Third Circuit Split Over Whether Corporations Can Bring Suit Under RFRA

February 8th, 2013

We now have a border-line split between the 3rd and the 7th with respect to whether corporations can bring suit under RFRA. To SCOTUS we go.

Judge Rendell’s “majority” opinion would choose not to reach these issues at this stage. The concurring opinion by Judge Garth in Conestoga Wood v. Sect’y Dept. HHS adopts the position of Judge Rovner’s dissent in the Grote case, and the reasoning of the Hobby Lobby case. Notably, the majority fails to even engage with the majority opinion in Grote.

I write separately in order to highlight what I have found to be particularly persuasive reasoning advanced both by District Court Judge Goldberg’s thorough and comprehensive opinion in this case 2 and by our sister Circuits, most notably the Tenth Circuit in Hobby Lobby Stores, Inc. v. Sebelius, 12-6294, 2012 WL 6930302 (10th Cir. Dec. 20, 2012). 3 I have also found the opinion of Judge Judge Ilana Rovner of the Seventh Circuit, writing in dissent in Grote v. Sebelius, 13-1077, 2013 WL 362725 at *4- 15 (7th Cir. Jan. 30, 2013), to dispositively answer all of the arguments of Conestoga and Judge Jordan. I conclude, as Judge Rovner’s opinion does, that Conestoga’s complaint is flawed and without the likelihood of success necessary to warrant an injunction.

Garth is very clear that corporations cannot be protected here. Notably, he offers not citations to Citizens United.

As the District Court properly recognized, this argument fails to account for the fact that for-profit corporate entities, unlike religious non-profit organizations, do not— and cannot—legally claim a right to exercise or establish a “corporate” religion under the First Amendment or the RFRA. As the District Court noted, “[g]eneral business corporations … do not pray, worship, observe sacraments or take other religiouslymotivated actions separate and apart from the intention and direction of their individual actors.” Contestoga 2013 WL 140110 at *7 (quoting Hobby Lobby Stores, Inc. v. Sebelius, 870 F.Supp.2d 1278, 1291 (W.D. Okla. 2012)). Unlike religious non-profit corporations or organizations, the religious liberty relevant in the context of for-profit corporations is the liberty of its individuals, not of a profit-seeking corporate entity. 4

To keep it timely, he cited in a footnote President Obama’s revised contraception mandate policy.

I also note in this connection that President Obama has recently proposed permitting a broad range of religious nonprofit organizations who object to providing contraception coverage to decline to do so. Coverage of Certain Preventive Services Under the Affordable Care Act, (proposed Jan. 30, 2013).

Garth concludes that the only purpose of these corporations is to make money, not to advance any religious ideals, like a church would.

Conestoga further claims that it should be construed as holding the religious beliefs of its owners. This claim is belied by the fact that, as the District Court correctly noted, “‘[i]ncorporation’s basic purpose is to create a distinct legal entity, with legal rights, obligations, powers, and privileges different from those of the natural individuals who created it, who own it, or whom it employs’ . . . . It would be entirely inconsistent to allow the Hahns to enjoy the benefits of incorporation, while simultaneously piercing the corporate veil for the limited purpose of challenging these regulations.” Contestoga, 2013 WL 140110 at *8 (quoting Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 163, 121 S.Ct. 2087, 150 L.Ed.2d 198 (2001)). As Judge Rovner put it in Grote, “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.” Grote, 13-1077, 2013 WL 362725 at *5. Similarly, the purpose—and only purpose—of the plaintiff Conestoga is to make money! Despite Judge Jordan’s objection to this statement (see Diss. Op. at n. 8), the record clearly reveals that Conestoga Wood Specialties Corporation is no more than a for-profit corporation designed for commercial success and is without membership in any church, synagogue, or mosque and without religious convictions. 

Judge Jordan in dissent disagreed with Judge Garth and said corporations could bring these suits.

And corporations have been held to have free speech rights, see generally Citizens United v. Fed. Election Comm’n, 558 U.S. 310 (2010), including the right to frame their own message where abortion is concerned. See Greater Balt. Ctr for Pregnancy Concerns, Inc. v. Mayor of Balt., 683 F.3d 539, 554 (4th Cir. 2012) (holding that the plaintiff “pregnancy centers are not engaged in commercial speech and that their speech cannot be denied the full protection of strict scrutiny”). Ironically (given the character of the constitutional and statutory claims being made here), many an abortion rights case has been brought by corporations like Planned Parenthood and has resulted in the granting of preliminary injunctive relief. See Planned Parenthood of Ind., Inc. v. Comm’r of Ind. Dept. of Health, 699 F.3d 962, 968 (7th Cir. 2012) (affirming grant of preliminary injunction to prevent enforcement of a state statute prohibiting a medical provider (a corporation) that also performed abortions from receiving any state-administered funding, because the state law required the provider to choose between providing abortion services and receiving public money for other services besides abortions); Planned Parenthood of S.E. Pa. v. Casey, 686 F. Supp. 1089, 1137-38 (E.D. Pa. 1988) (granting preliminary injunction to several corporations, both for-profit and not-for-profit, and an individual to enjoin state law requiring, inter alia, unduly burdensome record keeping and reporting requirements that were determined to be likely to result in an unconstitutional impediment to a woman’s right to have an abortion). There is thus ample precedent indicating that the corporate form itself does not prevent a corporation from asserting constitutional rights, including First Amendment rights.

Jordan’s point about Planned Parenthood is similar to Justice Alito’s point about the New York Times bringing First Amendment suits–we never thought about the simple fact that corporations can sue to vindicate constitutional rights. However Planned Parenthood, unlike the New York Times, cannot avail itself of the Press Clause (like the plaintiff this term in  Agency for International Development v. Alliance for Open Society International, Inc., a corporation suing to fight for First Amendment rights).

Judge Jordan responds to Judge Garth’s point about the fact that these religious-corporations do make a profit.

Judge Garth asserts that “the purpose – and only purpose – of the plaintiff Conestoga is to make money!” (Concurrence at 4.) That assumes the answer to the question the Hahns have posed. As a factual matter, it is unrebutted that Conestoga does not exist solely to make money. This is a closely held corporation which is operated to accomplish the specific vision of its deeply religious owners, and, while making money is part of that, it has been effectively conceded that they have a great deal more than profit on their minds. To say that religiously inclined people will have to forego their rights of conscience and focus solely on profit, if they choose to adopt a corporate form to conduct their business, is a controversial position and certainly not one already established in law.

I think this will continue to be an issue of growing importance as federal mandates creep further and further into areas once reserved for individual choices.

All of my posts on this topic are collected here. By the time I collect 5 or more posts, I usually have enough for the basis of an article.

I think I’ll write a short piece, maybe titled “Corporate Prayer: Religious Freedom for Corporations under RFRA” or “Religious Freedom for Corporations.”

H/T How Appealing