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Symposium: Under a straight-forward reading of constitutional text and history and fundamentals of corporate law, Hobby Lobby’s claims fail

The following contribution to our contraceptive mandate symposium comes from Elizabeth B. Wydra, Chief Counsel at the Constitutional Accountability Center.

Superstar Supreme Court lawyer Paul Clement starts his brief on behalf of Hobby Lobby Stores, Inc., and its individual owners, the Green family, with a rather remarkable assertion: that this case “is one of the most straight-forward violations of the Religious Freedom Restoration Act.”  Someone like Clement can get away with breaking one of the basic rules of legal advocacy – one is generally not supposed to tell the Court that it is reviewing “an easy case,” since such a legal cakewalk probably wouldn’t require the rare attention of the High Court.  But Clement’s assertion is nonetheless wrong.  To the contrary, it’s — dare I say — easy to show that this case is far from easy for Hobby Lobby to win.

The Religious Freedom Restoration Act (RFRA) provides that the government “shall not substantially burden a person’s exercise of religion,” and was intended to codify First Amendment Free Exercise Clause jurisprudence as it existed for the first two hundred years of our nation.  Never in that two hundred years had the Court held that secular, for-profit corporations like Hobby Lobby or its co-litigant Conestoga Wood may assert rights under the Free Exercise Clause.  Throughout our nation’s history, corporations have been treated differently than individuals when it comes to fundamental, personal rights of conscience and human dignity.   The First Amendment’s free exercise guarantee has always been viewed as a purely personal liberty, guaranteeing the right of individuals to worship and exercise religion consistent with the dictates of their conscience.  It has never been considered a right possessed by secular, for-profit corporations.

Churches and other houses of worship, as well as other explicitly religious organizations, have received protection under the Free Exercise Clause.  This is a reflection of the fact that many people exercise their religion through a community, in, as the political philosopher John Locke described, “a voluntary society of men, joining together of their own accord.”  But these explicitly religious corporations are and always have been distinct from secular companies, even if there are unquestionably devout religious people who work for and own secular businesses.  In the Founding Era, the common law, as Blackstone explained, generally divided corporations into “ecclesiastical” and “lay” corporations.

American constitutional tradition has recognized that explicitly religious, “ecclesiastical” organizations have the right to choose their leaders and employees in line with religious doctrine and to run their institutions as they generally see fit.  Accordingly, as the Court recently held in Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, incorporated churches and other religious employers are free from the strictures of federal anti-discrimination law when choosing employees – in that case, teachers – who perform religious functions.  But surely Hobby Lobby and Conestoga Wood are not arguing that they should be free from federal employment law’s mandate of equality of opportunity.  If these secular, for-profit corporations can deny their employees contraception coverage to which they are legally entitled because using those contraceptives violates the owners’ personal religious beliefs, could they also fire an employee for engaging in other activity that does not conform to the owners’ religious code?  Individuals who take a job at a Hobby Lobby crafts store or make cabinets for Conestoga Wood do not sign up to surrender their own personal liberty and right to exercise the religion of their choice at their bosses’ door.

Allowing the religious values of the individual owners of a company to be passed through to the corporation itself would not only run counter to well-established constitutional law, but it would also run counter to fundamental principles of corporate law.  As a brief filed by corporate law scholars explains, “[t]he first principle of corporate law is that for-profit corporations are entities that possess legal interests and a legal identity of their own—one separate and distinct from their shareholders.”  In fact, as recounted in the brief, this legal separateness is “the corporation’s most precious characteristic,” according to one early American treatise writer, because it creates “limited liability” for business founders and investors, shielding their personal assets.  If the Court were to accept attempts by Hobby Lobby and Conestoga Wood to blur the distinction between a corporation and its owners, it could undermine key features of corporate law.

Hobby Lobby’s brief appears to argue that this legal separateness is more the exception than the rule, trying to limit its application to laws that “expressly turn on corporate structure.”  But certainly the Fifth Amendment’s privilege against self-incrimination doesn’t “expressly turn on corporate structure,” and yet the Court held in Braswell v. United States that when individuals act in their official capacity as corporate agents, they “cannot be said to be exercising their personal rights and duties nor to be entitled to their purely personal privileges.”  Instead, “they assume the rights, duties, and privileges of the artificial entity.”   Accordingly, while Randy Braswell had a personal right to avoid incriminating himself by turning over inculpatory documents, he had no such right when he was responding as a corporate officer to a subpoena served on his company.  This is because the Fifth Amendment right against self-incrimination, like the First Amendment right to act according to the dictates of one’s own religious conscience, is a personal right not afforded to artificial corporate entities.

But what about the individuals who own Hobby Lobby Stores and Conestoga Wood?  To be sure, the current owners of these companies have their own personal free exercise rights, but those rights are not implicated by the contraception coverage requirement because federal law does not require the individuals who own a company to personally provide health care coverage or to satisfy any other legal obligation of the corporation.  The law places requirements only on the corporate entities.  The individual corporate owners retain their own rights under the First Amendment and RFRA, but those rights simply aren’t available when the claimed burden is placed on the corporation itself – just as Randy Braswell retained his personal right against self-incrimination, but could not use that right to shield his business when a subpoena was issued against the corporation he owned.  Individual business owners should not be given a green light to move freely between corporate and individual status to gain the advantages and avoid the disadvantages of the respective forms whenever it suits their purposes.

Even with more than two hundred years of constitutional and corporate law on the government’s side in these cases, I wouldn’t say these cases will be an easy win for the government, given the composition of the Court.   But if there’s anything “straight-forward” about this case, it’s that accepting the claims of Hobby Lobby and Conestoga Wood would mark an unprecedented departure from longstanding principles of constitutional jurisprudence and corporate law.

Recommended Citation: Elizabeth Wydra, Symposium: Under a straight-forward reading of constitutional text and history and fundamentals of corporate law, Hobby Lobby’s claims fail, SCOTUSblog (Feb. 27, 2014, 10:27 AM),