A “Closer” Look at Hobby Lobby

Published in Lancaster Sunday News (Sunday, July 13, 2014)

On the last day of its term, the United States Supreme Court held that two for-profit corporations were “persons” within the meaning of a federal statute that prohibits the government from “substantially burdening a person’s exercise of religion.” Much has already been said and written about this decision, Burwell v. Hobby Lobby (Case No. 13-354; June 30, 2014), which involved national retailer Hobby Lobby Stores, Inc. and Lancaster-based cabinet manufacturer Conestoga Wood Specialties Corporation. Commentators on the right have hailed it as a victory for religious freedom and against intrusive government. The left despairs over its implications for women’s reproductive freedom, employment discrimination, and LGBT rights. It remains to be seen, of course, just how the decision will impact future cases that involve religious expression and corporations. Perhaps all sides can agree, though, that the word that best describes both the result and the reasoning in this case is “close.”

It was, of course, a close decision. The corporations won by the slimmest of margins, 5-4, and along partisan lines. Republican presidents appointed the five justices in the majority; Democrats appointed the remaining four. Justice Samuel Alito, who was appointed by President George W. Bush in 2006 to replace Justice Sandra Day O’Connor, wrote the majority opinion, joined by Justices Scalia, Thomas and Chief Justice Roberts. It holds, for the very first time in our nation’s history, that for-profit corporations can exercise religious beliefs within the meaning of a federal statute, the Religious Freedom Restoration Act. Justice Alito’s opinion also restricts the holding to the type of corporation represented by family-owned Hobby Lobby and Conestoga Wood: a “closely-held” corporation. (More about that later.)

Justice Ruth Bader Ginsburg, appointed by President Bill Clinton in 1993, rejects the notion that corporations can “believe” and chastises the majority for ignoring the rights of those unrepresented in the lawsuit – the female employees of the corporations – and creating a legal “minefield” for future cases involving clashes between religion and federal law.

Justice Anthony Kennedy, who was appointed in 1988 by Ronald Reagan, did not sign onto the majority opinion, but cast the deciding (or “swing”) vote in favor of the corporations. He explains his reason for doing so in a separate (“concurring”) opinion that not only cautions against reading the decision too broadly (as Justice Ginsburg would) but also recognizes that the case requires the Court to balance the interests of both the corporations and its female employees (a point not emphasized in Justice Alito’s opinion). Here is how Justice Kennedy describes what he terms the “two competing principles” presented in Hobby Lobby:

Among the reasons the United States is so open, so tolerant, and so free is that no person may be restricted or demeaned by government in exercising his or her religion. Yet neither may that same exercise unduly restrict other persons, such as employees, in protecting their own interests, interests the law deems compelling.

This language suggests that Justice Kennedy himself may have seen this as a very close case. His use of the phrase, “interests the law deems compelling” almost certainly alludes to earlier Supreme Court decisions concerned with women’s reproductive rights: 1) Griswold v. Connecticut (1965), which held Connecticut’s ban on contraceptives unconstitutional under a newly-established “right of privacy;” and 2) Planned Parenthood of Southeastern Pa. v. Casey (1992), which narrowed, but ultimately upheld the right to abortion established under Roe v. Wade (1973). The phrase could also be read as a subtle (but important) point of disagreement with the majority opinion written by Justice Alito, which “assumes,” but does not expressly acknowledge, that the government’s interest – ensuring women’s affordable access to contraception – is compelling. Indeed, if Kennedy’s allusion to Planned Parenthood v. Casey is intentional, it is also ironic: It was Justice Sandra Day O’Connor – whose seat Justice Alito now holds – who authored the majority opinion in Casey upholding the right to abortion.

In the end, Justice Kennedy sides with the majority because of his view that the government has a “less restrictive means” of ensuring contraceptive coverage than through “imposition of a direct mandate on the employers.” He expressly refers to (some might argue, “endorses”) a procedure proposed by the Department of Health and Human Services that would accommodate the objections of other corporations – non-profit religious organizations – to the contraception mandate:

The accommodation works by requiring insurance companies to cover, without cost sharing, contraception coverage for female employees who wish it. That accommodation equally furthers the Government’s interest but does not impinge on the plaintiffs’ religious beliefs.

