The Hobby Lobby Case
Summary
This case, which is usually referred to as The Hobby Lobby Case, began before any of the corporations involved had any knowledge that a lawsuit was in their future. The events that precipitated the lawsuit began when Congress passed the Patient Protection and Affordable Care Act (ACA) in 2012. The goal of the act was to make certain that all (well, at least most) Americans had health care insurance. The mechanism by which this was to be accomplished was a mandate that all employers who had more than 50 workers employed on a full-time basis would have to provide “a group health plan or group health insurance coverage” that would give those employees “minimum essential coverage.” [26 USC Section 5000 A (f) (2); Sections 4980 H (a) and (c) (2).] To enforce the law, Congress attached stiff penalties, in the form of heavy fines, for employers who failed to obey the law. (In the case of Hobby Lobby, for example, those fines would have been more than $1.3 million daily for a total of $475 million annually.) Part of this health care package required that the insurance plan provide “preventative care and screenings” for women that would be free from “any cost sharing requirements.” [42 USC Section 300gg-13(a) (4).] The statute did not identify the kind of prevention; rather, it empowered the Department of Health and Human Services (HHS) acting through the Health Resources and Services Administration (HRSA), one of the department’s subdivisions, to make that determination. The HRSA took immediate steps to fulfill that assignment by calling on the Institute of Medicine. The institute endorsed the idea that employers should be compelled to provide coverage for all contraceptive procedures approved by the Food and Drug Administration. Four of these methods are designed to stop the development of an already fertilized egg. These four methods are at the heart of this case. Don't use plagiarised sources.Get your custom essay just from $11/page
The HHS also issued regulations that would exempt specific not-for-profit religious institutions from participating in the coverage of these contraceptive devices. Any nonprofit religious organization that had genuine religious convictions against such methods could notify their insurer of their objection, and the insurer would then eliminate that part of the plan from the institution’s coverage and cover the cost with no cost sharing penalty for the employee. Other plans that did not cover contraceptive methods were grandfathered into the new act with no penalty. This provision allowed that coverage to continue without complying with the act’s contraceptive provisions. Also, based on the fundamental requirements of the ACA, employers with less than 50 workers were also exempt. Those original provisions would not compel them to participate in the offering of such contraceptive methods to their employees.
These rules and the exemptions did not anticipate religious objections from certain closely held profit-making companies that are owned and operated by a few individuals who have strong, authentic religious objections to the use of the contraceptive methods in question here. Three corporations in particular fell into this category, and each one felt so strongly about the issue that they brought suit against the secretary of the Department of Health and Human Services. These three companies are Conestoga Wood Specialties, owned and operated by Norman and Elizabeth Hahn and their three sons, who belong to the Mennonite Church; Hobby Lobby, a national chain of arts and craft stores owned and operated by David and Barbara Green and their three children, all of whom are devoted Christians; and Mardel, a chain of Christian bookstores owned and operated by one of the Greens’ sons. In each of these lawsuits the plaintiffs issued very clear and obviously sincere position statements defending their religious objection to being compelled to join in the coverage of what they considered a morally bankrupt practice. The lawsuit was brought under the authority of the Religious Freedom Restoration Act (RFRA) and the Free Exercise Clause of the Constitution.
The RFRA states that the government cannot “substantially burden a person’s exercise of religion even if the burden results from a rule of general applicability” except when the government “demonstrates that the application of the burden to the person (1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.” [42 USC Sections 2000bb- 1(a)(b).] The threshold issue before the Court is whether the three corporate plaintiffs qualify as “legal persons” under the RFRA. The Court begins by noting that the goal of the RFRA is to make certain that a wide berth is given to individuals in the exercise of their religious beliefs. As the name of the act implies, congressional intent was to rebuild a layer of defense for religion that had been eroded over the years by the decisions of the judicial branch. In restoring the balance in favor of religious freedom rather than governmental power, Congress was, in essence, redirecting the courts to rebuild that lost defensive layer. Accordingly, that protection must be broadened, not narrowed. While it is true that the legal fiction of a corporation does create an entity that is separate from the founders, the purpose of that protective layer is not to protect the fiction in and of itself. Rather, that protection was built to defend real flesh and blood people. When the law defines the rights and duties of a corporation, it is actually defining the rights and duties of the people behind those corporations. They are the ones who must carry out corporate duties and who benefit from corporate rights. Thus, when the corporation is given property rights, those property rights really belong to the people. This is especially true when the right in question is a religious right. Thus, the Court in this case states with some conviction that the term person in the statute is not meant to protect corporate “persons” because the real protection flows to the people behind that corporate veil.
