Sloppy Sixth Circuit Ruling Rejects Challenge to HHS Mandate

by Ed Whelan

As I’ve discussed, the litigation over the HHS mandate has already generated a conflict between the Third Circuit and the Tenth Circuit over whether for-profit corporations have the capacity to engage in religious exercise for purposes of protections under the federal Religious Freedom Restoration Act and the First Amendment. In a muddled ruling yesterday (in Autocam Corp. v. Sebelius), a Sixth Circuit panel sided with the Third Circuit, albeit on different grounds: Whereas the Third Circuit had ruled that “a for-profit, secular corporation cannot engage in the exercise of religion” (and therefore did not address the question “whether such a corporation is a ‘person’ under the RFRA”), the Sixth Circuit ruled that “corporations primarily organized for secular, profit-seeking purposes” are not “persons” under RFRA.

The Sixth Circuit panel’s reasoning, in an opinion by Judge Julia Smith Gibbons (a Bush 43 appointee), is incoherent. As Gibbons recognizes, the Dictionary Act (1 U.S.C. § 1) provides that the word “person” includes corporations “unless the context indicates otherwise.” Gibbons further recognizes that “many religious groups organized under the corporate form have made successful Free Exercise Clause or RFRA claims,” and she purports “not [to] question those decisions” (which include Supreme Court decisions). But those decisions mean that the word “person” does include corporations under RFRA, and there is no textual basis for reading the Dictionary Act to say that “person” includes some corporations but not others. (That presumably is why the Third Circuit instead jumped to the logically subsequent argument that business corporations cannot exercise religion within the meaning of RFRA.)

Gibbons’s conclusion that the members of the Kennedy family who own the shares of the corporations and who operate as its directors and officers lack standing to challenge the HHS mandate is also sloppy. The fact that the law imposes fiduciary duties on directors and officers to operate the corporation in accordance with governing law ought to cut in favor of the family members’ standing in those capacities, not against.

To illustrate the absurdity of the Sixth Circuit’s holdings, consider this hypothetical: A family-owned corporation, consistent with the family members’ religious beliefs, owns and operates a deli that abides by kosher rules. An HHS pork mandate requires all food providers to serve pork. Under the Sixth Circuit’s analysis, the corporation would have no RFRA claim because it is not a “person,” and the family members wouldn’t have standing to invoke any protections under RFRA even though the HHS pork mandate requires them to violate their religious beliefs in operating their deli.

When, as seems likely, the Supreme Court grants review on the question whether a for-profit corporation has rights under RFRA, it should also address the intertwined question whether the individuals who own the shares of a closely held corporation, who sit on its board of directors (or who similarly exercise ultimate policymaking authority for the corporation), or who act as its officers have rights under RFRA by virtue of any of those roles.

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