Business Owners Who Oppose Obamacare's Birth Control Mandate Want Employees Just Like Them
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It might seem strange to claim that a corporation (or an LLC) has religious freedom rights separate from those of the “real people” who own or manage it. An Oklahoma federal district court, rejecting a challenge by Hobby Lobby Stores to the coverage mandate, thought it was, finding:
General business corporations do not, separate and apart from the actions or belief systems of their individual owners or employees, exercise religion. They do not pray, worship, observe sacraments or take other religiously-motivated actions separate and apart from the intention and direction of their individual actors. Religious exercise is, by its nature, one of those “purely personal” matters... which is not the province of a general business corporation.
Hobby Lobby appealed, but the 10th Circuit Court refused to enjoin enforcement while the appeal is pending. So did Supreme Court Justice Sonia Sotomayor. Neither resolved the question of whether the business entity itself has religious rights.
However, in other ways, corporations often do have constitutional rights. A corporation cannot be convicted of a criminal offense without the protections given by the Constitution to criminal defendants. And in the famous 2010 Citizens United case, the Supreme Court held that corporations have the same First Amendment rights of political speech that “real people” do. If the First Amendment has been interpreted to guarantee a corporation’s free speech rights, does it also have free religious exercise rights guaranteed by the same Amendment? Annex Medical claims it does, citing as evidence its formal Mission Statement
to manufacture medical products of high quality and good value, while conducting business in a way that is pleasing to God and is faithful to Biblical principles and values. We will accomplish this mission from a Christian perspective that respects others who believe differently while sharing the joy we have received from Jesus Christ.
A Corporation as Alter Ego of its Owners
Whether a corporation can be seen as having non-economic rights—whether it is to be considered fully a “person” under the law—is not a new question. In the 18th century, the Lord Chancellor of England famously scoffed at the claim, asking, “Did you ever expect a corporation to have a conscience, when it has no soul to be damned and no body to be kicked?” In the Affordable Care Act cases, some courts have avoided the difficult issue of whether a business has religious conscience rights by instead concluding that the business is so closely identified with its owners that it may assert the owners’ religious objections as its own.
This idea—that a corporation and its owners should be treated as the same person—is a well-known concept in corporate law, commonly referred to it as “piercing the corporate veil.” Most of the time, lawyers warn their corporate clients to do everything possible to avoid this “piercing,” since the doctrine is usually invoked when creditors of a business are making claims against the personal assets of a company’s shareholders, seeking to recoup their losses from an insolvent business by going after its owners. There is a vast amount of case law on when a court should allow “piercing the corporate veil” to reach shareholders’ personal assets, often focusing on abuse of the corporate form, misleading of creditors, or lack of corporate formalities. Business lawyers look to whether the corporation is the mere alter egoof its owners and routinely advise their corporate clients to emphasize the corporation’s separate existence from its owners.
However, the pleadings filed in many of the contraceptive mandate challenges purposely blur this line, collapsing the beliefs of the business with its owners, inviting “piercing.” As the district court concluded in a challenge brought by Tyndale House, a for-profit publisher of Bibles and Christian books: