Hobby Lobby: A Critical But Limited Ruling For Corporate Religious Exercise Claims

In Burwell v. Hobby Lobby Stores, Inc., No. 13-354 (June 30, 2014), the Supreme Court ruled, by a 5 to 4 margin, that three closely-held corporations did not have to comply with a mandate promulgated by the Department of Health and Human Services under the Affordable Care Act which required them to provide certain contraceptive services to their employees. In a majority opinion by Justice Alito, the court held that this mandate violated the rights of the corporations under the Religious Freedom Restoration Act of 1993 (RFRA).

Early commentary on the Burwell ruling by both those supporting and those opposing the HHS Mandate has tended to exaggerate its impact. What the case holds is that “a federal regulation’s restriction on the activities of a for-profit closely held corporation must comply with RFRA,” and that “The contraceptive mandate, as applied to closely held corporations, violates RFRA.” (Slip Opinion at 31, 49)

In this post, we review four key issues decided in the majority opinion.

First, are corporations protected under RFRA?  Here, the opinion is at its broadest, holding that corporations do fall under the statute. Justice Alito noted that the federal  Dictionary Act defines “person” – the controlling word in RFRA – to include corporations and other entities. He further reasoned that “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 corporations.” (Slip Op. at 18)

Second, can corporations “exercise…religion,” under RFRA? Here, the opinion becomes more circumscribed and adopts the position I predicted in my March 25, 2014 post on the oral argument in Hobby Lobby, ruling that “a federal regulation’s restriction on the activities of a for-profit closely held corporation must comply with RFRA.” (Slip Op. at 31) (italics added.) This limitation, suggested by Chief Justice Roberts at the oral argument, permits the majority to avoid the harder cases posed by large, publicly held corporations such as General Electric or Apple. Nevertheless, as I previously argued, these corporations are unlikely to oppose governmental mandates such as those imposed by the HHS Mandate. On this point, Justice Alito similarly noted that “HHS has not pointed to any example of a publicly traded corporation asserting RFRA rights, and numerous practical restraints would likely prevent that from happening.” (Slip Op. at 29.) Justice Alito goes on to note that “we have no occasion in these cases to consider RFRA’s applicability to such companies. The companies in the cases before us are closely held corporations, each owned and controlled by members of a single family, and no one has disputed the sincerity of their religious beliefs.” (Slip Op. at 29.) Where there is a dispute regarding sincerity, the majority concludes that the federal courts are “up to the job” of dealing with insincere claims. (Slip Op. at 30)

Third, does the HHS Mandate “substantially burden” these closely held corporations’ exercise of religion? The majority concluded that “We have little trouble concluding that it does.” (Slip Op. at 31) Justice Alito supports this view by summarizing the financial penalties which would be imposed for non-compliance with the mandate, which in Hobby Lobby’s case would be $475 million a year. In addition, the majority rules that the courts should not second guess whether the religious beliefs sincerely held by the owners are reasonable. Justice Alito states that “the federal courts have no business addressing…whether the religious belief asserted in a RFRA case is reasonable.” (Slip Op. at 36)

Fourth, does the HHS Mandate impose the “least restrictive means of furthering [a] compelling governmental interest,” as required by RFRA? The majority assumes without deciding, as a threshold matter, that the mandate does further a compelling governmental interest, and turns to the least restrictive means issue to decide the case. Turning to that issue, the court rules, as I previously suggested it would, that the mandate is not the least restrictive means. The least restrictive means test “is exceptionally demanding.” (Slip Op. at 40) It is not met here, in the view of the majority, because the government could provide contraceptive coverage at its own cost, or it could provide to closely held for-profit corporations the same accommodation provided for nonprofit corporations with religious objections. Those corporations can “self-certify that [they] oppose providing coverage for particular contraceptive services.” (Slip Op. at 43)

In the final pages of the majority opinion, Justice Alito summarizes several additional considerations that further restrict the scope of the court’s holding. He notes that different considerations apply to immunizations aimed at combatting the spread of infectious diseases, or to practices of racial discrimination allegedly based on religious objections, where the government has a compelling interest in “providing an equal opportunity to participate in the workplace without regard for race.” (Slip Op. at 46) The majority also points out that no woman will lose coverage for any mandated contraceptive services because the nonprofit accommodation provided by the mandate assures that the contraceptive services will be provided to them.

Given the limitations described in the majority opinion and summarized above, Hobby Lobby will have limited applicability to for-profit corporations. To fall under the majority opinion, such a corporation will have to be closely held and its controlling persons will need to show a history of religious beliefs followed by the corporation. While the rights, if any, of publicly held corporations were not decided, it is unlikely any such corporation will ever invoke RFRA for practical as well as public relations purposes, and even less likely that they would prevail if they did. With respect to the least restrictive means issue, the government is unlikely ever to win on this point so long as it grants exemptions to multiple corporations which received grandfathering relief, and provides accommodations to non-profit corporations.

The real issue which remains is whether the accommodation credited in both the majority opinion and in Justice Kennedy’s concurring opinion will be found acceptable to impose on the religious nonprofit organizations which have refused to accept the self-certification it requires. While both opinions seem to suggest this, they do so in the context of these for-profit corporations, and Justice Alito specifically notes that the court is not deciding the issue “for purposes of all religious claims.” (Slip Op. at 44) Indeed, he signals what the ultimate outcome may be in the cases of religious institutions such as the numerous Catholic hospitals, colleges, and religious orders which have declined to accept the accommodation by referring to footnote 9 of the opinion, which on page 11 notes that the court in a case involving the Little Sisters of the Poor granted relief from the mandate pending their appeal by permitting them “to opt out of the contraceptive mandate by providing written notification of their objections to the Secretary of HHS, rather than to their insurance issuers or third-party administrators.”


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2 Responses to Hobby Lobby: A Critical But Limited Ruling For Corporate Religious Exercise Claims

  1. I think you nailed it. The more important decision is yet to come.

    • Ed Mannino says:

      Thanks for your nice comment and for retweeting many of my tweets.I appreciate it and enjoy your tweets as well. Please keep up your good work.

      Ed Mannino