Hobby Lobby and the legal rights of people organized as corporations

June 30

Today’s Hobby Lobby decision holding that the Religious Freedom Restoration Act limits the scope of the Obamacare contraceptive mandate reiterates the important point that people organized as corporations are still entitled to important constitutional and statutory rights. The government had argued that RFRA does not apply to closely held commercial corporations because they are not “persons” covered by the act, and because they cannot engage in the “exercise” of religion. Justice Samuel Alito’s majority opinion effectively refutes the former argument:

Congress provided protection for people like the [owners of Hobby Lobby and Conestoga Wood] by employing a familiar legal fiction: It included corporations within RFRA’s definition of “persons.” But it is important to keep in mind that the purpose of this fiction is to provide protection for human beings. A corporation is simply a form of organization used by human beings to achieve desired ends. An established body of law specifies the rights and obligations of the people(including shareholders, officers, and employees) who are associated with a corporation in one way or another. When rights, whether constitutional or statutory, are extended to corporations, the purpose is to protect the rights of these people. For example, extending Fourth Amendment protection to corporations protects the privacy interests of employees and others associated with the company. Protecting corporations from government seizure of their property without just compensation protects all those who have a stake in the corporations’ financial well-being. And 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 companies….

The fundamental point here is that people organized as corporations are people too. Even the dissent by Justice Ruth Bader Ginsburg partially recognizes this, since she accepts that RFRA does apply to nonprofit religious corporations, such as those established by churches. The latter, of course, are no more natural “persons” than for-profit corporations are. In modern society, people routinely use corporations for a wide range of activities. Numerous employers, churches, schools, newspapers, charities, and other organizations use the corporate form. When they do so, their owners and employees should not have to automatically check their constitutional and statutory rights at the door.

Later in the majority opinion, Alito also effectively addresses the dissent’s argument that for-profit corporations cannot “exercise religion” because their purpose to make money, not uphold religious principles. As Alito points out, the law permits commercial corporations to pursue a wide range of objectives and does not require them to sacrifice all other goals to maximizing profit. If such corporations can, for example, pursue charitable objectives, they can also pursue religious ones. I would add that even if profit is the sole purpose of a particular firm, its owners can still choose to accept moral or religious constraints on the pursuit of that objective. An obvious example is a business whose owners choose to close on the Sabbath because they believe they have a religious duty to do so. Keeping the Sabbath is not the purpose of the business. But it is a constraint on the means the owners use to pursue that purpose.

These questions are not the only ones at issue in the Hobby Lobby case. The federal government and the dissenting justices also argued that even if for-profit corporations do have rights under RFRA, the law would not bar the contraception mandate because the latter is the “least restrictive means” to achieving various “compelling” government interests. I find that view unpersuasive. There are many other ways that the federal government can expand access to contraception, including directly subsidizing it (as the Supreme Court majority points out), and legalizing the sale of birth control pills over the counter. But regardless of whether the majority was right on the “least restrictive means” question, it is important that the Court has reaffirmed the important principle that people do not lose vital statutory and constitutional rights when they act through corporations.

Perhaps I should add that I am not religious myself and – like the vast majority of Americans – have no moral objections to contraception. But religious freedom, like other important rights, cannot be limited to those cases where the majority approves of the beliefs of those exercising it.

Today’s decision is limited to “closely held” corporations and does not address the status of publicly traded corporations under RFRA. As the majority points out, the shareholders of major publicly traded corporations are unlikely to agree to follow highly restrictive religious constraints on their business dealings, especially (I would add) ones that are highly unpopular, such as rejection of contraception. But I actually agree with Justice Ginsburg that the logic of the majority’s argument ultimately applies to corporations of all types, even if some are far more likely to actually claim RFRA exemptions than others. The same point applies to constitutional rights, as well. For example, publicly traded corporations are surely entitled to Fourth Amendment rights against “unreasonable” searches and seizures and Takings Clause protections against the condemnation of their property without compensation.

Ilya Somin is Professor of Law at George Mason University. His research focuses on constitutional law, property law, and popular political participation. He is the author of "The Grasping Hand: Kelo v. City of New London and the Limits of Eminent Domain" (forthcoming) and "Democracy and Political Ignorance: Why Smaller Government is Smarter."
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