March 25, 2014
The Threshold Issue
Posted by Brett Scharffs

The threshold issue in the Hobby Lobby case is whether there is a substantial burden on the free exercise of religion. This in turn depends upon whether Hobby Lobby is a person under the Religious Freedom Restoration Act, or in the alternative, that as owners of the business the Green's religious freedom is substantially burdened.

Secretary Sebelius takes the position that 1) Hobby Lobby has no free exercise interests and that 2) the Green's interests are not implicated. Not just that the free exercise interests are outweighed by important government interests, but that there are no cognizable free exercise interests implicated at all. The government makes two arguments to support the first proposition and one to support the second. 

The government says Hobby Lobby has no free exercise interests because it is a for-profit corporation. The government's brief says, "For profit corporations 'are different from religious non-profits in that they use labor to make a profit, rather than to perpetuate a religious values-based mission.'" When corporations enter the marketplace, the argument goes, they subject themselves to legislation designed to protect health, safety, and welfare of their employeess. But we expect corporations to have and pursue values. Secretary Sebelius lavishly praised CVS when it announced it would stop selling tobacco products, even though this will cost the cmopany millions in sales, reduce shareholder profits, inconvenience customers, and perhaps result in employees losing their jobs. CVS was not scolded by the government for not sticking to its knitting of maximizing shareholder profit; it was lauded for prsuing moral values -- the protection of human health -- in spite of the fact that it might detract from corporate profits.

Being a for-profit corporation does not prevent a corporation from having conscientious interets. As Apple CEO Tim Cook explained just a few weeks ago to a shareholder angry that the company was wasting money on green energy initiatives, Apple does "a lot of things for reasons besides profit motive." Cook said, "We want to leave the world better than we found it." Then addressing the shareholder directly, Cook exhibited a rare flash of anger: "If you want me to do things only for ROI [return on investment] reasons, you should get out of this stock."

The government's second argument for saying that Hobby Lobby has no religious freedom interests has to do with the structure of the corporation as a separate entity from its owners. Granting corporations religious rights, Secretary Sebelius argues, would "disregard fundamental tenets of American corporation law," since a corporation is a "distinct legal entity, with legal rights, obligations, powers, and privileges different from those of the natural individuals who creted it, who own it, or whom it employs."

Here the government misrepresents the significance of seprate corporate legal existnce. Calling a corporation a person is a legal fiction to be sure, but a useful one that is employed broadly. We treat corporations as persons allowing them to own property and enter into contracts. Separate corporate personhood is used to shield owners from being held personally liable for the debts and obligations of the corporation. There are a few exceptions, such as piercing the corporate veil. But the separate corporate existence of corporations is not to separate the values of the corporation from the values of the owners and managers of the corporation -- where else would a corporation get its values if not from its owners and managers? It makes no sense to say as the government does that the beliefs of owners must not be "imputed" to corporations.

The key question is whether we treat corporations as entitites that can be expected to act conscientiously. The answer is clearly, yes. Corporations can be held liable in both civil and criminal law (along with their owners and managers), we expect them to be good citizens, to behave responsibly, to exercise corporate social responsibility. We even treat corporations as capable of having human rights, and we certainly expect them to be respectful of the human rights of others. We do not limit expectations of moral behavior to non-profit corporations, to "expressive associations," or closely held businesses. Our expectations concerning matters of conscience are much broader and extend to all corporations.

If corporations are "persons" under RFRA, then the question is whether the contraceptive mandate imposes a "substantial burden" on free exercise interests. Asking a corporation to be complicit in taking human life is clearly a substantial burden. Imposing millions of dollars in fines for refusing to do so is also a substantial burden.

What about the Greens themselves? The government argues that the Greens' free exercise rights are not violated because the HHS mandate applies only to the corporation, not to them as individuals. Argues the government: "Federal law does not require the Greens to provide health insurance, particular health benefits, or any other form of compensation to the corporation's employees. The Greens do not personally employ the 13,000 individuals who work for Hobby Lobby; the corporation does."

To argue that forcing a company to do something does not have implications for its owners is an extreme instance of legal formalism. This logic would mean that the government could (without even implicating free exercise interests) compel a cmpany owned by those who conscientiously object to military service to channel all their production into the building of weapons of war; that the government oculd force a Jewish butcher who does business as a corporation to process pork; or to force any business to provide abortion coverage or assisted suicide coverage in their health plans. This is a view that project a statist authority far beyond anyting we have come to view as acceptable in our pluralistic liberal democracy with its commitment to individual rights and fredoms.

In an amicus brief filed in the case on behalf of a number of international law and religion scholars and institutions, we noted that there is an unsettling "heads we win, tails you lose" quality to the government's argument. On the one hand, Hobby Lobby is said to have no free exercise interests at all; on the other hand, the Greens are said to not have their free exercise interests burdened because it is just their company that is being compelled. In actuality, restrictions on collective expression of religion by for-profit corporations may substantially burden the free exercise rights of both corporations and owners.

This does not mean Hobby Lobby, or the Greens, win. If there is a substantial burden on religious exercise, it means the government must bear the burden of proving there is a compelling state interest that justifies imposing the burden, and that the contraceptive mandate is the last restrictive means for protecting that state interest. My own suspiscion is that it is because the government's argument that there is a compelling state interest justifying the contraceptive mandate and that the contraceptive mandate is the least restrictive means of protecting that interest is so weak that the government argues so strenuously that there is no burden at all because Hobby Lobby is a corporation. I'll address these questions in a later post.


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