The Supreme Court recently declined to review a Federal Court decision that denied a request by the Hobby Lobby Corporation for injunction against the United States Government to stop enforcement of provisions of the Affordable Care Act. According to media reports, Hobby Lobby sought the injunction on the basis that the requirement that large employers provide their employees with health insurance that includes family planning is forcing Hobby Lobby Corporation to violate the corporation’s religious beliefs and therefore is a violation of Hobby Lobby Corporation’s Constitutional rights to exercise its religion beliefs.
While many may applaud or condemn the refusal to issue an injunction based upon their own perspectives on abortion and family planning, there is an aspect to this lawsuit that, as both an attorney and religious person, I see as a victory for religious people in the United States. For reasons I explain below, I believe this decision upholds the idea that under our society’s laws human beings are sacred and entitled to respect and protections greater than corporations.
We live in a society where corporations dominate our economic landscape. They are very much a part of our everyday lives. However, it is important to be mindful of the true nature, history, and purpose of the modern corporation. To understand the legal nature of a corporation we can look to The United States Supreme Court which wrote in 1819:
“A corporation is an artificial being, indivisible, intangible, and existing only in contemplation of law. Being a creature of law, it possess only those properties which the charter of its creation confer upon it, either expressly, or as incidental to its very existence”
That is, a corporation is what we lawyers call a “legal fiction”. It is a made-up imaginary person that other people use to hold property, conduct business, and perhaps most importantly, to take on debt and risk. It is not a flesh and blood humanbeing with spiritual questions and longings. Under the law a corporation can exist forever and does not have a life span governed by biology. A corporation owes its existence to the state and not to flesh and blood parents whose passing it grieves.
The men and women who lived at the time our nation was founded did not live in a world where commerce, and their lives, were dominated by corporations and their products. As one legal treatise states:
“In the early 19th century, American law restricted the use of corporations. In order to form a corporation in the United States, one had to petition one’s state legislature for a charter granting the right to operate as a corporation. Articles of incorporation were not freely given due to suspicion of the private power of corporations.”
However, with the rise of the industrial revolution and entities such as railroads and factories, there was an expansion in the use and freedom to the creation of corporations such that in today’s marketplace the corporation is the dominant form of large business ownership.
One of the primary reasons for choosing the corporation as a business structure is that it shields the owners, called shareholders, from liability for corporate debts. Because the corporation is a separate legal person from the shareholders, any creditor seeking payment for a corporate liability must look to the corporation and not to shareholders for payment. Thus, in the case of the Hobby Lobby Corporation, the owners are legally shielded and not liable for corporate debts. It is a completely separate legal entity from its owners.
While corporations are not people, in the past our Courts have granted them Constitutional protections that, to me, should be limited to human-beings. In 2010, in a case called Citizens United vs. Federal Election Commission, in a 5-4 decision, the Court found that corporations have political speech rights equal to those of natural people and that legislation designed to limit corporate campaign donations infringed upon the political speech of the corporation. Justice Stevens, one of the dissenting Justices in the case wrote of the dangers of making no distinctions between corporations and natural persons:
“In the context of election to public office, the distinction between corporate and human speakers is significant. Although they make enormous contributions to our society, corporations are not actually members of it. They cannot vote or run for office. Because they may be managed and controlled by nonresidents, their interests may conflict in fundamental respects with the interests of eligible voters. The financial resources, legal structure, and instrumental orientation of corporations raise legitimate concerns about their role in the electoral process. Our lawmakers have a compelling constitutional basis, if not also a democratic duty, to take measures designed to guard against the potentially deleterious effects of corporate spending in local and national races.” Citizens United v. Fed. Election Com’n, 558 U.S. 310 (2010).
However, it does appear that the Courts our nation are not going to extend the Constitution’s protections for the exercising of religious beliefs to corporations. In denying Hobby Lobby’s request for the injunction the Court wrote:
“Corporations have constitutional rights in some circumstances, such as the right to free speech, but the rights of corporate persons and natural persons are not coextensive. Courts have not extended all constitutional rights to all corporations. Corporations do not possess a “right to exercise a privilege against self-incrimination….The purpose of the free exercise clause is “to secure religious liberty in the individual by prohibiting any invasions thereof by civil authority.”… Churches and other religious organizations or religious corporations have been accorded protection under the free exercise clause… However, Hobby Lobby and Mardel are not religious organizations. Plaintiffs have not cited, and the court has not found, any case concluding that secular, for-profit corporations such as Hobby Lobby and Mardel have a constitutional right to the free exercise of religion.” Hobby Lobby Stores, Inc. v. Sebelius, 870 F. Supp. 2d 1278, 1287 (W.D. Okla. 2012).
Hobby Lobby appealed the decision denying the injunction to the United States Supreme Court which declined to hear the matter.
It is important to understand that this case may not be over yet. The actual merits of the case have not yet been fully decided. The Court has only ruled that it will not issue a preliminary injunction because it believes that it is unlikely Hobby Lobby Corporation will succeed on the merits of its claims. The Court has not denied Hobby Lobby Corporation the right to litigate those claims more fully and attempt to change the Court’s opinion on the matter. It will be interesting to see where this goes. However, I think the Court got this one right in finding that the Constitutional protections regarding religious practice do not apply to for-profit corporations, but belong to the individual people who study, pray, contemplate, and seek to find spiritual fulfillment and purpose through religious practice. For me, this affirms that our law continues to reflect the idea that there is something inherently sacred about each human being and as such should be protected.
Pinto & Branson, Understanding Corporate Law, (2nd Ed., 2004).