Having disposed of the “person” argument the Court moves on to the second argument made by the defense and supported by several lower court judges as well as by the principal dissent. That argument states that Hobby Lobby, Conestoga, and Mardel do not deserve the protection afforded by the RFRA because their principal objective is to earn a profit, not to promote religious values. The Court finds this argument weak at best. The Court acknowledges that it is conceivable that a law can be enacted by the government that makes the practice of a particular religion more expensive and thus more difficult. To demonstrate this point the Court refers to the case of Braunfield v. Brown, 366 U.S. 599 (1961), in which the Supreme Court acknowledged that forcing Jewish shop owners to remain closed on Sunday in addition to being closed on Saturday, which was required by their faith, might place an unfair burden on their constitutional right to the free exercise of their religion, even though the direct consequence of the prohibition was a loss of profits. Although the business owners lost the case, the right of profit making businesses to bring free exercise cases was affirmed by the Court. The Court also notes that the several lower courts have erroneously held that the Free Exercise Clause and the RFRA do not protect profit-making businesses because their only purpose is to earn a profit not to promote religious values. The Court points out that this is patently false in the modern view of corporate law, which has held repeatedly that corporations have civic and public duties beyond making a profit for their shareholders. Moreover, the plaintiffs in this case have repeatedly demonstrated that their corporations do have religious goals.
In a lengthy footnote, the court also makes a point that is directly related to our study of contract law. The Court notes that the dissent argues that the historical development of business in the common law does not support the notion that “lay corporations” (as opposed to ecclesiastical corporations) can have any religious function. This, as we saw in our lengthy examination of the historical development of the law merchant and its merger with common law, is simply not true. In fact, no matter which version of history we accept, the Church was closely allied with the development of the capitalist business system. Max Weber, for example, in The Protestant Ethic: The Spirit of Capitalism, defends the proposition that European capitalism began with the Protestant Reformation in the 16th century. Protestantism, primarily in the form of Puritanism, Separatism, and Calvinism, promoted the idea that the accumulation of wealth was a fairly good sign that the merchant who so prospered was among the elect, and, therefore, bound for heaven. In a similar vein, Rodney Stark in his book, The Victory of Reason: How Christianity Led to Freedom, Capitalism, and Western
Science, argues, rather convincingly, that one of the driving forces behind the growth of capitalism was the Roman Catholic Church. The medieval Church had the ability to redirect capitalism as it did because, as a system, the Roman Catholic Church had a strong central controlling agent and a concentration, rather than a dispersal, of power among various actors.
Thus, the Church helped provide a rational and moral foundation for the principles and procedures that guided the activities of merchants in their communities, their courts, and in the making of their contracts. The Church, which is directed by a central powerful leader, refused to condemn commercial activity. Instead, the Church monitored how those activities were carried out. In short, the Church encouraged this new class of sellers to establish guilds that followed the law of the Church, a legal tradition that is generally referred to as canon law. The Church also insisted that these emerging businessmen never engage in deceit or dishonesty and always follow a good faith approach to contract development. As long as they followed these basic precepts, the Church reassured the members of the new and expanding class of professional sellers that there was nothing inherently wrong with making a profit in their chosen profession. Finally, Berman in his study of the growth of the law merchant, Law and Revolution: The Formation of the Western Legal Tradition, states that, from the very beginning, merchants were involved in the courts that heard and settled contract disputes and commercial differences. Involvement meant that, as a system, the law merchant, like the Roman Catholic Church, had a strong central controlling agent and a concentration, rather than a dispersal, of power. This allowed the law merchant to direct, at least to a certain degree, the other characteristics of neutrality, universality, mutuality, integration, and evolution, all of which have an ethical basis. (Reproduced below is that portion of the Court’s opinion that corresponds to this analysis. Footnote numerals are included but the citations themselves and explanatory notes are omitted.)
