Tag archives: Conestoga Wood

Hobby Lobby: A clear win for RFRA, and a cautious rebuke of the HHS mandate

by Travis Weber

July 1, 2014

In Burwell v. Hobby Lobby Stores, the Supreme Court held in a 5-4 decision that closely held for-profit corporations can bring claims under the Religious Freedom Restoration Act (“RFRA”), and that the HHS mandate violated these corporations’ rights under RFRA by requiring them to provide contraceptives which they believe end human life. The Court faced two issues: (1) whether for-profit corporations are “persons” for purposes of RFRA protection, and if so, (2) whether the HHS mandate violated RFRA in this case. It decided the first clearly, and the second more cautiously.

RFRA protects corporations

Holding

RFRA protects a “person’s” religious exercise. The question is whether Hobby Lobby and Conestoga are “persons.” The Court held that they are—specifically that closely held for-profit corporations like those in this case clearly fall within the meaning of “person” in RFRA.

Analysis

The Court began by noting the broad protections Congress set in place by passing RFRA, which would indicate that closely held businesses are covered. In addition, the Dictionary Act indicates that for profit corporations are covered by RFRA, and there is no context surrounding RFRA to indicate otherwise (the Court rejected the government’s argument that RFRA merely codified pre-Smith case-law). The government had conceded that a nonprofit corporation can be a person for purposes of RFRA. Thus, there is no logical reason to conclude that for profit corporations are not protected by RFRA simply because they make a profit. As the majority opinion notes: “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.” Majority op., at 17. Of course, the government has to recognize that individuals (sole proprietors) can exercise religion even though they make a profit. The government thus argued that these two elements—profit making and corporate form—added together are reason to deny Hobby Lobby and Conestoga RFRA protection. Yet the government ultimately had no sufficient basis for its argument, and the Court squarely rejected the government’s position and held that Hobby Lobby and Conestoga can bring claims under RFRA.

*NOTEResult is limited to closely held corporations: The Court expressly noted its ruling applied to closely-held for profit corporations like those in these cases. The Court did not decide clearly one way or the other whether publicly traded companies and other corporate forms are protected. Those determinations would have to be made in other cases. While this may be viewed as a “narrow” win, the Court regularly does not decide issues which are not before it, and the issue of a publicly traded company’s coverage under RFRA was not before it. Therefore, the Court was simply conducting its analysis as is typical in these cases, and the fact that it so clearly held that the businesses in this case are covered is a strong holding notwithstanding the Court’s statements limiting the holding to closely held companies. The issue of whether companies like Hobby Lobby are covered by RFRA was previously subject to dispute, but now it is settled. This significantly broadens RFRA’s reach.

RFRA claims in this case succeed

Holding

RFRA provides that the government may only substantially burden a person’s exercise of religion when the government’s action or regulation (1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest. The challengers had claimed that the HHS mandate violates RFRA by burdening their beliefs by requiring them to provide drugs they believe end life, all while not serving a compelling government interest and not being the least restrictive means. The government must make a showing on these elements, or the RFRA claim succeeds. The Court skipped the first question, and easily decided the second against the government because of the existence of less restrictive means. This grants the plaintiffs a win on their RFRA claims, but the Court arrived at its conclusion easily. If the legal trail had been more difficult to blaze, Hobby Lobby would not have been as assured of a win.

Analysis – religious beliefs, their sincerity, and whether they were burdened

Normally a court would determine if the religious beliefs at issue are sincere beliefs (courts never get into whether the exercise is actually in accord with the religion – that would meddle in the internal workings of religion), but the government did not dispute the plaintiffs’ sincerity in this case. Thus the first question for the court is whether there is a substantial burden to the plaintiffs’ exercise of religion. The Court looked at the fines which would be imposed and concluded the HHS mandate imposed a substantial burden, while dismissing the idea that there is no burden because the penalty is conceivably less than providing coverage for employees. The Court also rejected the government’s argument that the religious burden and HHS mandate were too attenuated, noting that the government is not to be in the business of assessing the religious belief, but only determining if it is sincerely held.

Analysis – compelling interest

The Court then assumed that the government may have a compelling interest in providing all the methods of birth control at issue—the Court simply didn’t decide whether there was a compelling government interest in this case. But the Court didn’t ultimately have to decide this issue, because it held that the government did not advance its regulation through the least restrictive means.

