Third Circuit Ruling Against Challenge to HHS Mandate

Last Friday, a divided Third Circuit panel ruled that “for-profit, secular corporations cannot engage in religious exercise” and on that basis affirmed a misguided district court ruling that denied preliminary injunctive relief to plaintiffs challenging the HHS mandate under the federal Religious Freedom Restoration Act and the First Amendment. The panel ruling creates a conflict with the en banc Tenth Circuit’s ruling one month ago in the Hobby Lobby case and thus substantially increases the prospect that the Supreme Court will soon address the issue.

The particular plaintiffs in this case are Conestoga Wood Specialties Corporation and the five members of the Hahn family who together own 100% of Conestoga’s shares and each of whom is a member of Conestoga’s board of directors.

Some observations:

1. I’ve previously highlighted law professor (and Becket Fund lawyer) Mark Rienzi’s essay and law-review article explaining that “there is no principled basis for excluding profit-making businesses and their owners from the protection of our religious liberty laws.” In his extensive dissent, Third Circuit judge Kent Jordan does an excellent job of dismantling the majority’s reasoning. As Volokh Conspirator Will Baude puts it, “the majority’s reasoning is pretty strange,” for what it says about the religious corporations known as churches “cuts against everything it has just said about corporations not having ‘beliefs’ or ‘religiously-motivated actions separate and apart’ from their members.”

2. As for the individual plaintiffs: The Third Circuit majority fails to keep in mind the Hahns’ dual roles as shareholders of Conestoga and as members of Conestoga’s board. Referring only to the Hahns as Conestoga’s “owners,” the Third Circuit majority argues that the claim that they have religious-liberty rights “rests on erroneous assumptions regarding the very nature of the corporate form.” It likewise contends that the HHS mandate “does not actually require the Hahns to do anything.” (Emphasis in original.) But the HHS mandate in fact requires that the Hahns, as Conestoga’s board members, comply with its terms in operating Conestoga. In other words, it constrains how the Hahns exercise their authority as board members in conducting Conestoga’s operations. And by virtue of their other role as owners, the Hahns face a substantial economic penalty if they fail to operate Conestoga consistent with the HHS mandate.

(It is no answer to say that the Hahns could escape the compulsion of the HHS mandate by resigning from Conestoga’s board. As the Supreme Court made clear in Sherbert v. Verner, the question under the Free Exercise regime that RFRA restored as a matter of federal statutory law is not limited to whether a law “directly compel[s]” a person to act contrary to his religious beliefs but extends as well to “indirect” burdens.)

3. Given the conflict between the Third Circuit and the Tenth Circuit, the Supreme Court will likely soon have the opportunity to address whether for-profit corporations have the capacity to engage in religious exercise for purposes of RFRA and the First Amendment. If it decides (as it should) to address that question, the Court should invite full briefing on the intertwined question whether the individuals who own the shares of a closely held corporation and sit on its board of directors (or who similarly exercise ultimate policymaking authority for the corporation) have religious-liberty rights in the corporation’s operation by virtue of those dual roles.

Most Popular

Film & TV

Why We Can’t Have Wakanda

SPOILERS AHEAD Black Panther is a really good movie that lives up to the hype in just about every way. Surely someone at Marvel Studios had an early doubt, reading the script and thinking: “Wait, we’re going to have hundreds of African warriors in brightly colored tribal garb, using ancient weapons, ... Read More
Law & the Courts

Obstruction Confusions

In his Lawfare critique of one of my several columns about the purported obstruction case against President Trump, Gabriel Schoenfeld loses me — as I suspect he will lose others — when he says of himself, “I do not think I am Trump-deranged.” Gabe graciously expresses fondness for me, and the feeling is ... Read More
Politics & Policy

Students’ Anti-Gun Views

Are children innocents or are they leaders? Are teenagers fully autonomous decision-makers, or are they lumps of mental clay, still being molded by unfolding brain development? The Left seems to have a particularly hard time deciding these days. Take, for example, the high-school students from Parkland, ... Read More
PC Culture

Kill Chic

We live in a society in which gratuitous violence is the trademark of video games, movies, and popular music. Kill this, shoot that in repugnant detail becomes a race to the visual and spoken bottom. We have gone from Sam Peckinpah’s realistic portrayal of violent death to a gory ritual of metal ripping ... Read More
Elections

Romney Is a Misfit for America

Mitt’s back. The former governor of Massachusetts and occasional native son of Michigan has a new persona: Mr. Utah. He’s going to bring Utah conservatism to the whole Republican party and to the country at large. Wholesome, efficient, industrious, faithful. “Utah has a lot to teach the politicians in ... Read More
Law & the Courts

What the Second Amendment Means Today

The horrifying school massacre in Parkland, Fla., has prompted another national debate about guns. Unfortunately, it seems that these conversations are never terribly constructive — they are too often dominated by screeching extremists on both sides of the aisle and armchair pundits who offer sweeping opinions ... Read More