case

Lyle Denniston Reporter Posted Thu, March 20th, 2014 3:30 pm

Argument preview: Religion, rights, and the workplace

At 10 a.m. next Tuesday, the Supreme Court will hold ninety minutes of oral argument on the

government’s authority to require private businesses to provide birth control and other pregnancy-

related services to their employees under the Affordable Care Act. Arguing for the challengers to the so-

called “contraceptive mandate” will be Paul D. Clement, of the Washington, D.C., law firm of Bancroft

PLLC. Defending the mandate will be U.S. Solicitor General Donald B. Verrilli, Jr. Each will have

forty-five minutes of time, under an order issued Thursday expanding the time beyond the normal

amount. The consolidated cases are Sebelius v. Hobby Lobby Stores and Conestoga Wood Specialties

Corp. v. Sebelius.

Background

For the first time since the broad new federal health care law partially survived its most sweeping

constitutional challenge in the Supreme Court nearly two years ago, the Affordable Care Act comes up for

a new test before the Justices. This time, the Court will be examining whether the government may

enforce against private businesses owned by religiously devout owners the requirement that employee

health plans provide no-cost coverage for women’s pregnancy-related services, including birth control.

These services, required under the so-called “contraceptive mandate” in the Act and in government

regulations, are not themselves in legal trouble: the only issue before the Court at this point is which

businesses can be ordered to provide the services to their female workers at no cost to them.

That issue will be debated by two of the legal gladiators who met in the last test at the Court of the

Affordable Care Act: Washington attorney Paul D. Clement, a former U.S. Solicitor General, and the

current Solicitor General, Donald B. Verrilli, Jr.

There probably would be a significant loophole in the contraceptive mandate’s reach if the challengers

win. Some women’s rights groups have estimated that millions of women would be affected. Female

workers of the two companies involved and those of other religiously oriented companies would have to

cover personally the cost of at least some of the birth-control services — unless the government were to set

up a new program on its own to do so, which is a very unlikely prospect.

Thus, the two cases that the Court has combined for review set up a direct conflict between the interests of

some employers against those of their female workers of child-bearing age. The federal government is

clearly on the workers’ side, but the lower federal courts have been divided on who should win.

The dispute only involves private businesses because religious groups, as such, are given an exemption by

regulations the government has issued. Even some businesses get exemptions, too, because their

employee health plans have been “grandfathered,” but before long those, too, will actually have to provide

the benefits at issue, or face heavy financial penalties.

At the level of their greatest potential, the two cases raise the profound cultural question of whether a

private, profit-making business organized as a corporation can “exercise” religion and, if it can, how

far that is protected from government interference. The question can arise — and does, in these cases —

under either the First Amendment’s Free Exercise Clause or under a federal law, the Religious Freedom

Restoration Act, passed by Congress in 1993.

In a manner of speaking, these issues pose the question — a topic of energetic debate in current American

political and social discourse — of whether corporations are “people.” The First Amendment protects the

rights “of the people,” and the 1993 law protects the religious rights of “persons.” Do profit-making

companies qualify as either?

Aside from whether corporations do have any religious rights, as such, the cases also raise the question

whether the religious rights of their owners — real people, who undeniably can act according to their faith

— are violated by the requirement that their companies obey the contraceptive mandate. Ordinarily, in

business law, corporations are separate from their owners, but the owners in these cases resist that

notion, at least so far as the owners’ religious views actually shape the business of their companies.

No one doubts that the owners of the two companies have sincere religious objections to some forms of

birth control or that their beliefs do counsel them to avoid any role in providing those services to their

employees. The companies and their owners do not have to convince the Court that that is what they

believe — only whether that belief controls enforcement, or not, of the mandate.

One company is Hobby Lobby Stores, Inc., and a related company, Mardel, Inc. Headquartered in

Oklahoma City, the two companies are owned — through a trust — by members of the Green

family. Hobby Lobby is a chain of more than 500 arts-and-crafts stores across the country, with more

than 13,000 employees. Mardel is a chain of Christian book stores, with 35 outlets and about 400

employees.

The Green family members signed a formal commitment to run the two chains according to Christian

religious principles — closing on Sunday, advertising their religious orientation, and playing religious

music in the stores. The owners and their stores do not object to every part of the contraceptive mandate,

but they do object to the use of any drugs or intrauterine devices that — in the words of their lawyers —

“end human life after conception.”

They have estimated that, if they follow their faith and violate the mandate, they face fines of about $1.3

million a day, or almost $475 million a year. They believe that cancelling their health plan to avoid

obeying the mandate would put them at a competitive disadvantage with other employers. They do not

believe that the government can force them to make such choices.

The other company is Conestoga Wood Specialties Corp., a company based in East Earl, Pennsylvania,

that also has operations in other states, making wooden cabinets and wood specialty products. It has

about 950 employees.

The company is owned by members of the Hahn family, who are Mennonite Christians. Their faith

teaches them that it is wrong to take a human life and to prevent its creation through drugs and

intrauterine devices. If the company or its owners were to violate the mandate to adhere to their beliefs,

they estimate that they would face financial penalties of about $35 million a year.

Federal appeals courts ruled in conflicting ways. The U.S. Court of Appeals f0r the Tenth Circuit decided

that Hobby Lobby was likely to win its challenge because, even though it is a profit-making business, it

can, indeed, act according to faith principles. The U.S. Court of Appeals for the Third Circuit decided that

neither the company, Conestoga Wood Specialties, nor its owners could claim First Amendment religious

rights — because, it found, the corporation is incapable of doing so, and because the owners had chosen

the corporate form for their business and it stands apart from their personal interests.

Petitions for certiorari

The federal government asked the Supreme Court to review the Hobby Lobby case, while the Hahn family

and their woodworking company did the same in their case. As offered to the Justices, the two cases

together raise both the First Amendment religious rights question and the RFRA statutory issue, as to

both the companies and their owners.

The First Amendment provides that no law may be passed, at any level of government, that prohibits “the

free exercise of religion.” RFRA provides that government agencies (only at the federal level, since the Act

no longer applies at the state and local levels) may not impose a “substantial burden” on the religious

exercise of “a person,” even if the law is one that everyone ordinarily must obey, unless the government

can justify the burden to satisfy a “compelling government interest,” and only if it is the “least restrictive

means” of doing so. It does not specifically define “person.”

On November 26, the Court agreed to review both cases and consolidated them for review.

Briefs on the merits

Hobby Lobby Stores — whose name will probably provide the label for the case in history

– argued aggressively in its merits brief that the federal government was pursuing “a misguided shell

game” in which only the Green family has rights and the corporation suffers alone the burden of

the mandate. That, it contended, was a move to ”drive a wedge” between the family and its corporation.

The brief insisted that, if the Court uses the definition of “person” that is in the federal Dictionary Act, it

would refer not only to natural persons, but to corporations, too. And, under the ACA regulations at issue,

the filing said, the government is seeking to force employers to provide specific contraceptives, not just

“an exchange of money.” It is the contraceptives, not their cost, that burdens the Green family’s faith and

the principles of Hobby Lobby Stores and the related bookstore chain, the brief argued.

Saying that the Court must apply “strict scrutiny,” the most demanding test for the validity of a

government mandate or program, the Hobby Lobby brief said that the government has “not come close”

to satisfying that standard. The official claims that the mandates support public health and women’s

equality are so broad that they could never meet that test, the brief said.

The retail chains’ filing said that the government has come up at the last minute with another attempted

justification — that is, that the mandate is part of a comprehensive scheme of providing health benefits to

all. But that notion, the brief said, is belied by all the exemptions the government has allowed.

Because the question that the government raised in its petition in the Hobby Lobby case was restricted to

the scope of the Religious Freedom Restoration Act, the retail chains’ merits brief is confined to that issue.