The Court’s Opinion Delivered by Justice Alito
At issue in these cases are HHS regulations promulgated under the Patient Protection and Affordable Care Act of 2010 (ACA), 124 Stat. 119. ACA generally requires employers with 50 or more full-time employees to offer “a group health plan or group health insurance coverage” that provides “minimum essential coverage.” 26 U.S.C. §5000A (f)(2); §§4980H(a), (c)(2). Any covered employer that does not provide such coverage must pay a substantial price. Specifically, if a covered employer provides group health insurance but its plan fails to comply with ACA’s group-health-plan requirements, the employer may be required to pay $100 per day for each affected “individual.” §§4980D (a)–(b). And if the employer decides to stop providing health insurance altogether and at least one full-time employee enrolls in a health plan and qualifies for a subsidy on one of the government-run ACA exchanges, the employer must pay $2,000 per year for each of its full-time employees. §§4980H (a), (c) (1).
Unless an exception applies, ACA requires an employer’s group health plan or group-health-insurance coverage to furnish “preventive care and screenings” for women without “any cost sharing requirements.” 42 U.S.C. §300gg–13(a) (4). Congress itself, however, did not specify what types of preventive care must be covered. Instead, Congress authorized the Health Resources and Services Administration (HRSA), a component of HHS, to make that important and sensitive decision. Ibid. The HRSA in turn consulted the Institute of Medicine, a nonprofit group of volunteer advisers, in determining which preventive services to require. See 77 Fed. Reg. 8725–8726 (2012).
In August 2011, based on the Institute’s recommendations, the HRSA promulgated the Women’s Preventive Services Guidelines. See id., at 8725–8726, and n. 1; online at http://hrsa.gov/womensguidelines (all Internet materials as visited June 26, 2014, and available in Clerk of Court’s case file). The Guidelines provide that nonexempt employers are generally required to provide “coverage, without cost sharing” for “[a]ll Food and Drug Administration [(FDA)] approved contraceptive methods, sterilization procedures, and patient education and counseling.” 77 Fed. Reg. 8725 (internal quotation marks omitted). Although many of the required, FDA-approved methods of contraception work by preventing the fertilization of an egg, four of those methods (those specifically at issue in these cases) may have the effect of preventing an already fertilized egg from developing any further by inhibiting its attachment to the uterus. Brief for HHS 9 Cite as: 573 U.S. ____ (2014) in No. 13–354, pp. 9–10, n. 4;6 FDA, Birth Control: Medicines to Help You.7 HHS also authorized the HRSA to establish exemptions from the contraceptive mandate for “religious employers.” 45 CFR §147.131(a). That category encompasses “churches, their integrated auxiliaries, and conventions or associations of churches,” as well as “the exclusively religious activities of any religious order.” See ibid (citing 26 U.S.C. §§6033(a) (3)(A)(i), (iii)). In its Guidelines, HRSA exempted these organizations from the requirement to cover contraceptive.
In addition, HHS has effectively exempted certain religious nonprofit organizations, described under HHS regulations as “eligible organizations,” from the contraceptive mandate. See 45 CFR §147.131(b); 78 Fed. Reg.39874 (2013). An “eligible organization” means a nonprofit organization that “holds itself out as a religious organization” and “opposes providing coverage for some or all of any contraceptive services required to be covered… on account of religious objections.” 45 CFR §147.131(b). To qualify for this accommodation, an employer must certify that it is such an organization. §147.131(b)(4). When a group-health-insurance issuer receives notice that one of its clients has invoked this provision, the issuer must then exclude contraceptive coverage from the employer’s plan and provide separate payments for contraceptive services for plan participants without imposing any cost-sharing requirements on the eligible organization, its insurance plan, or its employee beneficiaries. §147.131(c).8 Although this procedure requires the issuer to bear the cost of these services, HHS has determined that this obligation will not impose any net expense on issuers because its cost will be less than or equal to the cost savings resulting from the services. 