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Another Circuit Court Rules against Free Exercise of Religion Claim by a Business Corporation

Posted on: September 18th, 2013 by Art Leonard No Comments

A third federal circuit court of appeals has weighed in on the question whether for-profit business corporations have a right under the 1st Amendment to free exercise of religion, and thus to claim a religious exemption from compliance with a valid general law.  As in Hobby Lobby Stores, Inc. v. Sebelius, 2013 WL 3216103 (10th Cir., June 27, 2013), and Conestoga Wood Specialties Corp. v. Sec’y of U.S. Dep’t of Health & Human Servs., 2013 WL 3845365 (3rd Cir., July 26, 2013), the case of Autocam Corp. v. Sebelius, 2013 U.S. App. LEXIS 19152 (6th Cir., Sept. 17, 2013), arises in the context of implementation of the Affordable Care Act regulations requiring that employer-provided health insurance plans include coverage for contraception for women.  The spreading circuit splits will likely lead to Supreme Court review of the underlying constitutional question, which would be significant for enforcement of laws banning discrimination by businesses.

As in the earlier cases, the corporate defendants are not publicly-traded, but rather are closely held corporations owned entirely by individuals or groups of individuals whose religious beliefs deem contraception to be immoral.  In Autocam, a 6th Circuit panel lines up with the 3rd Circuit in finding that such a business corporation cannot claim a right to free exercise of religion, either under the 1st Amendment directly or under the Religious Freedom Restoration Act (RFRA), which was passed by Congress in reaction to the Supreme Court’s 1990 ruling in Employment Division v. Smith, 494 U.S. 872, which had upheld the right of legislators to pass a “valid and neutral law of general applicability” outlawing conduct or requiring conduct that may be contrary to the teachings of a particular religion.

Both the 1st Amendment and RFRA speak in terms of protecting the right of “persons” to free exercise of religion, and the 3rd and 6th Circuits construe that to mean that neither the 1st Amendment nor RFRA protect business corporations from having to comply with valid general laws that contradict the religious beliefs of their shareholders.

The 10th Circuit, by contrast, holds that as for-profit corporations are treated as “persons” for purposes of due process, equal protection, and freedom of speech, they should also be treated as persons who are capable of exercising the practice of religion.  See, e.g., Citizens United v. Federal Election Commission, 558 U.S. 310 (2010), holding that corporations are protected by the 1st Amendment from restrictions on their expenditures in political campaigns under the Freedom of Speech Clause.

The Autocam court stated its agreement with the Obama Administration’s position, presented in this case by the Justice Department, that preliminary injunctive relief against implementation of the statutory requirement should not be granted and that claims asserted by the owners of Autocam Corporation under RFRA should be dismissed.

While acknowledging that the Supreme Court has recognized free speech rights for corporations under the 1st Amendment, Circuit Judge Julia Smith Gibbons wrote for the court, “No analogous body of precedent exists with regard to the rights of secular, for-profit corporations under the Free Exercise Clause prior to the enactment of RFRA.  The Free Exercise Clause and the Free Speech Clause of the First Amendment have historically been interpreted in very different ways.  Therefore, the Court’s recognition of rights for corporations like Autocam under the Free Speech Clause nearly twenty years after RFRA’s enactment does not require the conclusion that Autocam is a ‘person’ that can exercise religion for purposes of RFRA.”  The court noted that Congress had specifically stated that it did not intend by enacting RFRA to expand 1st Amendment free exercise rights beyond what they had been prior to the ruling in Employment Division v. Smith, and no prior Supreme Court ruling had found any corporate exemption from compliance with general laws due to the religious beliefs of the corporation’s owners.

We previously suggested that it was likely that the Supreme Court would grant certiorari in one or more of these cases, since the Court has never previously ruled on the question presented here:  Whether somebody who has decided to run their sole proprietor or family-owned business as a for-profit corporation may assert his or her individual free exercise of religion rights through the control of the corporation to avoid the requirements of a valid general statute.  The question has great importance for LGBT legal rights, of course, since recognition of a right of business corporations to avoid complying with general laws based on the religious beliefs of their owners could undermine the application of enforcement against such corporations of laws forbidding discrimination in employment, housing and public accommodations, such as, for example, the recent New Mexico Supreme Court decision in  Elane Photography, LLC v. Willock, 2013 N.M. LEXIS 284, 2013 WL 4478229 (August 22, 2013), holding that the owner of a wedding photography business did not enjoy a religious exemption from the state’s public accommodations law based on the owner’s religious objection to same-sex commitment ceremonies.