The Bill of Rights and the Religion of Business

, New York Law Journal

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Christopher Dunn

When Mitt Romney famously declared while campaigning in Iowa in August 2011 that "corporations are people," he was widely mocked—at least by those on the left. Yet, as a matter of constitutional principle he was largely right. And last week the Supreme Court announced it will decide whether to extend that principle to for-profit corporations seeking to invoke religious beliefs as a shield against a mandate in the Patient Protection and Affordable Care Act which requires them to provide contraceptive coverage to their employees.

The abortion issues underlying the two cases the court agreed to review—one from the Tenth Circuit, the other from the Third—undoubtedly will generate even more heated debate about the Affordable Care Act. From a constitutional perspective, however, the major tension in these cases is between respecting freedom of religion on the one hand and opening the door to corporate discrimination in the guise of religious conviction on the other. Given that for-profit corporations have never before been held to have First Amendment free exercise rights and given the potential consequences of such a holding, these cases bear close watching.

Corporations, Bill of Rights

The interplay between the Bill of Rights, which speaks largely of individual rights, and corporations, which are separate legal entities largely designed to shield individuals from legal responsibility, is a complex one. In sorting out which constitutional rights are available to corporations and which are not, the Supreme Court has drawn a distinction between "purely personal" rights, which cannot be invoked by corporations, and other rights:

Corporate identity has been determinative in several decisions denying corporations certain constitutional rights, such as the privilege against compulsory self-incrimination or equality with individuals in the enjoyment of a right to privacy, but this is not because the states are free to define the rights of their creatures without constitutional limit. Otherwise, corporations could be denied the protection of all constitutional guarantees, including due process and the equal protection of the laws. Certain "purely personal" guarantees, such as the privilege against compulsory self-incrimination, are unavailable to corporations and other organizations because the "historic function" of the particular guarantee has been limited to the protection of individuals. Whether or not a particular guarantee is "purely personal" or is unavailable to corporations for some other reason depends on the nature, history, and purpose of the particular constitutional provision.

If one focuses on the First Amendment, under this approach it long has been established that the free speech clause extends to corporations, including for-profit ones such as the New York Law Journal and The New York Times. Similarly, it long as been recognized that the First Amendment's free exercise clause extends to nonprofit religious corporate entities, such as the Catholic Church.

But the courts have not previously held that a for-profit corporation can invoke the free exercise clause as a vehicle for asserting its own claimed religious beliefs or those of its owners. Thus, it arguably is an open question whether the Law Journal or The Times, like the Catholic Church, could invoke the First Amendment in defending a decision that women are not fit to serve as their priests, i.e., editors.

Adding to the analysis is the Religious Freedom Restoration Act (RFRA). Congress enacted RFRA in 1993 in response to a Supreme Court decision that largely eliminated free-exercise challenges to religion-neutral government rules that applied generally but nonetheless had a substantial impact on specific religious practices (in that case, a general prohibition on use of a drug that one group used in its religious practices). Though the court subsequently held that RFRA was unconstitutional as applied to states and localities, the statute remains in effect for the federal government and thus plays a key role in the Affordable Care Act challenges the Supreme Court has agreed to take up.

Obamacare and Religion

Among the myriad legal challenges to the Affordable Care Act are ones to a mandate that employers provide to their employees heath coverage that includes contraceptive measures to which some object for sincere religious reasons. In the two cases headed to the Supreme Court, for-profit corporations assert that they have religious rights under the free exercise clause and under RFRA that shield them from this mandate. On this important question of constitutional law, the U.S. Court of Appeals for the Tenth Circuit in June became the first federal appeals court to hold that for-profit corporations have free exercise rights. One month later, the U.S. Court of Appeals for the Third Circuit rejected that position, setting up a circuit split for the Supreme Court to resolve.

The plaintiffs in the Tenth Circuit case, Hobby Lobby Stores v. Sebelius,1 are Hobby Lobby Stores, Mardel Inc., and the individuals who own the two businesses. For-profit Hobby Lobby is an arts-and-crafts chain with more than 500 stores and about 13,000 full-time employees. Mardel is an affiliated for-profit chain of 35 bookstores with just fewer than 400 employees that sells only Christian books and materials. The two corporate businesses are owned and operated by members of a family that has sincere religious beliefs that guide certain aspects of the businesses' operations.

The principal issue the en banc Tenth Circuit addressed was whether Hobby Lobby and Mardel were "persons" under RFRA, an issue that required examination of whether for-profit corporations had rights under the First Amendment's free exercise clause. On this key point, the Tenth Circuit started with the proposition that the free exercise clause is not a "purely personal" guarantee, as evidenced by the fact the Supreme Court long had held that not-for-profit religious organizations have free exercise rights.

The appeals court then noted that the Supreme Court also had held that individuals engaged in for-profit activity have free exercise rights. "In short," the court concluded, "individuals may incorporate for religious purposes and keep their Free Exercise rights, and unincorporated individuals may pursue profit while keeping their First Amendment rights." Finally, the court pointed to Citizens United v. Federal Elections Commission,2 the momentous 2010 campaign-finance decision premised on the proposition that for-profit corporations have free-speech rights.

Given this situation, the Tenth Circuit saw "no reason the Supreme Court would recognize constitutional protection for a corporation's political expression but not its religious expression."

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