Analysis – least restrictive means

The Court continued by stating that even assuming the government has a compelling interest in advancing its HHS mandate, the government has not accomplished this goal through the least restrictive means. The Court rejected the argument that the ACA was akin to a scheme like social security in which it was very important for everyone to participate—the government did not have to compel employers to provide the drugs in order to advance its interests. Here, for instance, the government could directly provide the drugs in order to accomplish its goal through a less restrictive means. The Court also looked at the “accommodation” which has already been provided to other non-profits, and offered that as an example of something the government could have done to provide birth control coverage, while burdening the companies to a lesser degree. Because the government could have done this but did not, the challengers win and the HHS mandate as currently stands violates RFRA.

*NOTEApplication to other scenarios: The Court also said its ruling pertained to contraception and the ACA, and did not necessarily apply to corporate religious objections to other issues like vaccines or taxes. Other considerations on the part of the government, such as controlling the spread of infectious diseases, would affect these determinations in ways different from the considerations pertaining to the HHS mandate. The Court does not give much of an indication on how it would rule on a RFRA claim objecting to a law requiring nondiscrimination on the basis of sexual orientation. It did say religious objections regarding hiring decisions based on race would not succeed, but the race issue is pretty well settled, and such an example does not really help predict how the court would rule on the sexual orientation issue. Many, including the dissent, will decry the majority opinion as sweeping (Justice Kennedy wrote a separate concurrence just to respond to this claim). And yet contrary to this doom and gloom about all manner of religious objections to come, the court recognized RFRA claims would continue to be assessed on a case by case basis as they arise. Majority op., at 46. The “sky is falling” response is not credible in light of the Court’s opinion.

**NOTEEffect on non-profit cases: The Court specifically discussed the “accommodation” as a possible less restrictive means for the government to use, and suggested it would not violate RFRA if used in the instant case—it notes that if the government provided for an “accommodation” similar to that which it provided non-profit entities, the impact on female employees of Hobby Lobby would be zero (thus this satisfies the less restrictive means requirement) Majority op., at 3-4.Justice Alito points out “[t]he principal dissent identifies no reason why this accommodation would fail to protect the asserted needs of women as effectively as the contraceptive mandate, and there is none.” Majority op., at 44. Yet the Court expressly said it was not deciding the “non-profit cases” and would have to decide those separately. In addition, those entities will be treated differently under the law, and involve different legal considerations and claims. It remains an open question whether the “accommodation” violates RFRA in the non-profit challenges, even though it appears such an accommodation would satisfy the Court in Hobby Lobby.

Concurrence

Justice Kennedy concurred in the judgment, and authored a concurrence to respond to the dissent’s characterization of the majority’s holding as very broad and sweeping. (Justice Kennedy appears sensitive enough on that point to want to defend himself).

While the Court skipped over the question of whether a compelling government interest in the HHS mandate exists, Justice Kennedy does seem sensitive about noting he is not deciding that question here: “[i]t is important to confirm that a premise of the Court’s opinion is its assumption that the HHS regulation here at issue furthers a legitimate and compelling interest in the health of female employees.” What explains this statement? It is possible that Justice Alito (and maybe one or more of the other justices in the majority) would have been willing to find there is no compelling government interest in the HHS mandate, but Justice Kennedy was unwilling to do so. Yet Justice Kennedy was willing to find the least restrictive means requirement unsatisfied in this case, which is enough to find for the plaintiffs. So the majority avoided the compelling interest question, and Justice Kennedy confirms this point. Reading into the opinion slightly more, the “cautious win” for Hobby Lobby on this point could be due to Justice Kennedy.

On a more positive note, Justice Kennedy appears to support a slightly broader view of freedom of religion, noting that religious exercise includes “the right to express those beliefs and to establish one’s religious (or nonreligious) self-definition in the political, civic, and economic life of our larger community.” He obviously agrees that the Greens and Hahns can exercise religion in the face of contrary arguments from the government that non-profits exercise religion while for-profits do not: “RFRA is inconsistent with the insistence of an agency such as HHS on distinguishing between different religious believers—burdening one while accommodating the other—when it may treat both equally by offering both of them the same accommodation.” Justice Kennedy also cited Justice Kagan’s dissent from the Town of Greece in a statement supporting the diversity of religious exercise in the United States today—while this is good to see, it must be remembered that Justice Kennedy is considering this case easily decided because the existing “accommodation” is a clearly identifiable less restrictive means to advance the HHS mandate. Cases with other issues may not have easily identifiable less restrictive means. In addition, Justice Kennedy will also likely approach cases involving other rights differently.