78 Fed. Reg. 39877.9 In addition to these exemptions for religious organizations, ACA exempts a great many employers from most of its coverage requirements. Employers providing “grandfathered health plans”—those that existed prior to March 23, 2010, and that have not made specified changes after that date—need not comply with many of the Act’s requirements, including the contraceptive mandate. 42 U.S.C. §§18011(a), (e). And employers with fewer than 50 employees are not required to provide health insurance at all. 26 U.S.C. §4980H(c)(2). All told, the contraceptive mandate “presently does not apply to tens of millions of people.” 723 F. 3d 1114, 1143 (CA10 2013). This is attributable, in large part, to grandfathered health plans: Over one-third of the 149 million nonelderly people in America with employer-sponsored health plans were enrolled in grandfathered plans in 2013. Brief for HHS in No. 13–354, at 53; Kaiser Family Foundation & Health Research & Educational Trust, Employer Health Benefits, 2013 Annual Survey 43, 221.10 The count for employees working for firms that do not have to provide insurance at all because they employ fewer than 50 employees is 34 million workers. See The Whitehouse, Health Reform for Small Businesses: The Affordable Care Act Increases Choice and Saving Money for Small Businesses 1.11 II A
Norman and Elizabeth Hahn and their three sons are devout members of the Mennonite Church, a Christian denomination. The Mennonite Church opposes abortion and believes that “[t]he fetus in its earliest stages… shares humanity with those who conceived it.”12
Fifty years ago, Norman Hahn started a wood-working business in his garage, and since then, this company, Conestoga Wood Specialties, has grown and now has 950 employees. Conestoga is organized under Pennsylvania law as a for-profit corporation. The Hahns exercise sole ownership of the closely held business; they control its board of directors and hold all of its voting shares. One of the Hahn sons serves as the president and CEO. The Hahns believe that they are required to run their business “in accordance with their religious beliefs and moral principles.” 917 F. Supp. 2d 394, 402 (ED Pa. 2013). To that end, the company’s mission, as they see it, is to “operate in a professional environment founded upon the highest ethical, moral, and Christian principles.” Ibid. (internal quotation marks omitted). The company’s “Vision and Values Statements” affirms that Conestoga endeavors to “ensur[e] a reasonable profit in [a] manner that reflects [the Hahns’] Christian heritage.” App. in No. 13–356, p. 94 (complaint).
As explained in Conestoga’s board-adopted “Statement on the Sanctity of Human Life,” the Hahns believe that “human life begins at conception.” 724 F. 3d 377, 382, and n. 5 (CA3 2013) (internal quotation marks omitted). It is therefore “against [their] moral conviction to be involved in the termination of human life” after conception, which they believe is a “sin against God to which they are held accountable.” Ibid. (internal quotation marks omitted). The Hahns have accordingly excluded from the group health-insurance plan they offer to their employees certain contraceptive methods that they consider to be abortifacients. Id., at 382.
The Hahns and Conestoga sued HHS and other federal officials and agencies under RFRA and the Free Exercise Clause of the First Amendment, seeking to enjoin application of ACA’s contraceptive mandate insofar as it requires them to provide health-insurance coverage for four FDA approved contraceptives that may operate after the fertilization of an egg.13 These include two forms of emergency contraception commonly called “morning after” pills and two types of intrauterine devices.14 In opposing the requirement to provide coverage for the contraceptives to which they object, the Hahns argued that “it is immoral and sinful for [them] to intentionally participate in, pay for, facilitate, or otherwise support these drugs.” Ibid. The District Court denied a preliminary injunction, see 917 F. Supp. 2d, at 419, and the Third Circuit affirmed in a divided opinion, holding that “for profit, secular corporations cannot engage in religious exercise” within the meaning of RFRA or the First Amendment. 724 F. 3d, at 381. The Third Circuit also rejected the claims brought by the Hahns themselves because it concluded that the HHS “[m]andate does not impose any requirements on the Hahns” in their personal capacity. Id., at 389.
B.
