Mirror of Justice

A blog dedicated to the development of Catholic legal theory.
Affiliated with the Program on Church, State & Society at Notre Dame Law School.

Monday, November 4, 2013

Where the D.C. Circuit's analysis of whether a corporation may assert a RFRA claim went off track

A split panel of the D.C. Circuit held last week in Gilardi v. HHS that the HHS contraceptives mandate violates the Religious Freedom Restoration Act. This post is not about the merits of that holding (with which I agree), but about the court's determination that "secular corporations" may not assert a RFRA claim. I think that the court's analysis was flawed and that it reached a wrong decision on this issue. The basic flaw was a failure to examine what constitutes an exercise of religion under RFRA. As I have previously argued, once one recognizes that "a religiously based refusal to do something otherwise required by law is an 'exercise of religion'" within the meaning of RFRA, it is not too difficult to see that corporations can engage in the exercise of religion because they can decide for religious reasons not to do something otherwise required by law.

First, some background: 

Gilardi v. HHS was brought by two brothers and their two closely held corporations. These corporations collectively employ approximately 400 employees and sponsor a self-insured health plan that has historically excluded contraceptives, sterilization, and abortion. En route to holding that enforcement of the contraceptives mandate against the corporations violates the RFRA, the court held that the corporations themselves could not assert a claim under RFRA but that the brothers who controlled the corporations could. Judge Brown wrote the principal opinion, joined by Judge Edwards with respect to the issue of who may assert a RFRA claim and joined by Judge Randolph with respect to the merits. Judge Edwards dissented on the merits while Judge Randolph thought it unnecessary to decide whether the corporations themselves could assert a RFRA claim.

Now, some analysis:

RFRA provides that "[a] person whose religious exercise has been burdened in violation of this section may assert that violation as a claim or defense in a judicial proceeding and obtain appropriate relief against a government." 42 U.S.C. § 2000bb-1(c). As the Tenth Circuit explained in Hobby Lobby v. Sebelius, and as appellants argued, "person" generally encompasses corporations pursuant to 1 U.S.C. § 1 (the Dictionary Act). Judge Brown observes, however, that "the focus on personhood [alone] is too narrow; instead, we must construe the term 'person' together with the phrase 'exercise of religion.'"

Until this point, the analysis is correct. The right question to ask is whether a corporation is a "person" that can engage in an "exercise of religion" under RFRA. And to answer this question we need to know what counts as an exercise of religion. The analysis goes off track, however, when Judge Brown surveys Free Exercise Clause caselaw. Nowhere in Judge Brown's analysis does she examine what constitutes an "exercise of religion" under Free Exercise Clause caselaw even though that is the avowed object of her inquiry. Although Judge Brown asserts that "RFRA provides us with no helpful definition of 'exercise of religion,'" Congress declared that the purpose of RFRA was "to restore the compelling interest test as set forth in Sherbert v. Verner, 374 U.S. 398 (1963) and Wisconsin v. Yoder, 406 U.S. 205 (1972) and to guarantee its application in all cases where free exercise of religion is substantially burdened." Presumably, then, Sherbert and Yoder are good cases to look to for an understanding of what constitutes a proteted "exercise of religion" under RFRA. In each of those cases, the exercise of religion was a religiously based refusal to do something otherwise required by law. Judge Brown's analysis, however, mistakenly proceeds under the (unargued for) notion that the exercise of religion is limited to worship. She writes that "[w]hen it comes to the free exercise of religion . . . the Court has only indicated that people and churches worship. As for secular corporations, the Court has been all but silent." The issue is not whether corporations can worship; the issue, instead, is whether a corporation can refuse for religious reasons to do something otherwise required by law. And a corporation can do this. (See after the jump for relevant excerpts from prior blog posts on this topic.)

The exercise of religion in [Sherbert v. Verner] was Adele Sherbert’s religion-based refusal to work on Saturday. See id. at 403 (describing the relevant conduct as “appellant’s conscientious objection to Saturday work”).

A corporation can engage in this kind of “exercise of religion” if a corporation can refuse, for religious reasons, to do something otherwise required by law. And it plainly can. Suppose a federal law requiring fast-food restaurants located near interstate highways to be open seven days a week. Chick-fil-A’s religion-based refusal to operate on Sundays in violation of this law would surely be an “exercise of religion” akin to Ms. Sherbert’s refusal to work on Saturdays.

The profit-making character of the corporation does not change the analysis of whether the corporation can make a religion-based decision. Chick-fil-A is a profit-making business. Yet it foregoes the profits it would otherwise make through Sunday operation because its religion-based corporate policy controls the manner in which it seeks to make a profit. Similarly, Ms. Sherbert was working for money (and later seeking unemployment benefits). Yet her religious obligation not to work on Saturday conditioned the manner in which she could go about earning money.

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One might try to distinguish the exercise of religion in Sherbert on the ground that the underlying basis of the refusal to work on Saturday was so that Ms. Sherbert could engage in the religious exercise of attending worship services. The problem with this distinction is that it is sufficient for the religion-based refusal to be sincere and religion-based. It does not need to be tied to some other “religious exercise.” Consider Thomas v. Review Board, 450 U.S. 707 (1981). The exercise of religion in that case was Mr. Thomas’s refusal to participate in the production of turrets for military tanks. This refusal was based on Mr. Thomas’s beliefs as a Jehovah’s Witness. It did not matter that this religion-based refusal conditioned Mr. Thomas’s pursuit of money. The Supreme Court found it sufficient that “Thomas terminated his employment for religious reasons.” 

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[The district court in the Hobby Lobby case] reasoned that “[g]eneral business corporations . . . do not pray, worship, observe sacraments or take other religiously-motivated actions separate and apart from the intention and direction of their individual actors.” But this reasoning applies as well, of course, to religious corporations. All corporations act through “the intention and direction of their individual actors.” When performed under certain circumstances, however, the actions of individuals count as the action of the corporation. We have no problem understanding this concept in the context of discrimination. If a for-profit corporation were to announce a policy to refuse to hire Muslims, or adherents of some other religion, there would be no difficulty in attributing that religion-based discrimination to the corporation. The law recognizes corporate intention and corporate motivation all over the place. If a for-profit corporation can discriminate on the basis of religion, why can’t a for-profit corporation perform some other act on the basis of religion? When Hobby Lobby Stores, Inc., for example, decides to honor the Sabbath by staying closed on Sundays (and thereby forgoing profits the corporation would otherwise earn), that is a corporate act on the basis of religion–a corporate “exercise of religion.” And just as a corporate refusal, for religious reasons, to operate on a particular day is a corporate “exercise of religion” under federal law, so too is a corporate refusal, for religious reasons, to include particular drugs and devices in the group health plan offered by the corporation to its employees.


Walsh, Kevin | Permalink