This term of the Supreme Court of the United States is setting up to be as contentious and pivotal as the last. Just three years after the Patient Protection and Affordable Care Act’s (ACA) passage1 and one year after withstanding a challenge to the law’s individual mandate,2 the law, colloquially known as ObamaCare, is poised for its second round of Supreme Court challenges. This time the Court is asked to address whether the law’s abortion and contraceptive mandate violates the Religious Freedom Restoration Act (RFRA), 42 U.S.C. § 2000(b)(b), and the Free Exercise Clause of the First Amendment.3
Under the ACA, all employers with more than 50 employees are required to provide health insurance plans that cover “[a]ll Food and Drug Administration approved contraceptive methods [and] sterilization procedures,” including abortion and abortifacient forms of contraceptives that destroy fertilized embryos, such as the “morning after pill.”4 The Department of Health and Human Services originally exempted churches from this mandate.5 Within the last year the department has extended the exemption to other non-profit religious organizations, such as Catholic universities, religious hospitals and other charities.6 However, the department continues to refuse to extend the exemption to for-profit businesses.7 To uphold the mandate would force these businesses to drop healthcare coverage for their employees altogether,8 violate their religion by providing it, or face stiff penalties amounting to a minimum fine of $1.825 million per year, in addition to exposing them to suit from the Department of Labor and private suits from their employees.9 Clearly fines this punitive would at best put these companies at an enormous competitive disadvantage, but more realistically would cause them to drop all healthcare coverage or drive them out of the marketplace altogether.
Earlier this year, within a month of one another, two Circuit Courts of Appeals released opposing opinions on the issue. Both cases come down to the question of whether a for-profit business can even engage in religious exercise at all.10 The Third Circuit, in Conestoga Wood Specialties Corp. v. Secretary of U.S. Department of Health & Human Services, held that “for-profit, secular corporations cannot engage in religious exercise,” and, therefore, are not protected by RFRA or the Free Exercise Clause of the First Amendment.11 In Hobby Lobby Stores, Inc. v. Sebelius, however, the Tenth Circuit held that a secular, private corporation does have standing to bring a claim under RFRA and the Free Exercise Clause.12
Conestoga Wood Specialties Corporation is a nearly 50-year-old woodworking company in Pennsylvania that employs 950 full-time employees and is wholly owned by the Hahn family.13 The Hahns are devout Mennonites who believe that life begins at conception and that terminating a fertilized embryo is a grave sin.14 Regarding the ACA, the Hahns object to providing two of the mandated forms of birth control—the commonly known “morning after pill” and the less commonly known “week after pill.” The Hahns allege that requiring them, through their company, to “participate in, pay for, facilitate, or otherwise support these drugs” is a violation of their religious freedom protected by RFRA and their right to free exercise of their religion protected by the First Amendment.15
Conestoga put forward two theories to support its claim that a corporation can engage in religious exercise.16 Its first theory is based on Citizens United,17 the 2010 Supreme Court case that prompted the famous quote that, for the purposes of the First Amendment’s Free Speech Clause, “corporations are people too.”18 Since the Free Speech Clause and the Free Exercise Clause are both in the First Amendment, Conestoga urged the court to extend the protections of the Free Exercise Clause to businesses as was done under the Free Speech Clause in Citizens United. The Third Circuit Court of Appeals, however, distinguished this case from Citizens United. The court’s analysis rested on the “historic function” of the constitutional right to free exercise being “purely personal” unlike the constitutional right to freedom of speech, which has historically been granted to corporations.19
Alternately, the second argument to support Conestoga’s claim that the Free Exercise Clause protects corporations rests on the “pass through” theory.20 This theory does not determine the standing of a corporation alone under the Free Exercise Clause. Rather, it looks to the rights of the owners of the corporation and enforces their constitutional rights through the corporation. Under this theory, a “company ha[s] ‘standing to assert the free exercise rights of its owners.’”21 Here, the court repudiated this theory and denied the Hahns’ right to bring suit through their corporation because “by incorporating their business, the Hahns themselves created a distinct legal entity that has legally distinct rights and responsibilities from the Hahns, as the owners of the corporation.”22 The dissent strongly disagreed with this unforgiving analysis, stating that it “takes us down a rabbit hole where religious rights are determined by the tax code, with non-profit corporations able to express religious sentiments while for-profit corporations and their owners are told that business is business and faith is irrelevant.”23 This sentiment is echoed in the majority opinion in Hobby Lobby v. Sebelius where the court came to the opposite conclusion from Conestoga, holding that corporations are persons under RFRA and that they can engage in religious exercise.24
