New York Law School

Art Leonard Observations

Posts Tagged ‘free exercise of religion’

Circuit Split May Take Religious Exemption Issue to Supreme Court

Posted on: July 31st, 2013 by Art Leonard No Comments
A divided panel of the U.S. Court of Appeals for the 3rd Circuit ruled on July 26 that a for-profit business corporation has no right to free exercise of religion under the 1st Amendment, rejecting a contrary doctrine that had been adopted by the 9th and 10th Circuits and setting up the possibility that the Supreme Court may intervene on a question that has become very salient in the context of marriage equality: Can business owners with religious objections to providing particular services claim an exemption from statutory requirements to provide those services? 

The 3rd Circuit ruling came in one of several challenges that have been filed by businesses to the requirement under the Affordable Care Act that health insurance plans provided to employees include coverage for prescription contraceptives for women.  Business owners who have religious objections to providing such coverage have asserted 1st Amendment free exercise claims.  In Conestoga Wood Specialties Corp. v. Secretary of Health and Human Services, 2013 WL 3845365, the 3rd Circuit panel voted 2-1 to affirm District Judge Mitchell S. Goldberg’s denial of a preliminary injunction to the plaintiff.  Conestoga is a corporation wholly owned by members of the Hahn family, who are all Mennonites who are opposed to any contraceptive that acts in effect as an abortifacient by preventing the development of a fertilized egg.  Two such medications are included in the formulary required under regulations promulgated by the Department of Health and Human Services to be covered under employee group health insurance.  Conestoga became subject to this requirement as of January 1, 2013, and due to the denial of preliminary injunctive relief, the company has been providing this coverage.

The Hahns rely heavily on the Supreme Court cases finding that corporations have 1st Amendment free speech rights, as well as 5th and 14th Amendment Due Process and Equal Protection rights, but the panel majority found that the Supreme Court has never ruled that corporations, across the board, are entitled to every constitutional right enjoyed by individuals.  In particular, Circuit Judge Cowen wrote for the court, the Supreme Court’s recognition of religious free exercise rights for corporations has been limited to religious corporations, and has never been extended to business corporations based on the religious beliefs of their owners.  Cowen pointed out that the Supreme Court has stated that the purpose of the Free Exercise Clause is to “secure religious liberty in the individual,” and stated, “We do not see how a for-profit ‘artificial being, invisible, intangible, and existing only in contemplation of law,’ that was created to make money could exercise such an inherently ‘human’ right.” 

The ruling brings the 3rd Circuit into conflict with the 10th Circuit’s recent ruling in Hobby Lobby Stores, Inc. v. Sebelius, 2013 WL 3216103 (10th Cir., June 27, 2013), which held that a family-owned corporation that wanted an exemption from the ACA requirements on religious grounds could maintain a Free Exercise claim.  There is also a conceptual conflict with the 9th Circuit’s rulings in EEOC v. Townley Engineering & Manufacturing Co., 859 F.2d 610 (9th Cir. 1988) and Stormans, Inc. v. Selecky, 586 F.3d 1109 (9th Cir. 2009), that adopted the so-called “pass through” theory under which a closely-held corporation whose small proprietor group had religious objections to a statutory requirement could assert their individual free exercise claims on behalf of their corporation.  The 3rd Circuit specifically rejected the reasoning of the 9th Circuit cases, finding that once business people have adopted the corporate form of business, they have created an entity distinct and apart from themselves, which should be subject to commercial regulations of the civil rights laws as well as such public welfare regulations as the insurance requirements.

Similar arguments are now playing out in various cases where businesses are claiming that they should not be required to provide services to same-sex couples for commitment ceremonies or weddings, due to the business owners’ religious objections to same-sex marriage.  The significance of recognizing corporate free exercise privileges to evade statutory rights of gay couples prompted amicus participation in these cases, including briefs filed by the ACLU and Lambda Legal.