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Hobby Lobby: Can Corporations Be Religious?

Supreme Court justices seem ready to give corporations religious rights.

by Grace Wyler
Mar 27 2014, 6:28pm

Photo via Wikimedia Commons

The relentless litigation of Obamacare returned to the Supreme Court this week, when justices heard oral arguments in the controversial Hobby Lobby case. The case hinges on whether the Christian arts-and-crafts chain can refuse to offer its employees coverage for birth control, based on the grounds that it violates the religious beliefs of the company's devout Baptist owners. 

The arguments brought the culture war back to the courthouse steps this week, opening up a complex debate among the justices Tuesday about religious freedom, government regulation, and corporate rights. But the touchstone question is whether for-profit corporations have the right to exercise religion—something that the court has never ruled on before. Depending on where the nine justices come down on the questions, the ruling could have major ramifications far beyond the issues of contraception and Obamacare.

The case—which actually combines two suits, Sebelius v. Hobby Lobby Stores, Inc. and Conestoga Wood Specialties Corp. v. Sebelius—itself is fairly straightforward. Under the Affordable Care Act, the Obama administration came up with a set of minimum requirements for health insurance plans, which includes coverage for a range of contraceptives. Hobby Lobby and its co-plaintiff, Conestoga Wood Specialties Corp., a Pennsylvania-based cabinet manufacturer owned by devout Mennonites, say that they have no problem providing most forms of contraception, but that the government shouldn’t force them to cover IUDs and emergency contraception like Plan B, which they regard as forms of abortion.

Hobby Lobby, the lead plaintiff, claims that it is protected by the 1993 Religious Freedom Restoration Act, which protects people from federal laws that pose a “substantial burden” to religious exercise. But the RFRA has never been applied to corporations, and the Obama administration argues that its protections don’t extend to for-profit companies. “It would be such a vast expansion of what Congress could have thought it was doing to say that for-profit corporations can make claims for religious exemptions to any laws of general application that they want to challenge,” Solicitor General Donald Verrilli, who defended the law, told the court.

Judging by the transcript from Tuesday’s oral arguments, the justices weren’t buying it. In fact, a majority of justices, including Chief Justice John Roberts and Justice Anthony Kennedy, seemed onboard with the idea of corporate religiosity. Even Justice Stephen Breyer, who usually sides with the court’s liberal judges, seemed open to considering the argument that companies should be allowed to bring RFRA claims to court. In a pretty convincing hypothetical, Justice Samuel Alito asked Verrilli what would happen if the government decided to ban kosher or halal butchers. “They would have no recourse whatsoever,” Alito said. “They couldn’t get their day in court.”

Still, a ruling in favor of for-profit religious freedom would signal a pretty major shift in the concept of corporate personhood, dramatically expanding on the 2010 Citizens United v. Federal Election Commission ruling that granted companies full rights to freedom of speech, including the right to make campaign donations. While Citizens United may have been a terrible ruling, the idea that corporations have a First Amendment right to free speech was grounded in decades of legal precedent. The idea that a company can have religious beliefs—and impose those religious beliefs on employees and customers—is totally new.

Such a decision could have some troubling consequences. Opponents of Hobby Lobby have imagined an array of slippery-slope catastrophes, warning that companies could use religious protection to skirt minimum wage and fair-housing laws, discriminate against customers and employees, and gain unfair competitive advantage in the marketplace. “A bad Hobby Lobby decision will have an immediate negative impact on the right of a woman to make personal health care decisions,” Center for American Progress president Neera Tanden said in a statement, “but it could also become a blueprint for discrimination against people in the lesbian, gay, bisexual, and transgender community; allow corporations to evade important federal laws; and change the corporate structure as we know it.”

And perhaps the more pressing concern, raised by the Supreme Court’s three female justices Tuesday, is that companies could claim to have religious objections to other health care services, like vaccines or blood transfusions. “There are quite a number of medical treatments that different religious groups object to,” Justice Elena Kagan said Tuesday. “So one religious group could opt out of this, and another religious group could opt out of that, and everything would be piecemeal, and nothing would be uniform.”

“It really opens up a Pandora’s box, and it is going to be very difficult to contain it in any way,” said James Cox, a professor of corporate law at Duke University. “The very basis of corporate law is that you can create an entity that is separate and distinct from its owners. Once you start moving away from that and say that this entity is going to have the features of the people who own it, that opens up a whole vista and we don't know what the ramifications are.”

"It's been roundly understood that a corporation lacks a soul—I think that's a pretty good metaphor for this," he added.

If the court decides that corporations can be religious, it could also be the death knell for the Obama administration’s case. Under the RFRA, the Justice Department has to convince the court that the contraception mandate represents a compelling government interest—in this case, advancing women’s health—and that the law is the “least restrictive option” for fulfilling that interest. Notably, while the lower courts have been divided on the question of whether corporations can be religious, they have never ruled in favor of the DOJ on the RFRA question.

Where the government’s case appeared to fall apart Tuesday was on the issue of the least restrictive option. Several justices pointed out that the Obama administration has already granted exemptions to the contraception mandate on religious grounds. Churches are totally exempt from providing birth control coverage; religious non-profits, such as schools and hospitals, can register an objection to contraception, and employees then receive contraception coverage from a third-party insurer. It follows that there actually is a way for the government to provide birth control coverage that is less restrictive of religious rights—it just doesn’t want to extend that option to for-profit companies like Hobby Lobby.

“It’s not clear why the government made this distinction,” said Douglas Laycock, a constitutional law professor at the University of Virginia. “I think they took seriously the claim of religious non-profits, and they didn't take seriously the claim of the for-profit companies, and that was probably a mistake. It might have avoided all of this litigation.”

But Laycock adds that concerns over the potential implications of a ruling in favor of Hobby Lobby are probably overblown, given the restrictions of the RFRA. "It could have implications to the extent that other claims are analogous, but there are not many cases that are analogous.”

Proving that that the government has a compelling interest in a law is a balancing act, Laycock explained, one that depends both on the religious claim and whether there is another way for the government to provide a service. In the Hobby Lobby case, the sincerity of the religious opposition to abortion is uncontested. Meanwhile, the government already has another way of providing birth control coverage. But it could be hard for other companies to meet that burden. “With LGBT rights, it would be hard to prove that it is a central tenant of someone’s religion,” he said. “And there is no other way for the government to protect people from discrimination except to protect people from discrimination.”