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Wobbly Hobby Lobby Ruling in Favor of HHS Mandate



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In a ruling yesterday in Hobby Lobby Stores, Inc. v. Sebelius, federal district judge Joe Heaton of the Western District of Oklahoma (a Bush 43 appointee) denied a motion for a preliminary injunction against the HHS mandate. The plaintiffs who filed the motion are two family-owned, for-profit corporations and the five family members who own and operate the corporations’ businesses.

Judge Heaton’s determination that plaintiffs did not establish a likelihood of success on their claims under the federal Religious Freedom Restoration Act hinges on the unique disability that he imagines for-profit corporations to suffer from, a disability that doesn’t afflict either religious corporations or unincorporated for-profit businesses. In his view, the only corporations that have rights under RFRA are “religious corporations” “because believers ‘exercise their religion through religious organizations’” (pp. 11, 18). Further, adopting a “directness” factor, Heaton reasons that the individual plaintiffs who own and operate the corporations’ businesses likely don’t face a substantial burden under the HHS mandate because the mandate applies only to the corporations, “not to [their] officers or owners” (and because the particular burden of which they complain would supposedly* arise only “after a series of independent decisions by health care providers and patients covered by” the corporate health-insurance plans) (p. 23). Evidently this factor would apply differently for an unincorporated business, where the mandate would operate directly against the business’s owners.

Heaton’s conclusion that for-profit corporations face a unique disability under RFRA, a disability that both religious organizations and unincorporated businesses escape, is puzzling.

For starters, it is clear that religious believers may “exercise their religion” through for-profit corporations as well as through nonprofit religious organizations. The two plaintiff corporations amply illustrate the fact. As the complaint makes clear (in uncontested allegations that Heaton doesn’t see fit to acknowledge), the Green family undertakes to operate Hobby Lobby “in a manner consistent with Biblical principles” (¶¶ 41, 42). For example, they use Hobby Lobby profits “to support Christian charities and ministries around the world” (¶ 39); they close their stores on Sundays (¶ 45), and they close early on other days “so that employees can spend the evening with their families” (¶ 39); and they take out full-page ads that celebrate the religious nature of Christmas and Easter and that direct readers for spiritual counseling (¶ 47). Under what possible theory are these not exercises of religion within RFRA’s broad definition of that term?  (See Introduction and Part I of my law-review essay on how the HHS mandate violates RFRA.)

The Green family likewise is governed by its religious beliefs in operating Mardel, “a bookstore and educational supply company that specializes in Christian materials.” (Given its religious line of business, it is unclear how Heaton can label Mardel a “secular” corporation (p. 11).) Among other things, they give 10% of Mardel profits to help print Bibles. (¶ 49) For both companies, the Green family employs chaplains and provides conflict resolution classes based on Christian principles (¶ 51).

In short, the Greens are clearly exercising their religion in how they conduct their for-profit corporations, and Heaton provides no coherent reason why those for-profit corporations shouldn’t be able to advance the same RFRA rights that nonprofit religious corporations invoke. Further, as even the Ninth Circuit has recognized (see slip op. at 8453-8454 & n. 9), and as various other district courts addressing RFRA challenges to the HHS mandate have held, a for-profit corporation has standing to assert the religious-liberty rights of its owners.

Heaton’s belief that the RFRA rights of business owners are diminished if they operate through the corporate form rather than through an unincorporated business also makes no sense. Once one recognizes the general principle that the owner of property has religious-liberty rights in his use or control of that property, why should those rights be any less if the property is a wholly owned corporation?

To re-use my previous hypothetical: A Jewish family operates a deli. Implementing its religious beliefs, the family keeps the deli closed on the Jewish Sabbath. But the federal government enacts a law that requires that all food-service businesses engaged in interstate commerce be open seven days a week.

What sense would it make to conclude that the deli owners’ RFRA claim is weaker if they operate their business as a wholly-owned corporation rather than as an unincorporated business?

* For this mistaken point, Heaton relies on the other poorly reasoned ruling in favor of the HHS mandate. But as Judge Reggie B. Walton explained last Friday in Tyndale House Publishers v. Sebelius: “Because it is the coverage, not just the use, of the contraceptives at issue to which the plaintiffs object, it is irrelevant that the use of the contraceptives depends on the independent decisions of third parties. And even if this burden could be characterized as ‘indirect,’ the Supreme Court has indicated that indirectness is not a barrier to finding a substantial burden.”



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