01 July 2014

A few thoughts on Hobby Lobby and for-profit corporations

One of the most interesting distinctions, and perhaps the most crucial distinction, in the Obamacare contraceptive mandate cases is not whether corporations can "practice" religion, but the differences between a non-profit corporation and a for-profit corporation.* Many opponents of the decision have argued that a corporation cannot practice religion. But this ignores a long-standing understanding of the Religious Freedom Restoration Act. Under RFRA, no one (not even the dissenters on the Supreme Court) questions that a non-profit corporation like a church can practice religion. Non-profit corporations are unambiguously covered by RFRA and the Free Exercise Clause. For if RFRA does not cover a church, then what is it good for?

(Nor is RFRA part of some ridiculous notion of a "war on women" by Republicans: The Religious Freedom Restoration Act was introduced in the House by then-Representative Chuck Schumer (D-NY) and 169 other co-sponsors, and passed by a voice vote. It passed the Senate by 97-3. President Clinton signed it into law. It was backed by the New York Times. It was primarily designed to protect Native American religions from the federal government.)

Rather, you must be able to make a principled distinction as to why a non-profit corporation like a church can practice religion, but that a for-profit corporation like Hobby Lobby or Conestoga Wood Specialties or Mardel cannot. In my opinion, the dissent tries but fails to do this in a convincing way. The Dictionary Act, a federal law codified at 1 U.S.C. § 1, states that
In determining the meaning of any Act of Congress, unless the context indicates otherwise—
the words “person” and “whoever” include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals....
(Yes, you read that right: since 1947, federal law says that anytime another law refers to "person" it includes corporations).

The dissent argues that "the context indicates otherwise," but this is not convincing. The only defining difference is profit, but "that dog don't hunt." Making profit is not mutually exclusive with practicing religion.   It is not, as the dissent suggests, that "religious exemptions had never been extended to any entity operating in 'the commercial, profit-making world,'" but rather that RFRA, when combined with the Dictionary Act, makes no such distinction. The dissent, in my opinion, must do better than this.

Good and smart people can disagree about the scope of RFRA, as evidenced by the 5-4 vote in this case. But when you try to argue that corporations cannot practice religion, without understanding that non-profit corporations are already unambiguously protected in this regard, you start to look foolish. To start to convince me, find a principled distinction between a non-profit corporation and a for-profit corporation that goes beyond the profit motive.

* A reminder: It is important to note the distinction that the holding in this case does not apply to all corporations, just those that are defined as closely-held. The IRS defines a closely-held corporation as one in which more than 50% of the value of its outstanding stock owned (directly or indirectly) by 5 or fewer individuals at any time during the last half of the tax year; and is not a personal service corporation.
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