JURIST Guest Columnist Ruthann Robson of the CUNY School of Law argues that allowing seemingly sectarian corporations to use religious beliefs as grounds for denying employees benefits mandated under the Patient Protection and Affordable Care Act could create many problems …
Can a corporation have a religion? That’s the simplified issue at the heart of cases such as Eden Foods v. Sebelius, decided by the US Court of Appeals for the Sixth Circuit on October 24, 2013. The panel followed the decision of a different Sixth Circuit panel from the previous month, essentially answering that question in the negative in Autocam Corp. v. Sebelius. The US Court of Appeals for the Third Circuit, by a divided panel opinion in July, also concluded that an ordinary corporation cannot raise a religious freedom claim, in Conestoga Wood Specialties Corporation v. Health and Human Services. A divided panel from the DC Circuit in Gilardi v. HHS, decided November 1, 2013, agreed, but found that shareholders of the closely held corporation Freshway Foods could assert their own religious freedom on behalf of the corporation, which is importantly organized as a Subchapter S corporation. And, most prominently, a majority of the en banc US Court of Appeals for the Tenth Circuit, in its deeply divided and fragmented 165 page opinion in Hobby Lobby Stores Inc. v. Sebelius held to the contrary. Hobby Lobby is presently before the US Supreme Court on a petition for writ of certiorari filed by the Solicitor General on behalf of Kathleen Sebelius, the Secretary of Health and Human Services. In its response filed October 21, 2013, Hobby Lobby agreed that the Supreme Court should grant the writ and hear the case. With the split in the circuits, numerous district court cases in litigation, and both parties contending it is a matter of great public importance, odds are that the court will grant certiorari for the current term.
Hobby Lobby, Conestoga Wood, Autocam and Eden Foods all involve challenges to the portions of the 2010 Patient Protection and Affordable Care Act (PPACA) requiring that employers with 50 or more employees provide health care coverage including certain contraceptive methods. While the PPACA does exempt religious employers, these secular for-profit corporations with businesses that many would not identify as religiously-affiliated are not included in that exemption. Instead, these corporations claim their religious freedom rights would be infringed by providing contraceptive coverage to their employees because the corporations—or their shareholders—have Christian beliefs inconsistent with some types of contraception. They argue these beliefs are entitled to protection by the First Amendment or by the Religious Freedom Restoration Act (RFRA).
The standards and history of the First Amendment and RFRA are intertwined. Passed by Congress in 1993 in reaction to the court’s opinion in Employment Div., Dept. of Human Res. of Oregon v. Smith, RFRA’s purpose was to “restore the compelling interest test” that the court had abandoned in Smith. When RFRA was challenged as exceeding Congressional power under section 5 of the Fourteenth Amendment, the court concluded in City of Boerne v. Flores that RFRA was not congruent and proportional to the court’s interpretation of the First Amendment’s Free Exercise Clause as applicable to the states through the liberty clause of the Fourteenth Amendment. This means that state laws must be measured by the less rigorous Smith standard, but federal laws—such as the ACA—may be challenged under RFRA’s strict scrutiny standard.
Yet in order for courts to scrutinize the merits of either a First Amendment or RFRA claim, the entity raising the claim must have the capacity to do so. The First Amendment, unlike the Fourteenth, does not contain the word “person,” but instead begins “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof,” with a subsequent clause protecting “the right of the people peaceably to assemble.” The First Amendment also prohibits Congress from “abridging the freedom of … the press,” a provision that has long been applied to corporate media such as newspapers. Additionally, the court’s controversial 2010 decision in Citizens United v. Federal Election Commission, held that corporate campaign expenditures were protected free speech under the First Amendment.
The text of RFRA, on the other hand, is explicit that it covers “a person’s exercise of religion.” But this does not mean the statute is necessarily limited to natural persons. Indeed, in 1 U.S.C. § 1, Congress has several definitions to apply to all statutes, including “person” (and “whoever”) as including “corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.” But 1 U.S.C. § 1 is not absolute: its caveat for all definitions is “unless the context indicates otherwise.”
Thus, whether or not the claim is limited to RFRA, as is the question presented by both parties in their petition for writ of certiorari briefs to the US Supreme Court in Hobby Lobby or includes the First Amendment, as in Conestoga Wood, there are fundamental—and perhaps even existential—quandaries regarding corporatism and religiosity.
