A Way Out of the For-Profit Conundrum

by vaughn_admin  //  

June 16, 2016

The Supreme Court will come to a decision in Sibelius v. Hobby Lobby by the end of June. Given the oral arguments and what we know about the justices, how is the court likely to reason on the religious freedom aspects of this case?

By: Mark L. Movsesian

Hobby Lobby could easily turn out to be the most important religious liberty decision in a quarter-century. The questions presented are technical ones about the construction of the Religious Freedom Restoration Act (RFRA), which has been, until now, an entirely uncontroversial federal statute.

The potential consequences are huge. The Court could use Hobby Lobby to make a broad pronouncement on the permissibility of religious exemptions from otherwise valid laws. The case implicates topics at the heart of national politics, like sex and gender, and it also threatens President Obama’s signature achievement, the Affordable Care Act. It’s no wonder the case has drawn so much attention. 

In this post, I’d like to focus on only one of the many issues the case presents. Actually, it’s the one on which all the others depend. According to regulations promulgated under the Affordable Care Act, certain employers must cover contraceptives as part of their employee health plans—the so-called “contraception mandate.” The owners of Hobby Lobby, a for-profit corporation, consider some of these contraceptives to be abortifacients, and they object on religious grounds to including them in the corporation’s health plan. They argue that the mandate violates religious freedom.

But whose religious freedom is being violated? RFRA provides that the government may not “substantially burden a person’s exercise of religion even if the burden results from a rule of general applicability”—unless the government has a compelling interest and has chosen the least restrictive means of furthering that interest. Is a for-profit corporation like Hobby Lobby a “person” within the meaning of RFRA? Can a for-profit corporation exercise religion? 

This question drew a great deal of attention at oral argument in March. Liberal judges were skeptical. Justice Sonia Sotomayor, for example, wondered whether a corporation could actually exercise religion. A corporation is, after all, a fictional person, a legal device; how can a corporation have religious convictions? 

And, in truth, there is something very odd in the notion that a large, publicly-traded corporation with thousands of institutional shareholders around the world—Exxon-Mobil, for example—has religious scruples that guide its conduct. (Most Exxon-Mobil shareholders, I think, would be deeply surprised.) Large, publicly-traded corporations exist principally to make profits for the shareholders, who remain passive with respect to the corporation’s day-to-day operations. Religion is the farthest thing from their minds. 

Moreover, if such corporations could exercise a religion, chaos could result. How would we determine when a corporation has a belief, Justice Sotomayor asked? Which of the thousands of shareholders would be entitled to raise their religious scruples? Would the majority of shareholders—51%—decide the matter for everyone else? What about the minority shareholders who object? 

On the other hand, it isn’t strange to think that some for-profit corporations might exercise religion. As law professors Alan Meese and Nathan Oman argue in a recent essay in the Harvard Law Review, most American corporations are small, private firms with a only a handful of shareholders. In such corporations, the shareholders take great interest in day-to-day operations and may run their businesses with religious convictions in mind. 

Take Hobby Lobby itself, for instance. Hobby Lobby is owned by five family members. It’s not at all strange to think that they could legitimately want to run their corporation in a way that advances their religious values. 

At oral argument, Chief Justice Roberts suggested a way to avoid this conundrum. The Court could hold that for-profit corporations qualify as persons for purposes of RFRA, but limit its holding to small, privately held firms like Hobby Lobby. That seems a very sensible solution, and it’s the one I expect the Court to adopt. 

What about larger corporations like Exxon-Mobil? Whether RFRA applies “in other situations,” the Chief Justice said, would be “a question that will have to await another case, when a large publicly-traded corporation comes in and says, ‘We have religious principles.’” But such a case, the Chief Justice noted, is unlikely to ever arise.

Mark L. Movsesian is the Director of the Center for Law and Religion at the St. John’s University School of Law. 

This piece was originally authored on June 9, 2014 for the Religious Freedom Project at Georgetown’s Berkley Center for Religion, Peace, and World Affairs.