Eugene Volokh on Corporations and RFRA Rights

In the latest of his ongoing series of posts on the HHS mandate cases, law professor Eugene Volokh explains why the individual owners of a closely held corporation have religious-liberty rights with respect to burdens imposed on that corporation. Here’s an excerpt (but I encourage you to read his whole post):

[I]f we see through the fiction of the “corporation” when it comes to rights, we should do the same when it comes to burdens. If you and your sister co-own a corporation that owns a market, and you believe it wrong for lottery tickets to be sold on your property, saying “there’s no burden on you, because only the corporation is required to sell the tickets” is a legal fiction, too. When people consider their moral or religious obligations, they don’t (I hope) let such fictions affect their sense of their duties. Neither should the legal system let such fictions obscure the burden that legal commands can impose on the owners of closely held corporations.

Indeed, all the talk in recent years of “corporate social responsibility” reflects this. I doubt that anyone thinks that “corporate social responsibility” stems from the social or moral obligations of a fictional legal entity as such. Rather, the theory is that the owners and managers of a corporation have moral duties to make sure that the corporation is run in an ethical, “responsible” way (with what constitutes ethical of course turning on the views of the person making the social responsibility arguments).

The moral obligations of human beings, the argument goes — correctly, at that level of generality — do not stop when the legal fiction of the corporation intervenes. Corporate owners can’t say, “Hey, it wasn’t me who created these social harms, it was the corporation that I own.” The same, I think, applies when we analyze the religious burden on owners when a law prevents them from doing what they see as part of their religious social and moral responsibility.…

So to determine the proper scope of corporations’ religious freedom rights (or other rights, such as free speech, constitutional property rights, or freedom from self-incrimination) one needs to go behind the legal fiction. One needs to ask: to what extent does government action with respect to a corporation burden the rights of real people? …

Do restrictions on corporations sometimes burden the religious practice of individuals? Sometimes, the answer is uncontroversially yes. Churches don’t believe or pray, either, but restrictions on churches interfere with the ability of individuals to participate in collective religious exercise.

Likewise, though for a different reason, with closely held corporations. If such a corporation is required to do something, the owners of the corporation may believe that this is obligating them to participate in that thing — as a matter of reality and of moral and religious obligation, setting aside the legal fiction. If they so believe, and they believe that this violates their religious beliefs, then the law substantially burdens their religious beliefs, even though it does that through imposing an obligation on a corporation. They face the same choice that sole proprietors or partners face: violate their religious obligations, violate the law and face the penalties for violating the law, or sell off their share of the business, which may be a very grave financial burden.

Volokh also points out that in Gallagher v. Crown Kosher Market (1961) three justices “would have ruled for the incorporated market [on its Free Exercise challenge to a Sunday-closing law], and thus must have concluded that the corporate ownership of the market was irrelevant.” (Emphasis added.) These three justices were Justice Douglas, Justice Brennan, and Justice Stewart, “hardly corporation-loving extremists.”