Religious Institutions Update: July 2014

Nathan A. "Nate" Adams IV is a Partner in our Tallahasse office.

HIGHLIGHTS:

The U.S. Supreme Court ruled in Burwell v. Hobby Lobby Stores, Inc. that an existing contraceptive coverage mandate violates the Religious Freedom Restoration Act statute that applies to for-profit closely held corporations and their owners. In Pedreira v. Sunrise Children's Servs, Inc., the court entered an order incorporating a settlement agreement providing for the court's retention of jurisdiction to enforce the agreement and dismissing the second amended complaint, despite opposition. A number of court decisions – including Michigan Catholic Conf. and Catholic Family Servs. v. Burwell and Colorado Christian Univ. v. Sebelius – reached different conclusions regarding the enjoinment of the Patient Protection and Affordable Care Act's certification requirement. Timely Topics

Some for-profit companies have federally protected free exercise rights. This is the ruling of the United States Supreme Court in Burwell v. Hobby Lobby Stores, Inc. outlined below. While for-profit companies typically exist in part to make money, the court pointed out that they are far more complex. They also engage in important philanthropic activities, participate in the political process and act charitably. From the local restaurant that donates day-old bread to the municipal food bank to the corporate foundation that donates millions of dollars to improve education, corporations are more than simple profit maximizers. Still, the government disagreed with the notion that companies could also practice religion. Part of the disagreement is rooted in what constitutes the exercise of religion. If understood primarily or exclusively as religious worship and prayer, religious exercise has been truncated from its historic good works to include food banks, schools and universities, hospitals, and the like. Corporations and their officers have advanced religious causes understood in this light for many years. Church-state counsel can assist for-profit companies and management interested in expressing religion in new ways or bringing to light practices they previously treated as purely secular while avoiding practices that surely will continue to violate the law, such as illegal discrimination in hiring.

For-Profit Closely Held Companies Have Religious Liberties

In Burwell v. Hobby Lobby Stores, Inc., No. 13-354, 13-356, 2014 WL 2921709 (Mar. 25, 2014), the United States Supreme Court ruled 5-4 that the contraceptive coverage mandate contained within the Patient Protection and Affordable Care Act (PPACA) violates the Religious Freedom Restoration Act (RFRA) as applied to for-profit closely held corporations and their owners with sincerely held religious beliefs opposed to contraceptives that they consider abortifacients. Conestoga Wood Specialties is a for-profit wood-working business with roughly 950 employees. Its owners are Mennonite and believe they must run their business in accord with their religious beliefs including beliefs opposed to abortion. Hobby Lobby employs 13,000 and Mardel employs 400. Its owners are Roman Catholic and believe likewise.

The court squarely rejected the government's argument that the owners of the companies forfeited all RFRA protection when they organized their businesses as corporations. As RFRA protects "persons," the court turned to the Dictionary Act to confirm that this includes corporations as well as individuals.1 The court also disagreed with the government that defendants cannot "exercise religion." The court observed that even the government recognizes that the corporate form is no obstacle to nonprofits exercising religion. Additionally, the court disagreed that RFRA merely codified the then-existing Free Exercise Clause precedent and pointed out that, even if it had, the precedent included a case recognizing the free exercise rights of a for-profit Orthodox Jewish retailer impacted by Sunday closing laws.

Next, the court turned to the question of whether the contraceptive mandate substantially burdens the corporations' exercise of religion and found that it did. The government argued that it did not because of the attenuated relationship between what the objecting parties must do (provide contraceptive coverage) and the end that they find to be morally wrong (destruction of the embryo) as a result of employees' use of the coverage. The court ruled that this defense was, in reality, an impermissible challenge to the sincerity and reasonableness of the companies' beliefs and an attempt to arrogate public authority to provide a binding national answer to a deeply religious and philosophical question, which the court was not empowered to address under the Establishment Clause.

The court rejected the second reason articulated for why the mandate does not violate the companies' exercise of religion because it was not raised by the government (only amici) and because the...