David and Barbara Green and their three children are Christians who own and operate two family businesses. Forty-five years ago, David Green started an arts and crafts store that has grown into a nationwide chain called Hobby Lobby. There are now 500 Hobby Lobby stores, and the company has more than 13,000 employees. 723 F. 3d, at 1122. Hobby Lobby is organized as a for-profit corporation under Oklahoma law. One of David’s sons started an affiliated business, Mardel, which operates 35 Christian bookstores and employs close to 400 people. Ibid. Mardel is also organized as a for-profit corporation under Oklahoma law. Though these two businesses have expanded over the years, they remain closely held, and David, Barbara, and their children retain exclusive control of both companies. Ibid. David serves as the CEO of Hobby Lobby, and his three children serve as the president, vice president, and vice CEO. See Brief for Respondents in No. 13–354, p. 8.15 Hobby Lobby’s statement of purpose commits the Greens to “[h]onoring the Lord in all [they] do by operating the company in a manner consistent with Biblical principles.” App. in No. 13–354, pp. 134–135 (complaint). Each family member has signed a pledge to run the businesses in accordance with the family’s religious beliefs and to use the family assets to support Christian ministries. 723 F. 3d, at 1122. In accordance with those commitments, Hobby Lobby and Mardel stores close on Sundays, even though the Greens calculate that they lose millions in sales annually by doing so. Id., at 1122; App. in No. 13– 354, at 136–137. The businesses refuse to engage in profitable transactions that facilitate or promote alcohol use; they contribute profits to Christian missionaries and ministries; and they buy hundreds of full-page newspaper ads inviting people to “know Jesus as Lord and Savior.” Ibid. (internal quotation marks omitted). Like the Hahns, the Greens believe that life begins at conception and that it would violate their religion to facilitate access to contraceptive drugs or devices that operate after that point. 723 F. 3d, at 1122. They specifically object to the same four contraceptive methods as the Hahns and, like the Hahns, they have no objection to the other 16 FDA-approved methods of birth control. Id., at 1125. Although their group-healthinsurance plan predates the enactment of ACA, it is not a grandfathered plan because Hobby Lobby elected not to retain grandfathered status before the contraceptive mandate was proposed. Id., at 1124.
The Greens, Hobby Lobby, and Mardel sued HHS and other federal agencies and officials to challenge the contraceptive mandate under RFRA and the Free Exercise Clause.16 The District Court denied a preliminary injunction, see 870 F. Supp. 2d 1278 (WD Okla. 2012), and the plaintiffs appealed, moving for initial en banc consideration. The Tenth Circuit granted that motion and reversed in a divided opinion. Contrary to the conclusion of the Third Circuit, the Tenth Circuit held that the Greens’ two for-profit businesses are “persons” within the meaning of RFRA and therefore may bring suit under that law. The court then held that the corporations had established a likelihood of success on their RFRA claim. 723 F. 3d, at 1140–1147. The court concluded that the contraceptive mandate substantially burdened the exercise of religion by requiring the companies to choose between “compromis[ing] their religious beliefs” and paying a heavy fee—either “close to $475 million more in taxes every year” if they simply refused to provide coverage for the contraceptives at issue, or “roughly $26 million” annually if they “drop [ped] health-insurance benefits for all employees.” Id., at 1141. The court next held that HHS had failed to demonstrate a compelling interest in enforcing the mandate against the Greens’ businesses and, in the alternative, that HHS had failed to prove that enforcement of the mandate was the “least restrictive means” of furthering the Government’s asserted interests. Id., at 1143–1144 (emphasis deleted; internal quotation marks omitted). After concluding that the companies had “demonstrated irreparable harm,” the court reversed and remanded for the District Court to consider the remaining factors of the preliminary injunction test. Id., at 1147.17 We granted certiorari. 571 U.S. ___ (2013).
III A
RFRA prohibits the “Government [from] substantially burden[ing] a person’s exercise of religion even if the burden results from a rule of general applicability” unless the Government “demonstrates that application of the burden to the person—(1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.” 42 U.S.C. §§2000bb–1(a), (b) (emphasis added). The first question that we must address is whether this provision applies to regulations that govern the activities of for-profit corporations like Hobby Lobby, Conestoga, and Mardel. HHS contends that neither these companies nor their owners can even be heard under RFRA. According to HHS, the companies cannot sue because they seek to make a profit for their owners, and the owners cannot be heard because the regulations, at least as a formal matter, apply only to the companies and not to the owners as individuals. HHS’s argument would have dramatic consequences. Consider this Court’s decision in Braunfeld v. Brown, 366 U.S. 599 (1961) (plurality opinion). In that case, five Orthodox Jewish merchants who ran small retail businesses in Philadelphia challenged a Pennsylvania Sunday closing law as a violation of the Free Exercise Clause. Because of their faith, these merchants closed their shops on Saturday, and they argued that requiring them to remain shut on Sunday threatened them with financial ruin. The Court entertained their claim (although it ruled against them on the merits), and if a similar claim were raised today under RFRA against a jurisdiction still subject to the Act (for example, the District of Columbia, see 42 U.S.C. §2000bb–2(2)), the merchants would be entitled to be heard. According to HHS, however, if these merchants chose to incorporate their businesses— without in any way changing the size or nature of their businesses—they would forfeit all RFRA (and free-exercise) rights. HHS would put these merchants to a difficult choice: either give up the right to seek judicial protection of their religious liberty or forgo the benefits, available to their competitors, of operating as corporations.