The merits brief for Conestoga Wood Specialties and its owners deals with its claims under both RFRA

and the First Amendment. The filing begins with a defense of the Hahn family’s claim that its members

choose to practice their faith through business activity, as well as in their personal lives. “The corporate

formality of a business is not determinative of whether religious exercise occurs in that business,” it

contended.

But, if the family’s religious interests could be separated from the company, the brief went on, the

company itself “exercises religion, too.” Under state law, the corporate form may be used “to pursue all

lawful purposes, without excluding religion,” Conestoga’s lawyers told the Court. The Supreme Court,

they added, “has never limited religious freedom to natural persons.”

Aside from arguing that the contraceptive mandate substantially burdens the religious rights of the Hahns

and of their company, the brief said that Congress in passing the Affordable Care Act did not require that

contraceptive services be included in employee health plans; that was added by the federal government in

ACA regulations.

And, like Hobby Lobby, the Conestoga filing asserted that “strict scrutiny” is the only valid test to apply

and that the government cannot show that it has a compelling interest in enforcing the birth-control

mandate against religious objectors. If the government is intent on assuring access to birth control, the

brief said, it could either expand existing programs which provide that service or create new ones.

The Obama administration’s merits brief in Hobby Lobby focused on the RFRA claim, and its separate

brief in the Conestoga case sought to answer claims under both RFRA and the First Amendment.

In each filing, the government made the same basic points: profit-making businesses do not “exercise”

religion at all, for purposes of either federal law or the Constitution; the mandate only applies to

corporations and not to their owners and, in any event, corporations law treats the business separate from

the owner; and, even if the mandate did have to satisfy a compelling government interest, it does so by

assuring that female workers have access to an important health benefit as part of a comprehensive health

insurance scheme.

The contraceptive coverage requirement, according to the government, is a neutral obligation that applies

to profit-making businesses in general, and does not target any religious exercise. The exemptions that

have been provided for other businesses — those whose plans are “grandfathered” and thus do not

immediately have to obey the mandate — will only exist in a phased sequence, and that alone is not

enough to deprive the mandate of its neutral character, the U.S. brief said.

In passing RFRA, the brief contended, Congress did not intend to “uniquely disable the government by

working a dramatic expansion” of the claims for exemption based on religious liberty. Besides, it added,

there has not been a single decision by the Supreme Court that struck down a federal law — or required an

exemption to it — on the theory that that was necessary “to protect the rights of a for-profit corporation or

of the owners, managers, or directors of the corporation.”

The government brief also made a religious liberty argument of its own. It said that giving for-profit

businesses the chance to obtain an exemption from federal laws based on religion would threaten “the

special place of religious institutions in our society.” Congress has often given religious bodies

exemptions from laws, but it has always “drawn the line at for-profit corporations,” the brief said.

If Hobby Lobby and Conestoga are legally entitled to exemptions, Congress would be discouraged from

providing exemptions for non-profit religious organizations “for fear that doing so would automatically

entitle for-profit corporations to the same accommodation,” according to the government’s argument.

The briefs for the government also asserted that there actually is no burden on any religious exercise by

owners or corporations, because the choice to use a birth-control pill or device would be made

independently by the female workers covered by a health insurance plan. The connection between those

choices and the interests of the employer who finances the plan, the brief went on, is “too indirect” to

make a legal difference.

The amicus briefs

If numbers of amici were to make a difference, there is no contest in these cases: the government drew

two dozen briefs in support, while Hobby Lobby and Conestoga are backed by five dozen filings. There

are two briefs that do not take a position on how these specific cases should be decided, but they take

opposite positions: a brief by professors of history and law argues that the Court has always treated

corporations differently from natural persons, while a brief by a group of traditional religious

organizations urges the Court to adopt an expansive view of the right to religious exemptions from public

laws.