Hobby Lobby is a nationwide craft store with more than 13,000 full-time employees.25 Like Conestoga, it is a corporation wholly owned by one family, here, the Green family.26 The Greens have organized their business around their Christian faith and “allow their faith to guide business decisions” for Hobby Lobby and their chain of Christian bookstores, Mardel.27 Their faith is evident in their corporate mission statement, in their decision to close their stores on Sundays, and in their practice of running full-page ads in Hobby Lobby’s name inviting people to the Christian faith. 28 Like Conestoga, Hobby Lobby objects to providing four of the twenty forms of birth control mandated by the ACA that it feels contravene its Christian belief that life begins at conception.29 Hobby Lobby estimates the penalty under the ACA for not providing these forms of birth control would amount to $475 million dollars per year in fines—totaling $1.3 million dollars per day.30 The Green family and Hobby Lobby filed suit claiming the mandate violated RFRA and their right to the Free Exercise of their religion.31
In examining the claims, the Tenth Circuit Court of Appeals started by defining who is a person under RFRA. Since RFRA itself does not define “person,” the court began its inquiry with the Dictionary Act.32 The Dictionary Act sets up the presumption that “unless the context [of an Act] indicates otherwise,” the word “person” includes corporations and businesses as well as natural persons.33 Therefore, the burden was on the government to show that the ACA intended to limit persons to natural persons given the context of the Act.34 On this point, the court was not swayed by the government’s arguments.35
Next, the court contradicted the Third Circuit in Conestoga with regard to the question of whether the Free Exercise Clause is a “purely personal” right.36 In Hobby Lobby, the court held that the Constitution guarantees freedom of association and that an individual’s First Amendment rights, including the right to free exercise, “could not be vigorously protected from interference by the State unless a correlative freedom to engage in group effort toward those ends were not also guaranteed.”37 Most importantly, the court stated, “[W]e cannot see why an individual operating for-profit retains Free Exercise protections but an individual who incorporates—even as the sole shareholder—does not, even though he engages in the exact same activities as before.”38 Unlike the Third Circuit, which held that the incorporation of a business causes the shedding of some rights in favor of the privileges and protections that incorporating affords, the Tenth Circuit held that groups can incorporate to gain advantages such as “limited liability and tax rates,” but that in so doing, they “retain their Free Exercise rights.”39
A circuit split this drastic concerning the limits of one of America’s most deeply held rights—the right to freely exercise religion without the threat of government coercion—is a question the Supreme Court cannot simply ignore. Perhaps they will wait for another day, or allow time for more cases to work their way through the appeals process. But the question of whether corporations, run by people, truly are “people” too under the First Amendment, is one that must be answered to ensure that the ACA is uniformly enforced. To build on the words of then−Speaker of the House Nancy Pelosi, we must not only “pass the bill so that [we] can find out what is in it,”40 but apparently, we must also litigate it all the way to the Supreme Court and back . . . again.
1 Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010).
2 Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566 (2012).
3 See Conestoga Wood Specialties Corp. v. Sec’y of U.S. Dep’t of Health & Human Servs., 724 F.3d 377, 381 (3d Cir. 2013); Hobby Lobby Stores, Inc. v. Sebelius, 723 F.3d 1114, 1120 (10th Cir. 2013).
4 Conestoga, 724 F.3d at 381 (internal quotation omitted).
5 Lyle Denniston, New Contraceptive Mandate Rules, ScotusBlog (Feb. 1, 2013, 2:12 PM), http://www.scotusblog.com/2013/02/new-contraceptive-mandate-rules/.
8 See Hobby Lobby, 723 F.3d at 1125 (discussing the fine the business would face if it instead stopped offering insurance benefits to its employees altogether).
9 Conestoga, 724 F.3d at 381. The penalty levied is $100 per day, per employee. Id. Therefore, the smallest fine that could be levied would be $1.825 million per year.
10 See Conestoga, 724 F.3d 377; Hobby Lobby, 723 F.3d at 1120.
11 Conestoga, 724 F.3d at 381.
12 Hobby Lobby, 723 F.3d at 1121.
13 Conestoga, 724 F.3d at 381.
14 Id. at 381−82.
15 Id. at 380–82.
16 Id. at 383.
17 Citizens United v. FEC, 558 U.S. 310 (2010).
18 See Conestoga, 724 F.3d at 383; Richard A. Epstein, Corporations Are People, Too, The Hoover Institute (May 22, 2012), available at http://www.hoover.org/publications/defining-ideas/article/117911.
19 Conestoga, 724 F.3d at 383–85 (noting “New York Times Co. v. Sullivan, 376 U.S. 254 (1964), in which the Court recognized that First Amendment free speech rights apply to corporations”).
20 Id. at 386.
21 Id. at 387 (internal citation omitted).
22 Id. at 387–88.
23 Id. at 390 (Jordan, J., dissenting).
24 Hobby Lobby, 723 F.3d 1114.
25 Id. at 1122.
29 Id. at 1123.
30 Id. at 1125; compare with the $26 million per year in fines Hobby Lobby would have to pay if instead it dropped health care coverage for its employees altogether. Id.
32 Id. at 1129.
34 Id. at 1129–30.
36 Id. at 1133–34.
37 Id. at 1133 (quoting Roberts v. U.S. Jaycees, 468 U.S. 609, 622 (1984)).
38 Id. at 1135.
40 Pelosi Remarks at the 2010 Legislative Conference for National Association of Counties, PR Newswire, Mar. 9, 2010, http://www.prnewswire.com/news-releases/pelosi-remarks-at-the-2010-legislative-conference-for-national-association-of-counties-87131117.html.