The Supreme Court yesterday issued its opinion in one of the most discussed cases on this year’s docket – Burwell v. Hobby Lobby. The actual facts of the Hobby Lobby case are somewhat convoluted and generalizing the holding beyond the facts presented will be problematic, but below are the major points of the opinion:
This is not a case interpreting the Constitution. Although a lot of the commentary on this case phrased the issue as to whether or not corporations enjoyed First Amendment rights, the actual opinion avoids the constitutional issue and is limited to a statutory interpretation of the Religious Freedom Restoration Act of 1993 (“RFRA”). The Supreme Court had previously held that a neutral law of general applicability may be applied to religious activities even when not supported by a compelling government interests. Congress responded to this holding by passing RFRA, which prohibits the Government from taking any action that substantially burdens a person’s exercise of religion unless that action constitutes the least restrictive means of serving a compelling government interest.
The first question addressed was whether a for-profit corporation could be a “person exercising religion” under RFRA. If no, then the act would not apply. The Government made the argument that “person” does not include corporations, but the Supreme Court summarily dismissed this argument based upon a dictionary definition. The more interesting question is whether a corporation could exercise religion. Here, the Supreme Court relied upon two concepts in holding that corporations could exercise religion: first, prior Supreme Court cases had held that RFRA applied to non-profit corporations, and second, applicable state law allowed for the formation of a corporation “for any lawful purpose.” I think the manner in which the majority opinion conflates the free exercise of the corporation’s owners with the corporation is problematic from a corporate law perspective, but the Supreme Court sidesteps these issues as discussed below.
This holding is limited to “closely-held corporations.” The Supreme Court does not appear to offer a definition of what constitutes a closely-held corporation for RFRA purposes, however. The issue is that many corporations have multiple stake holders – shareholders, directors, officers and employees. Determining whose problematic of these stakeholders have differing views. Because the shareholders, directors and officers in the Hobby Lobby case all held the same religious view, the majority opinion found no reason to discuss what may occur if these stakeholders disagree.
Having decided that RFRA applies, the remainder of the opinion applies the standards of that statute. The Supreme Court found that the so called contraceptive mandate did impose a substantial burden on Hobby Lobby based upon the taxes that would be imposed if the corporation did not comply. The Supreme Court then assumed that guaranteeing cost free contraceptives to all women was a compelling interest, but that the contraceptive mandate was not narrowly tailored to the compelling interest, in part based upon the existence of numerous exceptions to the mandate (none of which applied to Hobby Lobby).
The majority opinion goes out of its way to limit the scope of its opinion. It states that immunization and blood transfusions requirements very well may pass RFRA analysis, as would non-discrimination laws. The bigger issue is that the courts must now engage in the RFRA analysis for corporations, however.