Dissents

Justice Ginsburg authored the primary dissent, and was joined by Justice Sotomayor in deciding that the companies were not covered by RFRA, and by Justices Sotomayor, Breyer, and Kagan in deciding that the companies’ claims would fail anyway because they are not substantially burdened, the government has a compelling interest, and has satisfied the least restrictive means requirement. Justices Breyer and Kagan wrote a separate but short dissent in which they specifically stated they would not decide whether “for-profit corporations or their owners” may bring RFRA claims, perhaps recognizing the difficulty of the government’s argument on this point. Akin to the way the majority skipped the question of compelling interest and still ruled for the challengers, Justices Breyer and Kagan skipped the question of corporate coverage and held that even if the companies were covered by RFRA, their claims against the HHS mandate would fail. Therefore, notably, there are still seven members of the Court who recognize (through either affirmatively deciding or explicitly refusing to decide the question) the idea that you do not give up religious liberty when you engage in profit making activity.

Take away and future implications

This is a win. However, it is a narrow win. The ruling clearly applies to other closely held for profit entities objecting on RFRA grounds to any drugs required by the HHS mandate. It’s likely to apply to most of the potential fines for noncompliance, though Hobby Lobby’s may be larger than others’ fines. As long as the sincerity of the religious objection is not disputed, and the fines are relatively large, other cases featuring for profit businesses bringing RFRA claims will likely be decided along the same grounds as this opinion.

It is less clear as each of these aspects changes. If the company is another type, the result becomes less clear. If the objection is to a practice in which the government has an easier time showing a compelling interest, like tax collection, the challenge becomes more difficult. The Court offered the example of eradicating racial discrimination as a compelling government interest. We do not know what it will do with sexual orientation discrimination. The dissent did, however, offer Elane Photography as hypothetical future claim which the Court will have to decide. We can assume the four dissenting justices would have a problem with Elane Photography’s claim. Nothing else in the opinion provided a clue about how it would be decided, however.

What is going on with this ruling?

Why do the justices break down in the opinions as they do? This decision is ultimately about suppressing the exercise of religion in favor of a government scheme. This is why the government tried to force for profits to pay in this case. And this is why the accommodation is unsatisfactory for the Administration. Four justices ultimately see the ACA and HHS mandate as so important and such an advance of “rights” that they will subject these businesses to it. Justice Ginsburg uses dismissive language and asks whether RFRA would allow claims “of this ilk” just after mentioning Elane Photography and other cases regarding Christian views on sexuality—which shows an animus on her part toward Christian views associated with traditional values. She also says “[o]ne can only wonder why” the Court ignores (in her view) the reasoning underlying Title VII exemptions (limiting religious activity to nonprofit “religious corporations”) in its understanding of this case. This sharply worded question implies that the majority is deciding these cases according to the justices’ religious beliefs. She and the other liberal justices are likely to be increasingly aware and responsive to this perception. For many years the liberal justices were the ones siding with the free exercise claimant challenging government action. Now the conservative justices are. Admittedly, I think this case would be a closer call for some of the justices if they were deciding individuals’ RFRA claims (as opposed to those of corporations). But we do not have the benefit of that analysis.

Proper framing of this opinion:

Let us not forget that today’s ruling featured a showdown between individual religious liberty rights (constitutional rights, as embodied in RFRA) and an overly intrusive government scheme. Americans’ objections to such schemes, and the ability to seek judicial redress for their objections, lie at the core of American constitutional and civil rights jurisprudence. Americans’ consciences must not be sacrificed on the altar of legislative (or agency) action merely because they also happen to want to make a profit.

Whether corporations engaged in social responsibility initiatives, voluntary community initiatives, or religious practices, corporations have always done much more than just “make a profit.” Whether the case features a Jewish butcher, a Muslim financier, or the Green family’s decision to see their religious beliefs reflected in their business practices, corporations have always served to reflect the beliefs of the human beings behind them. The Court’s ruling today simply recognizes this principle.