The portrait of a corporation as possessing a religion has several puzzling pieces. First, there is profit. While religious entities such as those involved in Gonzalez v. O Centro Espirita Beneficente Uniao Do Vegetal or Church of the Lukumi Babalu Aye, Inc. v. Hialeah were corporations accorded religious rights, they were decidedly nonprofit. Indeed, religious entities are often deemed nonprofit by definition, in common parlance as well as tax codes. But this is a distinction that the majority in the en banc US Court of Appeals for the Tenth Circuit opinion in Hobby Lobby eschewed; indeed it stated that “sincerely religious persons could find a connection between the exercise of religion and the pursuit of profit.” Second, the secular shape of many corporations, such as one with a chain of 150 craft supermarkets such as Hobby Lobby, or one manufacturing high-end kitchen cabinetry such as Conestoga Wood, is ill-suited to sectarianism. There is little, if anything, to alert a consumer or a job applicant that one is engaging with a religious entity. Finally, any completed puzzle balances atop a very slippery slope. If a corporation is exempt from the PPACA’s requirement of insurance coverage for certain contraceptives, will it also be exempt from other types of coverage, perhaps related to the pregnancy of an unwed woman or HIV testing and treatment? And why should a corporation not also be allowed to employ only persons possessing a specific religious belief? Or terminate an employee for failure to accord by specific religious practices, as the court deemed constitutional for a religious corporation in Corp. of Presiding Bishop of Church of Jesus Christ of Latter-day Saints v. Amos?
The picture of a corporation being identical to its shareholders for some purposes but not for others is no less enigmatic. Under what the US Court of Appeals for the Third Circuit in Conestoga Wood referred to as the “passed through” theory, a corporation could assert the free exercise claims of its shareholders in some circumstances. In rejecting this theory, the court noted that it rested on “erroneous assumptions regarding the very nature of the corporate form” as a distinct legal entity apart from its shareholders. This independent entity insulates shareholders from individual liability, unless the “corporate veil” can be pierced. In asserting religious rights, corporations seek to pierce their own corporate veils for the purposes of some sectarian principles such as contraception coverage for employees, but presumably to keep their protective masks in place regarding personal liability. This would not only allow a corporation and its shareholders to “have it both ways,” but again raises the question of limiting principles. Could a corporation terminate an employee because she failed to comply with a religious precept of the corporation—for example, submission to male authority—but cocoon its owners from personal liability for damages for employment discrimination? And what is the importance of the tax status of the corporation? The concurring judge necessary to the two judge majority in the DC Circuit’s opinion in Gilardi, wrote separately to “emphasize the importance of the Freshway Corporation’s election to be taxed under subchapter S of the Internal Revenue Code.”
Ultimately, how one views the “context” of the meaning of “person” in RFRA or the ability of a corporation to assert a free exercise of religion right is not about constitutional doctrine or statutory construction. And it may not even be about religion. As the US Court of Appeals for the Sixth Circuit opinion in Eden Foods noted, although the corporation’s founder and sole shareholder Michael Potter claimed that his “deeply held religious beliefs” prevented him from supporting “contraception, abortion, and abortifacients” as procedures that “almost always involve immoral and unnatural practices,” his statements outside of litigation painted a very different portrait. The court quoted from one of the several interviews Potter gave to a reporter published in salon.com, in which Mr. Potter stated that he had “more interest in good quality long underwear” than “in birth control pills,” although he pursued the litigation because “I’m a man, number one.” When pressed, he continued that he didn’t care if the federal government was telling him to buy “Jack Daniel’s or birth control,” asking “What gives them the right to tell me that I have to do that?”
This is not to conclude that all of the corporate shareholders involved in challenging the contraceptive coverage requirement for health insurance do not possess sincerely held religious beliefs related to attenuated participation in an employee’s reproductive choices. But the statements by Eden Food’s founder—characterized by the US Court of Appeals for the Sixth Circuit as a “laissez-faire, anti-government screed” and which might also be described as sexist and anti-worker—are important pieces of the puzzle. If a corporation can have a religion, is it a coincidence that its most deeply held and sincere beliefs are in opposition to equality and democracy?
Ruthann Robson is Professor of Law and Distinguished Professor at the City University of New York (CUNY) School of Law. She is an expert on constitutional law and sexuality issues and is the co-editor of the Constitutional Law Professors Blog. Her newest book is Dressing Unconstitutionally: Hierarchy, Sexuality and Democracy.
Suggested Citation: Ruthann Robson, Puzzling Corporations: The Affordable Care Act and Contraception Mandate, JURIST – Forum, Nov. 5, 2013, http://jurist.org/forum/2013/11/ruthann-robson-puzzling-corporations.php
This article was prepared for publication by Brent Nesbitt, assistant editor for JURIST’s academic commentary service. Please direct any questions or comments to him at firstname.lastname@example.org
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