7th Circuit in Contraceptive Mandate Case: “use of the corporate form” not dispositive to resolving RFRA claim

January 31st, 2013

Building on their previous judgment holding that corporations can advance claims under RFRA, the same three-judge panel of the 7th Circuit (Flaum, Sykes, and Rovner) enjoined the contraceptive mandate as applied to another for-profit business that objects to the mandate on religious liberties grounds.

In Grote v. Sebelius, the panel reaffirmed its holding that the mere fact that a corporation is advancing a RFRA claim does not halt the claim.

In response the government advances the same arguments as it did in Korte.   To abbreviate, the government maintains that (1) a secular, for‐profit corporation cannot assert a claim under RFRA; (2) relatedly, the free‐exercise rights of the individual plaintiffs are not affected because their corporation is a separate legal entity; and (3) the mandate’s burden on their free‐exercise rights is too remote and attenuated to qualify as “substantial” under RFRA because the decision to use contraception benefits is made by third parties— individual employees, in consultation with their medical providers.  We addressed these arguments in our order in Korte, and nothing presented here requires us to reconsider that prior ruling. Here, as in Korte, the Grote Family’s use of the corporate form is not dispositive of the claim. See Korte, 2012 WL 6757353, at *3 (citing Citizens United v. Fed. Election Comm’n, 558 U.S. 310 (2010)).  And the government’s minimalist characterization of the burden continues to obscure the substance of the religious‐liberty violation asserted here. Id.  The members of the Grote Family contend that their faith forbids them to facilitate access to contraception by paying for it, as the mandate requires them to do.

This tees up the issue more closely of whether corporations can advance religious liberty arguments.

Judge Rovner elaborated on her dissent on this point, stressing that the religious interests of the owners are not coterminous of the corporation qua person.

 As such, I cannot imagine that the company, as distinct from the Grotes, has any religious interests or rights to assert here.  To be sure, a secular corporation does have some types of First Amendment rights:  it has the right to engage in commercial speech in the promotion of its products, for example, see generally Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y., 447 U.S. 557, 100 S. Ct. 2343 (1980), and in pursuit of its interests as a corporate citizen, it has the right to articulate what government policies it supports or opposes and to contribute money to political campaigns in pursuit of its commercial agenda, see Citizens United v. Fed. Election Comm’n, 558 U.S. 310, 130 S. Ct. 876 (2010).  Moreover, there do exist some corporate entities which are organized expressly to pursue religious ends, and I think it fair to assume that such entities may have cognizable religious liberties independent of the people who animate them, even if they are profit‐ seeking.  See, e.g., Tyndale House Publishers, Inc. v. Sebelius, 2012 WL 5817323, at *6‐*7 (D.D.C. Nov. 16, 2012) (for‐profit publisher of Christian texts, owned by not‐for‐profit religious foundation and related trusts which directed publisher’s profits to religious charity and educational work); see also Corp. of Presiding Bishop of Church of Jesus Christ of Latter‐day Saints v. Amos, 483 U.S. 327, 345 n.6, 107 S. Ct. 2862, 2873 (1987) (Brennan, J., concurring in the judgment) (“it is . . . conceivable that some for‐profit activities could have a religious character”). 1   Indeed, there is a regulatory exemption from the contraception mandate for religious employers.  45 C.F.R. § 147.130(a)(1)(iv)(B).  But it appears to be common ground among the parties that Grote Industries does not meet the criteria for such an employer.  So far as it appears, the mission of Grote Industries, like that of any other for‐profit, secular business, is to make money in the commercial sphere.  In short, the only religious freedoms at issue in this appeal are those of the Grotes, not the companies they own.  See Hobby Lobby Stores, Inc. v. Sebelius, 870 F. Supp. 2d 1278, 1291 (W.D. Okla. 2012) (“General business corporations do not, separate and apart from the actions or belief systems of their individual owners or employees, exercise religion. They do not pray, worship, observe sacraments or take other religiously‐motivated actions separate and apart from the intention and direction of their individual actors.  Religious exercise is, by its nature, one of those “purely personal” matters referenced in [First Natʹl Bank of Boston v. Bellotti, 435 U.S. 765, 778 n. 14, 98 S. Ct. 1407, 1416 n.14 (1978)] which is not the province of a general business corporation.”).

H/T Religion Clause