In the middle of its opinion, the Court rhetorically asks: “Is there any reason to think that the Congress that enacted such sweeping protection put small-business owners to the choice that HHS sug­gests? Majority op., at 17. No, there is not. America has been built on the backs of small-business owning families like the Greens and the Hahns. Many of them are merely seeking to live free from government intrusion in accord with their beliefs without being forced to violate their consciences. That is not too much to ask. Thankfully the Court agreed.

Supreme Court Delivers Momentous Religious Freedom Victory

by FRC Media Office

June 30, 2014

WASHINGTON, D.C.- Family Research Council (FRC) praised today’s ruling by the U.S. Supreme Court upholding religious liberty and protecting the conscience rights of family businesses who object to being forced to pay for the coverage of sterilizations, contraception and drugs that have the potential to destroy an unborn child.

FRC President Tony Perkins learned of the ruling this morning as he met with the Hahn family, founders and owners of Conestoga Wood Specialties, which were represented by Alliance Defending Freedom attorneys in this lawsuit challenging the Obama administration mandate.

Perkins made the following comments:

The Supreme Court has delivered one of the most significant victories for religious freedom in our generation. We are thankful the Supreme Court agreed that the government went too far by mandating that family businesses owners must violate their consciences under threat of crippling fines.

All Americans can be thankful that the Court reaffirmed that freedom of conscience is a long-held American tradition and that the government cannot impose a law on American men and women that forces them to violate their beliefs in order to hold a job, own a business, or purchase health insurance.

The unfair HHS mandate gave family businesses two non-choices: either violate your deeply held moral beliefs and comply by paying for drugs and services to which you object, or pay crippling fines of up to $100 per day, per employee, for non-compliance. This mandate threatened the jobs, livelihood and healthcare of millions of Americans and forced those who stood up for their conscience, like Hobby Lobby and Conestoga Wood, to either comply or be punished.

Thankfully, the threat the HHS mandate imposed on Americans has been deemed unlawful today as a violation of core religious freedom rights. While we celebrate this landmark decision, it is our hope that lower courts will follow the Supreme Court’s lead and protect non-profits like Little Sisters of the Poor, Priests for Life, and Wheaton College from the unfair HHS Mandate,” concluded Perkins.

Summary of Oral Arguments in Sebelius v. Hobby Lobby and Conestoga Wood Specialties Corporation v. Sebelius

by Travis Weber

March 27, 2014

The post-oral-argument predictions in the Hobby Lobby case will continue to pour out as various entities (more or less interested in the outcome) make guesses about which way the Supreme Court will rule now that the justices have had a chance to quiz the attorneys for each side. The truth is, no one knows what will happen. Nevertheless, several things were noteworthy and other things not noteworthy, about this morning’s arguments. My review of the arguments (with emphasis on noteworthy sections) is below (page numbers are those listed on the Supreme Court’s official transcript).

Arguments began with Paul Clement, the attorney for Hobby Lobby and Conestoga, presenting his clients’ case first. After some initial questions about whether Congress meant to include corporations within the Religious Freedom Restoration Act’s (RFRA) protections (pp. 4-9), the justices’ opposition to Hobby Lobby’s position predictably centered on what other claims corporations might bring should the Court rule for the Green family and against the government. Justices wondered whether a ruling for Hobby Lobby would lead to corporations objecting on religious grounds to providing vaccinations, blood transfusions, and the like. Hobby Lobby’s attorney Paul Clement disputed this implication, pointing out that the Court could be trusted to wade through these issues under RFRA. Furthermore, if the “parade of horribles” was likely to occur, where was it? RFRA has been around since 1993. Clement pointed that none of the claims over which the justices expressed concern had been brought (or they were brought but didn’t succeed) “notwithstanding the fact that the government concedes that sole proprietorships and partnerships and nonprofit corporations are all protected by RFRA” (pp. 14-15).

