The legal battle took an important step forward Wednesday when an appeals court here heard arguments in two cases brought by business owners who are Catholic. Another challenge is scheduled to be heard Thursday by an appeals court in Denver, and two other courts are set to hear similar cases over the next two weeks.
There are 60 cases filed nationwide objecting to the impending mandate, which requires employers to provide no-cost coverage of all contraceptives approved by the Food and Drug Administration. The challenges are split almost equally between those brought by corporations and by nonprofit entities with a religious affiliation or moral objection to contraception.
So far, it is the objections from religious-affiliated nonprofit corporations and institutions that have drawn the most attention. Groups such as Catholic bishops have accused the Obama administration of waging war on religious groups by insisting on the contraceptive mandate. But those cases are mostly in legal limbo as the administration works on regulations that might provide a compromise.
Further along in the legal process are the suits filed by businesses with religious owners. These enterprises are involved in profit-making activities that have nothing to do with faith. The companies, among other things, make wooden cabinets, run a national chain of arts and crafts stores and supply salad greens to local Panera restaurants.
Their challenges offer a complex set of issues — religious freedom, equality for women workers, whether a company rather than a person is protected in its exercise of religion — that already are dividing lower courts.
On Wednesday, the U.S. Court of Appeals for the 7th Circuit heard a pair of cases brought by an Illinois-based construction company, K&L Contractors, and an Indiana maker of vehicle-safety products, Grote Industries. Both firms were seeking permanent injunctions against the contraceptive requirement.
Cyril and Jane Korte, who own the privately held construction company, have vowed to run the business in concert with their Catholic beliefs, according to their lawyer, Edward L. White III. White is a senior counsel at the American Center for Law and Justice, one of several groups representing business owners in the lawsuits.
He said the law would force them to either submit to actions that “implicate their moral beliefs” or be subject to more than $700,000 in annual penalties. “It would destroy the business,” he told the court.
The federal government, for its part, has drawn support from groups advocating for women’s rights and for the separation of church and state, as well as civil libertarians.
“Everyone is entitled to their own beliefs, but just as religious objections to desegregation were not an excuse for racial discrimination, private businesses cannot use religion as an excuse to deny basic health care to the women who work for them,” said Louise Melling, deputy legal director of the American Civil Liberties Union.
In some of the lawsuits, business owners object to insurance plans that cover any contraceptives, while in others, the owners reject only certain devices or drugs.
All of them are basing their arguments on the First Amendment guarantee of free exercise of religion and on the Religious Freedom Restoration Act (RFRA) of 1993. The act prohibits the federal government from imposing a “substantial burden” on a person’s exercise of religion unless there is a “compelling governmental interest” and the measure is the least restrictive method of achieving the interest.
So far, courts have been split. Appeals courts in Denver, Philadelphia and Cincinnati have denied business owners’ requests for temporary injunctions, while courts in the District, St. Louis and the 7th Circuit have granted temporary injunctions.
The Supreme Court ultimately may be required to settle the question. “I don’t know if the Supreme Court will be eager get into this, but I think they will find it hard to avoid,” said Douglas Laycock, a University of Virginia law professor who is an expert on religious freedom.
The two cases Wednesday were heard by the same three judges who previously overturned the decision of a lower-court judge and gave the Kortes and the Grote family a temporary injunction. There was no indication that the intervening months had changed the minds of Judges Joel M. Flaum and Diane S. Sykes, who agreed with the businesses, and Judge Ilana Diamond Rovner, who has sided with the government.
U.S. Justice Department lawyer Alisa B. Klein made the federal government’s argument that secular, for-profit corporations are not entitled to the RFRA protections that apply to the “persons” mentioned in the law.
It is a “bedrock principle of American corporate law” that corporations are distinct from their shareholders, she said. The Kortes and Grotes may have religious rights, she said, but that does not free their corporations from having to comply with federal laws. The corporations cannot comply with only the parts of the law with which they agree, she said.
A brief supporting the government from Americans United for the Separation of Church and State said the companies’ rationale “could allow other employers to withhold insurance coverage for any number of other medical treatments — from blood transfusions to psychiatric care to the use of medicine ingested in the form of gelatin capsules.”
But Klein drew repeated skepticism from Sykes. The judge said the companies “had a corporate mission here to operate within Catholic doctrine” and that there was no challenge to their sincerity.
Sykes said that because corporations have rights to political speech, it would make no sense for them to be denied First Amendment rights to exercise religion. In its landmark Citizens United v. Federal Election Commission ruling in January 2012, the Supreme Court said that political contributions by corporations and labor unions are a form of protected speech.
Klein argued that if Congress had intended to include corporations in RFRA, it would have done so explicitly. Sykes countered that it was just as logical to think that Congress believed that it did not need to.
The question of whether corporations are included in RFRA could prove crucial for the government’s case, according to Michael W. McConnell, a religion law expert who heads Stanford’s Constitutional Law Center. Otherwise, the government could be in a weak position because it has already granted so many exemptions to the contraceptive mandate — for instance, to religious groups — and has grandfathered in existing health insurance plans, which may not cover contraceptives.
By the government’s own estimate, that means 100 million Americans might not have contraceptive coverage, said Matt Bowman, an Alliance Defending Freedom lawyer representing the Grotes in one of the two cases heard Wednesday. That could undercut the government’s argument that the need to carry out the mandate is so compelling it trumps the couple’s religious beliefs.
In court, Rovner questioned how the Kortes and Grotes would be harmed if they had to provide contraceptive coverage to employees. The owners are not forced to use contraceptives, only to offer insurance plans that cover them, she said. She wondered how this would be any different from a worker telling her employer she was was going to use her paycheck to get a procedure that the employer disapproved of.
Rovner also wondered whether courts were supposed to investigate the legitimacy of a company’s claims about the religious devotion of its owners. What if “Apple or Walmart or Juicy Couture” decided not to comply because of religious objections, she asked. Are courts “obliged to accept those assertions?”
Such questions are why Laycock, the University of Virginia expert, said the cases are such a tough call. Particularly as the objecting companies get bigger, he said, “it’s harder to say you are just practicing your religion.”
On Thursday, the appeals court in Denver hears the case of Hobby Lobby, an arts and crafts retailer that has more than 500 stores and 13,000 employees. In an unusual move, the entire U.S. Court of Appeals for the 10th Circuit will be hearing the Hobby Lobby case.
A panel of the appeals court turned down the company’s request for a temporary injunction, as did Supreme Court Justice Sonia Sotomayor, who oversees the circuit.
Sotomayor said that because the court had never ruled on whether a corporation was covered by RFRA, the company could not meet the high court’s strict standards for when an injunction should be granted.
Depending on how fast the appeals courts work, the challenges could reach the Supreme Court in time for the term that begins in October.
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