CORPORATION LAW CASE DIGESTS

ATTY. MA. LULU G. REYES ∫ S.Y. 2020-2021

GENERAL PRINCIPLES: Corporate Personhood

BURWELL, SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL. v. HOBBY LOBBY

STORES, INC., ET AL.
573 U.S. _ (2014) : June 30, 2014 : ALITO, J.

FACTS:
The Green family owns and operates Hobby Lobby Stores, Inc., a national arts
and crafts chain with over 500 stores and over 13,000 employees. The Green family
has organized the business around the principles of the Christian faith and has
explicitly expressed the desire to run the company according to Biblical precepts, one
of which is the belief that the use of contraception is immoral. Under the Patient
Protection and Affordable Care Act (ACA), employment-based group health care plans
must provide certain types of preventative care, such as FDA-approved contraceptive
methods. While there are exemptions available for religious employers and non-profit
religious institutions, there are no exemptions available for for-profit institutions such
as Hobby Lobby Stores, Inc.

The Religious Freedom Restoration Act of 1993 (RFRA) prohibits the

government from substantially burdening a person’s exercise of religion even if the
burden results from a rule of general applicability unless the government
demonstrates that application of the burden to the person—(1) is in furtherance of a
compelling governmental interest; and (2) is the least restrictive means of furthering
that compelling governmental interest.” As amended by the Religious Land Use and
Institutionalized Persons Act of 2000 (RLUIPA), RFRA covers “any exercise of religion,
whether or not compelled by, or central to, a system of religious belief.”

On September 12, 2012, the Greens, as representatives of Hobby Lobby Stores,

Inc., sued Kathleen Sebelius, the Secretary of the Department of Health and Human
Services, and challenged the contraception requirement. The plaintiffs argued that the
requirement that the employment-based group health care plan cover contraception
violated the Free Exercise Clause of the First Amendment and the RFRA. The plaintiffs
sought a preliminary injunction to prevent the enforcement of tax penalties, which the
district court denied and a two-judge panel of the U.S. Court of Appeals for the Tenth
Circuit affirmed. The Supreme Court also denied relief, and the plaintiffs filed for an
en banc hearing of the Court of Appeals. The en banc panel of the Court of Appeals
reversed and held that corporations were "persons" for the purposes of RFRA and had
protected rights under the Free Exercise Clause of the First Amendment.

ISSUE:
Does the Religious Freedom Restoration Act of 1993 allow a for-profit company
to deny its employees’ health coverage of contraception to which the employees would
otherwise be entitled based on the religious objections of the company's owners?
CORPORATION LAW CASE DIGESTS
ATTY. MA. LULU G. REYES ∫ S.Y. 2020-2021

RULING:
Yes.
Justice Samuel A. Alito, Jr. delivered the opinion for the 5-4 majority. The
Court held that Congress intended for the RFRA to be read as applying to corporations
since they are composed of individuals who use them to achieve desired ends. Because
the contraception requirement forces religious corporations to fund what they consider
abortion, which goes against their stated religious principles, or face significant fines,
it creates a substantial burden that is not the least restrictive method of satisfying the
government's interests. In fact, a less restrictive method exists in the form of the
Department of Health and Human Services' exemption for non-profit religious
organizations, which the Court held can and should be applied to for-profit
corporations such as Hobby Lobby. Additionally, the Court held that this ruling only
applies to the contraceptive mandate in question rather than to all possible objections
to the Affordable Care Act on religious grounds, as the principal dissent fears.

In his concurrence, Justice Anthony M. Kennedy wrote that the government

had not met its burden to show that there was a meaningful difference between non-
profit religious institutions and for-profit religious corporations under the RFRA.
Because the contraception requirement accommodates the former while imposing a
more restrictive requirement on the later without showing proper cause, the
requirement violates the RFRA.

Justice Ruth Bader Ginsburg wrote a dissent in which she argued that the
majority's decision was precluded by the Court's decision in Employment Division,
Department of Human Resources of Oregon v. Smith in which the Court held that
there is no violation of the freedom of religion when an infringement on that right is
merely an incidental consequence of an otherwise valid statute. Additionally, judicial
precedent states that religious beliefs or observances must not impinge on the rights
of third parties, as the sought-after exemption would do to women seeking
contraception in this case. Justice Ginsburg also wrote that the majority opinion
misconstrued the RFRA as a bold legislative statement with sweeping consequences.
Because for-profit corporations cannot be considered religious entities, the burden the
respondents claim is not substantial, and the government has shown a sufficiently
compelling interest, Justice Ginsburg argued that the contraception mandate does not
violate the RFRA. Justice Sonia Sotomayor, Justice Stephen G. Breyer, and Justice
Elena Kagan joined in the dissent. In their separate dissent, Justice Breyer and
Justice Kagan wrote that the Court need not decide whether for-profit corporations or
their owners may sue under the RFRA.
CORPORATION LAW CASE DIGESTS
ATTY. MA. LULU G. REYES ∫ S.Y. 2020-2021
GENERAL PRINCIPLES: Corporate Personhood