Clement was then questioned about how a corporation could exercise religion (pp. 17-21), but the argument drifted off into a discussion of what costs Hobby Lobby would incur if it refused to cover the contraceptives (pp. 17-29). A discussion subsequently ensued about grandfathered health plans, and then moved to the concept of burden shifting between the objecting employer and its employees (pp. 29-38). Clement noted that exemptions are allowed in the conscience law context — if a doctor objects to providing an abortion, the woman is not prevented from obtaining the procedure, but she must go to another provider (p. 38). Clement also pointed out that the government has available to it a less restrictive alternative than the current HHS mandate — allowing employees of objecting corporations to go on the exchanges and subsidizing them like it does for employees at companies with fewer than 50 workers (p. 40).

At this point, the government’s attorney, Solicitor General Donald Verrilli, took over and opened by arguing that the requested accommodation’s impact on third parties must be examined (pp. 43-46). He was then pressed by the justices on why the government insisted on hampering for-profit corporate religious exercise but not other religious exercise (pp. 46-49). When Verrilli said the Court had never ruled that corporations had a right to exercise religion, Justice Alito asked if “there’s something about the corporate form per se that is inconsistent with [a] free exercise claim” (p. 46). He followed: “Do you agree … that for­profit corporations must do nothing but maximize profits, they cannot have other aims … including religious aims?” (p. 47) Verrilli said no, but the point was made.

Verrilli then argued that ruling for Hobby Lobby would permit other problematic claims (pp. 52-53). He was pressed about the ability of corporations to have a racial identity (which courts have held), but said such a scenario was different from this case, which involves “exercise of religion — something the courts have never recognized corporations can do (p. 54). However, neither have the courts said corporations can’t engage in religious exercise. He was then pressed by Justice Kennedy about exemptions being given by the government apart from RFRA concerns (pp. 56-58). Verrilli explained that churches were exempt (as they have always been considered special under the law), but argued that the other companies and groups that do not have to pay were not actually subject to “exemptions” but were just categorized differently under the law (pp. 58-59). He was then pressed to explain when the grandfathered plans would end (pp. 59-60) — such continual “grandfathering” with slow and piecemeal implementation demonstrates the lack of a compelling government interest in enforcing the HHS mandate.

Justice Breyer then questioned Verrilli and asked him to explain how the government might meet the contraceptive needs of women less restrictively than enforcing the HHS mandate (pp. 64-69). Justice Kennedy quizzed Verrilli and said that according to the government’s logic, it seemed that a for-profit corporation could be forced to pay for abortions. Verrilli had to admit his logic allowed such a result, but he attempted to minimize the implication by noting there was no such law mandating abortions on the books at this time (p. 75). He followed by pointing out that the federal and state laws regarding abortion don’t consider the “particular forms of contraception” at issue in this case to cause abortions (pp. 75-77).

Verrilli had trouble batting away hypotheticals from Justices Alito and Breyer showing the problems corporations may face in bringing religious exercise claims (should the government win in this case) challenging laws banning kosher or halal slaughter methods (pp. 78-81). He concluded by pointing out that companies were going into the public sphere, and this would be the first time a company could be permitted to override statutory benefits under a Free Exercise or RFRA claim (p. 81). At the last moment, Verrilli was questioned by Justice Scalia about the government’s claim that it was not drawing a distinction between for-profits and non-profits (p. 82). Justice Scalia quite rightly noticed differences with how the government was treating the two groups (p. 82).

Paul Clement then had the last word. During his few minutes of rebuttal argument, Clement pointed out that Congress has applied the abortion conscience laws to all providers, including for-profit providers. But if Congress changed those laws, the government (according to its argument today) would take the position that RFRA does not apply to protect providers objecting on conscience grounds (p. 83). Clement also reminded the Court that if the government is going to burden religious exercise, its regulation has to do so in the least restrictive way. In this regard, Title X already provides for contraception coverage, so the government could provide contraceptive coverage through Title X (pp. 83-86). He also reminded the Court of one point Hobby Lobby already made in its brief — the government could simply pay for the contraceptives (p. 86). Clement concluded by noting that Congress has already spoken in an abundantly clear manner on the issue of religious freedom when it passed RFRA, but “[h]ere the agency has decided that it’s going to accommodate a subset of the persons protected by RFRA. In a choice between what Congress has provided and what the agency has done, the answer is clear” (p. 87).

With that, the arguments were concluded. A written decision in the case is expected in June 2014.

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