As we have seen, RFRA was designed to provide very broad protection for religious liberty. By enacting RFRA, Congress went far beyond what this Court has held is constitutionally required.18 Is there any reason to think that the Congress that enacted such sweeping protection put small-business owners to the choice that HHS suggests? An examination of RFRA’s text, to which we turn in the next part of this opinion, reveals that Congress did no such thing.
As we will show, Congress provided protection for people like the Hahns and Greens by employing a familiar legal fiction: It included corporations within RFRA’s definition of “persons.” But it is important to keep in mind that the purpose of this fiction is to provide protection for human beings. 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. For example, extending Fourth Amendment protection to corporations protects the privacy interests of employees and others associated with the company. Protecting corporations from government seizure of their property without just compensation protects all those who have a stake in the corporations’ financial well-being. And protecting the free-exercise rights of corporations like Hobby Lobby, Conestoga, and Mardel protects the religious liberty of the humans who own and control those companies. In holding that Conestoga, as a “secular, for-profit corporation,” lacks RFRA protection, the Third Circuit wrote as follows:
“General business corporations do not, separate and apart from the actions or belief systems of their individual owners or employees, exercise religion. They do not pray, worship, observe sacraments or take other religiously motivated actions separate and apart from the intention and direction of their individual actors.” 724 F. 3d, at 385 (emphasis added).
All of this is true—but quite beside the point. Corporations, “separate and apart from” the human beings who own, run, and are employed by them, cannot do anything at all.
B 1
As we noted above, RFRA applies to “a person’s” exercise of religion, 42 U.S.C. §§2000bb–1(a), (b), and RFRA itself does not define the term “person.” We therefore look to the Dictionary Act, which we must consult “[i]n determining the meaning of any Act of Congress, unless the context indicates otherwise.” 1 U.S.C. §1. Under the Dictionary Act, “the wor[d] ‘person’… include[s] corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.” Ibid.; see FCC v. AT&T Inc., 562 U.S. _____, _____ (2011) (slip op., at 6) (“We have no doubt that ‘person,’ in a legal setting, often refers to artificial entities. The Dictionary Act makes that clear”). Thus, unless there is something about the RFRA context that “indicates otherwise,” the Dictionary Act provides a quick, clear, and affirmative answer to the question whether the companies involved in these cases may be heard. We see nothing in RFRA that suggests a congressional intent to depart from the Dictionary Act definition, and HHS makes little effort to argue otherwise. We have entertained RFRA and free-exercise claims brought by nonprofit corporations, see Gonzales v. O Centro Spirit Beneficiate Union do Vegetal, 546 U.S. 418 (2006) (RFRA); Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, 565 U.S. _____ (2012) (Free Exercise); Church of the Lucama Babel Aye, Inc. v. Hialeah, 508 U.S. 520 (1993) (Free Exercise), and HHS concedes that a nonprofit corporation can be a “person” within the meaning of RFRA. See Brief for HHS in No. 13–354, at 17; 20 Reply Brief in No. 13–354, at 7–8.19 This concession effectively dispatches any argument that the term “person” as used in RFRA does not reach the closely held corporations involved in these cases. No known understanding of the term “person” includes some but not all corporations. The term “person” sometimes encompasses artificial persons (as the Dictionary Act instructs), and it sometimes is limited to natural persons. But no conceivable definition of the term includes natural persons and nonprofit corporations, but not for-profit corporations.20 Cf. Clark v. Martinez, 543 U.S. 371, 378 (2005) (“To give th[e] same words a different meaning for each category would be to invent a statute rather than interpret one”). 2 The principal argument advanced by HHS and the principal dissent regarding RFRA protection for Hobby Lobby, Conestoga, and Mardel focuses not on the statutory term “person,” but on the phrase “exercise of religion.” According to HHS and the dissent, these corporations are not protected by RFRA because they cannot exercise religion. Neither HHS nor the dissent, however, provides any persuasive explanation for this conclusion. Is it because of the corporate form? The corporate form alone cannot provide the explanation because, as we have pointed out, HHS concedes that nonprofit corporations can be protected by RFRA. The dissent suggests that nonprofit corporations are special because furthering their religious “autonomy… often furthers individual religious freedom as well.” Post, at 15 (quoting Corporation of Presiding Bishop of Church of Jesus Christ of Latter-day Saints v. Amos, 483 U.S. 327, 342 (1987) (Brennan, J., concurring in judgment)). But this principle applies equally to for-profit corporations: Furthering their relegious freedom also “furthers individual religious freedom.” In these cases, for example, allowing Hobby Lobby, Conestoga, and Mardel to assert RFRA claims protects the religious liberty of the Greens and the Hahns.21 If the corporate form is not enough, what about the profit-making objective? In Braunfeld, 366 U.S. 599, we entertained the free-exercise claims of individuals who were attempting to make a profit as retail merchants, and the Court never even hinted that this objective precluded their claims. As the Court explained in a later case, the “exercise of religion” involves “not only belief and profession but the performance of (or abstention from) physical acts” that are “engaged in for religious reasons.” Smith, 494 U.S., at 877. Business practices that are compelled or limited by the tenets of a religious doctrine fall comfortably within that definition. Thus, a law that “operates so as to make the practice of… religious beliefs more expensive” in the context of business activities imposes a burden on the exercise of religion. Braunfeld, supra, at 605; see United States v. Lee, 455 U.S. 252, 257 (1982) (recognizing that “compulsory participation in the social security system interferes with [Amish employers’] free exercise rights”). If, as Braunfeld recognized, a sole proprietorship that seeks to make a profit may assert a free-exercise claim,22 why can’t Hobby Lobby, Conestoga, and Mardel do the same? Some lower court judges have suggested that RFRA does not protect for-profit corporations because the purpose of such corporations is simply to make money.23 This argument flies in the face of modern corporate law. “Each American jurisdiction today either expressly or by implication authorizes corporations to be formed under its general corporation act for any lawful purpose or business.” 1 J. Cox & T. Hazen, Treatise of the Law of Corporations §4:1, p. 224 (3d ed. 2010) (emphasis added); see 1A W. Fletcher, Cyclopedia of the Law of Corporations §102 (rev. ed. 2010). While it is certainly true that a central objective of for-profit corporations is to make money, modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so. For-profit corporations, with ownership approval, support a wide variety of charitable causes, and it is not at all uncommon for such corporations to further humanitarian and other altruistic objectives. Many examples come readily to mind. So long as its owners agree, a for-profit corporation may take costly pollution-control and energy conservation measures that go beyond what the law requires. A for-profit corporation that operates facilities in other countries may exceed the requirements of local law regarding working conditions and benefits. If for-profit corporations may pursue such worthy objectives, there is no apparent reason why they may not further religious objectives as well. HHS would draw a sharp line between nonprofit corporations (which, HHS concedes, are protected by RFRA) and for-profit corporations (which HHS would leave unprotected), but the actual picture is less clearcut. Not all corporations that decline to organize as nonprofits do so in order to maximize profit. For example, organizations with religious and charitable aims might organize as for-profit corporations because of the potential advantages of that corporate form, such as the freedom to participate in lobbying for legislation or campaigning for political candidates who promote their religious or charitable goals.24 In fact, recognizing the inherent compatibility between establishing a forprofit corporation and pursuing nonprofit goals, States have increasingly adopted laws formally recognizing hybrid corporate forms. Over half of the States, for instance, now recognize the “benefit corporation,” a dual-purpose entity that seeks to achieve both a benefit for the public and a profit for its owners.25 In any event, the objectives that may properly be pursued by the companies in these cases are governed by the laws of the States in which they were incorporated—Pennsylvania and Oklahoma—and the laws of those States permit for-profit corporations to pursue “any lawful purpose” or “act,” including the pursuit of profit in conformity with the owners’ religious principles. 15 Pa. Cons. Stat. §1301 (2001) (“Corporations may be incorporated under this subpart for any lawful purpose or purposes”); Okla. Stat., Tit. 18, §§1002, 1005 (West 2012) (“[E]very corporation, whether profit or not for profit” may “be incorporated or organized… to conduct or promote any lawful business or purposes”); see also §1006(A)(3); Brief for State of Oklahoma as Amicus Curiae in No. 13–354. ALITO, J., delivered the opinion of the Court, in which ROBERTS, C. J., and SCALIA, KENNEDY, and THOMAS, JJ., joined. KENNEDY, J., filed a concurring opinion. GINSBURG, J., filed a dissenting opinion, in which SOTOMAYOR, J., joined and in which BREYER and KAGAN, JJ., joined as to all but Part III-C-1. BREYER and KAGAN, JJ., filed a dissenting opinion.