It should be noted that the accommodation Justice Kennedy finds less restrictive than an employer mandate is also the subject of separate litigation headed the Supreme Court’s way. The Court may very well find in those cases that even the proposed accommodation fails to satisfy federal law. Nevertheless, it can be argued that it is the availability of this alternative – which balances “equally” the interests of both the corporations and their female employees – that convinced Justice Kennedy to rule against the government. If, as Chief Justice Roberts famously said, the role of a Supreme Court Justice is simply to call balls and strikes, this, for Justice Kennedy, was evidently a very close call.

As for the substance of the Court’s ruling, it also relies on a variation of the word “close” by expressly limiting its reach to “closely-held” corporations. The Internal Revenue Service defines a closely held corporation as one in which five or fewer individuals hold a majority of the company’s shares. Five members of the Hahn family (all Mennonites) own and control Conestoga Wood; five members of the Green family (all evangelical Christians) own and control Hobby Lobby. Why is the fact that these corporations are “closely-held” critical to understanding the Court’s decision?

The answer lies in the longstanding legal distinction made between “natural persons,” i.e., human beings, and “artificial persons,” i.e., corporations. Until the Hobby Lobby decision, the idea that a corporation could believe or exercise religion was at odds with almost two hundred years of precedent. In 1819, Supreme Court Chief Justice John Marshall (the often overlooked half of “F&M”) described a corporation as “an artificial being, invisible, intangible, and existing only in contemplation of law.” By limiting its ruling to closely-held corporations, the majority in Hobby Lobby has said, in effect, that treating all corporations as “artificial beings” is itself an artificial construct of the law – especially when the religious views of the family owners of these companies are unanimous and uncontested. Here is how Justice Alito closes the gap between “natural persons” (i.e, the Hahns and the Greens) and “artificial persons” (i.e., the corporate entities Conestoga Wood and Hobby Lobby):

A corporation is simply a form of organization used by human beings to achieve desired ends. An established body of law specifies the rights and obligations of the people (including shareholders, officers, and employees) who are associated with a corporation in one way or another. When rights, whether constitutional or statutory, are extended to corporations, the purpose is to protect the rights of these people.

Before corporate rights can be protected, of course, they must be identified. That was not a challenge the Court faced in Hobby Lobby. The religious views of the five members of the Hahn family who own and control Conestoga Wood are identical, and their opposition to certain contraceptive coverage is unanimous; the same is true for the Greens and Hobby Lobby. This may not be the case for other corporations – even closely-held corporations – where the owners do not share the same religious views or their application to a government mandate. How would the rights of “these people” be protected in a post-Hobby Lobby world?

Future cases may hold the answer to that and other questions left unresolved in Hobby Lobby. Only one thing can be said with certainty at this point: the case may be over, but the issues it raises are far from closed.

Laurie T. Baulig

 

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Laurie T. Baulig
Laurie T. Baulig

Attorney at Law

With a career spanning three decades, Laurie Baulig has been a litigator for the federal government, a private practitioner, in-house counsel for two business trade associations, and a teacher at a liberal arts college.  She founded Baulig Law with the idea that, at its best, law is a service profession that should be transparent, accessible and affordable.  The firm’s focus on employment law also reflects her philosophy that both businesses and their employees benefit when the workplace is free from discrimination, unfair wage practices, and unsafe or unhealthy conditions.

Laurie began her career as an antitrust litigator for the Federal Trade Commission in Washington, D.C.  She later shifted her focus to employment law as in-house counsel for the American Trucking Associations, one of the largest business trade groups in the nation’s capital.   While at ATA, she travelled across the country explaining the requirements of new laws passed by Congress – such as the Americans with Disabilities Act, Civil Rights Act of 1991, and Family and Medical Leave Act – and regulatory proposals that would have an impact on the trucking industry.   This experience not only confirmed her passion for employment law, but also awakened her interest in teaching.   So she left D.C. for Lancaster, PA in 2008 to serve as adjunct assistant professor at Franklin & Marshall College.  From 2008-13, she taught Human Resources Management, Gender and the Law, and other courses affecting legal rights and responsibilities in the workplace.

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