Academic journal article Constitutional Commentary

Is Hobby Lobby a Tool for Limiting Corporate Constitutional Rights?

Academic journal article Constitutional Commentary

Is Hobby Lobby a Tool for Limiting Corporate Constitutional Rights?

Article excerpt

Critics lament that with Burwell v. Hobby Lobby Stores, Inc., (1) the Supreme Court further expanded corporate personhood powers. This Article offers an alternative reading. It suggests that Hobby Lobby might actually provide a tool for limiting previously recognized corporate constitutional rights. To those who oppose the decision, this assertion might seem unduly optimistic. After all, the Court did determine that three family-owned business corporations were "persons" with sincere religious beliefs entitled to use the Religious Freedom Restoration Act ("RFRA") (2) to deprive employees of federally mandated healthcare insurance coverage. Given that the Court determined that certain "closely held" (3) business corporations possessed statutory rights previously thought reserved to real human beings, it would not seem to presage the future restriction of corporate constitutional rights. However, by designating (thus far) just closely-held corporations as persons with free-exercise rights under RFRA the Court invites us to question whether other corporations (that lack similar attributes) would be denied such personhood. And, if so, whether a distinction between closely-held corporations and others could be applied to curtail corporate constitutional rights.

Determining how Hobby Lobby restricts corporate personhood rights is not a mere thought experiment. It has become immediately necessary as a practical matter. Because the Court held that the contraceptive mandate (4) under the Patient Protection and Affordable Care Act ("ACA") (5) as applied to the three corporate litigants violated RFRA, the Department of Health and Human Services ("HHS") was obligated to fashion an exemption for them and similar organizations. Yet, notwithstanding the apparent importance of the term to its central holding, the Court majority failed to define what it meant by a "closely-held corporation." (6) Moreover, there is no uniform state (7) or federal law defining this now critical category. Further, the decision seemed to discourage "discriminating" between classes of corporate entities. (8) Wrestling with this apparent indefiniteness, HHS sought through a proposed rulemaking to create a diagnostic test (what I will refer to as a type of "Hobby Lobby Tool") to identify the circumstances when business corporations could become eligible for the exemption from the contraceptive mandate.

The Hobby Lobby majority opinion does provide some guidance. (9) The Court's threshold determination that the three corporations were persons under RFRA appears to have depended upon the existence of three conditions. First, upon looking through the corporate entity, (10) the Court was able to see human owners that were co-extensive with the corporation. This move ignored the "separateness" that state corporate law recognizes between a corporation and its owners. (11) Second, it appears that only because the identified human owners held (or agreed to share) the same sincere religious beliefs, and third, openly ran the corporation in accordance with those beliefs, did the Court conclude the beliefs of these human beings could be attributed to the corporate entity. (12) Arguably, only with these three factors present, did the Court determine that the contraceptive mandate substantially burdened the sincere religious beliefs of each corporation. The majority opinion, written by Justice Samuel Alito, suggests that to be deemed a person under RFRA, a corporation would not need to be closely held. Thus, so long as each of these three conditions was met a corporation could be considered a person under RFRA. Conversely, not all closely held corporations could meet the test. (13)

Evidence of the first condition can be found in Justice Alito's explanation that rights arising from the designation of a corporation as a fictional person were designed to protect the rights of real human beings associated with the entity. Depending upon the nature of the statutory or constitutional right, his opinion acknowledged that some, but not all, such rights derived from looking through the entity (14) to the owners to find such human beings deserving of protection. …

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