Questions for Analysis
- It should be clear that, contrary to the opinion offered by one of the dissents, that the Church played an enormous role in the development of contract law especially as it related to the growth of the law merchant. How does this realization support the majority opinion in relation to the purpose of a corporation and the relationship of that purpose to the RFRA? Explain.
- In Chapter 7, “The Essentials of Contract Law,” the feature A Question of Ethics asks the following question: “Should the Church, or perhaps religion in general, be given a stronger voice in the political and economic arena, to help redirect and perhaps even equalize the distribution of wealth?” After reading this case, how would you answer this question? Does this answer differ from the answer you offered when you first read Chapter 7? Why or why not?
- The history of the law merchant offered by Harold J. Berman that we looked at briefly in Chapter 7 suggests that the law merchant always involved the merchants in the law-making process. In fact, the courts established by the guilds were run by elected guild members. It is likely that these guild leaders would have understood that the law can often make merchants choose between making a profit and following their religious beliefs. Given that knowledge, speculate on just how these guild members might have decided The Hobby Lobby Case.
- Also in Chapter 7, we learned that one of the essential differences between contract law and the other areas of the law is that the duties assumed by the parties to a contract are voluntary. Use that knowledge to develop an argument that supports the dissenting justices in The Hobby Lobby Case. Explain.
- Max Weber, in The Protestant Ethic: The Spirit of Capitalism, defends the proposition that European capitalism began with the Protestant Reformation in the 16th century. In a similar vein, Rodney Stark in his book, The Victory of Reason: How Christianity Led to Freedom, Capitalism, and Western Science, argues that one of the driving forces behind the growth of capitalism was the Roman Catholic Church. Which view is closer to your own view on the topic? Explain.
- In Chapter 8, “Offer, Acceptance, and Mutual Assent,” we learned that sometimes the law acts proactively and sometimes the law simply passively reacts. This knowledge helped explain why the law has acted (or reacted) as it has in the area of cyber-law. Does The Hobby Lobby Case reflect proactive integration or passive reaction? Explain.
- In Chapter 10, “Capacity and Legality: The Final Elements,” we learned that the most obvious type of illegal contract is one that is designed to obligate someone to commit a crime or a tort. Should there also be a prohibition against contracts that are designed to obligate the parties to do something unethical? Explain.
- If corporations are legal persons, as Justice Alito suggests in the majority opinion, can they enter contracts that are binding on their shareholders, board members, and officers? Explain.
- If corporations are legal persons, as Justice Alito suggests in the majority opinion, and if, in fact, they enter contracts that are binding on their shareholders, board members, and officers, what type of signature could they provide on any of those contracts that have to be in writing and signed by the party sought to be bound? Explain.
- A complex adaptive system (CAS) is a network of interacting conditions that reinforce one another, while at the same time adjusting to change from agents outside and inside the system. In what ways does Justice Alito’s opinion in this case reinforce the idea that the law works like a complex adaptive system? Explain.
Sukys, Paul. Business Law with UCC Applications (p. 306). McGraw-Hill Higher Education. Kindle Edition.