejected the argument that the connection between providing insurance coverage for medications that can destroy embryos and the moral wrong of an embryo's destruction is too attenuated to constitute a substantial burden. He warned that this argument did not truly address substantiality but inappropriately invited the Court to evaluate the reasonableness of the belief that providing coverage for the medications in question is a moral wrong. (26) The HHS regulation, Justice Alito concluded, placed a substantial burden on the...

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