The Evolution of Hobby Lobby: The Arguments that Matter and How They Were Developed

by vaughn_admin  //  

June 19, 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: Micah J. Schwartzman, Richard C. Schragger, and Nelson Tebbe

How will the Supreme Court decide the question of religious exemptions in Hobby Lobby? We are not in the prediction business, and although we would like to think we have some sense of how the justices reason about these issues, there is no need to guess at the outcomes. We will all know soon enough. But in anticipating the Court’s decision, it is worth noting how fast this litigation has proceeded—from the trial court to the Supreme Court in 15 months—and how rapidly the legal arguments on both sides evolved during that very short time period. Whatever the Court decides, we are fairly confident that it will address issues that were not squarely presented in the lower courts. That the arguments in this case have developed in this way is notable—for the parties, for the lawyers involved, for academic commentators, and, we hope, for the justices as well.In its early stages, litigation over the so-called “contraception mandate” focused mainly on two issues. The first was whether corporations are “persons” for the purpose of claiming religious exemptions. This issue was often framed in terms of whether corporations have rights to religious free exercise, just as they have been deemed to have free speech rights in cases like Citizens United and its progenitors. The second issue was whether the government has a compelling interest in requiring employers to provide insurance coverage for the full range of FDA-approved contraception. Following the government’s arguments, the lower courts that addressed this issue focused mainly on concerns about public health and women’s equality. 

It is striking how these issues have been displaced, or else reframed, in the process of litigating Hobby Lobby. After the Supreme Court’s oral argument this past March, it seems fairly clear that a majority of the Court will allow either Hobby Lobby or its owners to assert claims for religious exemptions under the Religious Freedom Restoration Act (“RFRA”). In other words, despite all the attention focused on it, the debate about whether corporations are “persons” is less important than many have assumed. 

We have argued elsewhere that this should not be surprising and that arguments about corporate personhood are almost always placeholders for substantive disagreements about moral and legal rights. At this point, however, the safest prediction one can make about Hobby Lobby is that the case will not turn on whether corporations or their owners can assert claims of religious liberty. 

Instead, the case depends on how the Court decides two issues, neither of which were briefed before any of the lower courts involved in this litigation. Arguments raising these issues only emerged in academic commentary, mainly through blogging by legal scholars, and were only presented by parties in their briefs to the Supreme Court. The first argument—really presenting the central issue in the case—is that granting a religious exemption for Hobby Lobby would impose significant costs on the corporation’s employees and infringe on their statutory rights to comprehensive health care insurance. 

As we have argued, drawing on the work of Fred Gedicks and Rebecca Van Tassell, such cost-shifting raising serious concerns under the Establishment Clause, which limits religious exemptions that would impose burdens on people who do not otherwise benefit from those exemptions—people like Hobby Lobby’s employees. The Supreme Court has never permitted a religious exemption that imposes such costs on an identifiable group of non-beneficiaries. A decision to do so here would mark a major break with decades of precedent under both the Establishment and Free Exercise Clauses of the First Amendment. 

A second problem for Hobby Lobby is that its owners may not be able to show that the Affordable Care Act substantially burdens their religious beliefs and practices. The company’s owners allege that they are required to purchase insurance that covers forms of contraception to which they object on religious grounds. But as Marty Lederman has argued, Hobby Lobby is not required to purchase health insurance for its employees. Instead, the company faces a choice: either purchase insurance with coverage that meets federal standards, or allow employees to purchase comprehensive insurance from state and federal exchanges and pay a tax of $2,000 per employee. 

Whether that choice itself creates a substantial burden on Hobby Lobby is a matter of dispute, including factual questions about how much it would cost the company to put its employees into exchanges. But because Hobby Lobby failed to litigate this argument, which only came to the foreground after significant development by Marty Lederman in a series of blog posts, courts have not had an opportunity to examine the factual issues or to work through the many complexities of the legal arguments surrounding them. 

It is hard to escape the sense that the litigation in Hobby Lobby was rushed. Important arguments—indeed, central and possibly decisive arguments—were either missed or ignored as the cases proceeded through the lower federal courts, only to be raised in the very late stages of review before the Supreme Court. Moreover, as we have noted previously, there are no employees involved in this litigation. That is a stunning fact. If Hobby Lobby wins its case, thousands of employees stand to lose a significant part of their health insurance coverage. And yet those employees have no representation in this case. 

We think it is remarkable that aside from the question of corporate rights, the two issues that dominated the Supreme Court’s oral argument were raised and developed not by the parties in litigation, but rather by constitutional lawyers and scholars outside the formal process. Chief Justice Roberts has complained that the work of legal scholars has become irrelevant to the bar and to the bench. That gap is consistently overstated. In this instance, however, legal academics made the leading arguments that the justices are currently considering. 

We do not know how the justices will resolve those issues. But we can make this prediction with some confidence: whatever the outcome in Hobby Lobby, future debates about religious free exercise will focus increasingly, and we hope more carefully, on whether laws impose significant burdens on religious believers and, equally importantly, on whether granting exemptions from those laws would burden non-beneficiaries – like the employees in Hobby Lobby—especially when they lack representation in the legal process.

Micah J. Schwartzman is the Edward F. Howrey Professor of Law at the University of Virginia School of Law. Richard C. Schragger is the Perre Bowen Professor and Barron F. Black Research Professor of Law at the University of Virginia School of Law. Nelson Tebbe is the Professor of Law at Brooklyn Law School.

This piece was originally authored on June 12, 2014 for the Rel
igious Freedom Project
 at Georgetown’s Berkley Center for Religion, Peace, and World Affairs.