Tag archives: Obamak Obamacare

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.

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