The boldest brief in support of the government takes a position that the government did not, urging the

Supreme Court to strike down RFRA as an unconstitutional attempt by Congress to scuttle a Supreme

Court decision requiring religious organizations to obey laws that apply generally. That is a brief by a

disparate group of advocacy organizations, including non-believers and survivors of clergy sexual abuse of

children.

There is, on the corporations’ side, a brief by constitutional law scholars seeking to answer that

constitutional challenge. That brief contends that RFRA is a valid exercise of Congress’s legislative

powers, and that nullifying the law “would threaten thousands of statutes that protect religious

minorities.”

There are predictable allies on each side: civil rights and women’s rights groups, liberal organizations,

professors of various disciplines, and liberal lawmakers on the side of the federal government and the

ACA, and traditional religious organizations and advocacy groups, conservative and libertarian entities,

professors of various disciplines, and conservative lawmakers on the side of Hobby Lobby and Conestoga.

Analysis

If the legal territory the Court enters in these cases is not entirely new, it is also not well traveled. The

Court has sort of assumed since 1886 — without ever ruling flatly — that corporations are “persons” in a

constitutional sense. And, over time, it has filled in some of the gaps on what rights corporations are to

have under the Constitution. But it has never said, explicitly, that they are endowed with the right to

freely exercise a religious faith.

These two cases give it the chance to do just that, if it is so inclined, and that would be a profound

constitutional shift, with deeply uncertain implications. It would, at a minimum, pave the way for

businesses to choose whom they serve according to the identities of the customers and how those square

with the religious preferences of the company.

But the Court need not go that far, even if it should lean toward ruling in favor of an exemption within the

business world from the ACA’s contraceptive mandate. It could decide that the Green family and the

Hahn family have a right to exercise their religious beliefs in the way they run their business firms, and

that this mandate intrudes on those rights.

Along the way, of course, the Justices would have to find a way around the conventional business law

notion that corporations stand apart from their owners. But they could do that with a very narrow

definition of the rights of the owners of a company that is so closely held that it is essentially not a public

corporation, except in name. Again, though, that would grow out of the rights of the owners, not of the

corporate entity itself.

The problem in anticipating a victory for religious owners, though, is that the focus in that analysis may

fall too heavily on the owner’s interests, and insufficiently on the interests of the employees. What is at

stake on that side of the legal controversy is the interest of female employees in managing their personal

lives and their reproductive health, with obvious implications for their ability to carry on their work lives

and careers.

Just as there are Justices now on the Court who would, indeed, view this controversy through sympathetic

eyes for business management, there also are Justices now serving who would certainly view

sympathetically the claims of female workers of child-bearing age.

In these two cases, those two perspectives seem distinctly at odds, and the chances of finding common

ground between them seem remote, indeed.

For example, the easiest way to rule for a religious exemption for businesses or their owners in this case

would be to interpret the Affordable Care Act as not even authorizing the government to include birth

control in the requirements for employee health plans. That is an argument that the lawyers for the

businesses here actually make. But to rule that way would be to read the purposes of the statute’s

coverage of preventive health services so narrowly as to ignore the realities of the health of women who

work in offices, factories, and shops.

In terms of the legal foundations for a ruling, the Court might well go into this case hoping to avoid

making new constitutional law, on the institutional premise that it should not decide a constitutional

question unless it has no way to avoid it.

But it would be hard to base a ruling in this case solely on the scope of the Religious Freedom Restoration

Act, because that Act is essentially designed to protect constitutional rights of religious liberty. To know

what that law does protect requires knowing what the Constitution embraces — either as to corporations,

or as to their owners, or both.

Only one thing, perhaps, is certain as the argument in this case approaches: whatever the Court decides, it

will not decide the fate of the Affordable Care Act. The nation’s politics, and many of its legislatures

(including Congress), are absorbed with debates over whether to keep the law, to amend it, to render it

unenforceable, or to repeal it altogether. None of that depends upon the outcome of this case.

The Court has not been asked to strike down any part of the law, and it almost certainly won’t volunteer to

do so. All that is at issue is who must obey the contraceptive mandate.