A Win for Hobby Lobby in High Court Case Could Cost You Big
BY Jeremy Quittner
A Supreme Court Case could turn your business into the legal equivalent of an individual, making you personally liable for your business' actions.
In solitary moments, you may wonder if your business counts as person, probably in the same way you might have wondered if there really was a Santa Claus when you were a kid.
But it's not a whimsical question at all, it's actually at the heart of two Supreme Court Cases, known as Sebelius v. Hobby Lobby Stores, Inc. and Conestoga Wood Specialties Corp. v. Sebelius. And they're at the center of a roster of cases that have been redefining the role of corporations in the U.S. since 2010, when the high court ruled companies had a first amendment right to unlimited political expenditures in Citizens United.
The Supreme Court will hear the appeals in March and will likely rule in the summer, legal experts say. The decision, depending on the outcome, could change the way you're required to abide by anti-discrimination laws, and the way you're viewed as a business entity.
Hobby Lobby Inc. and its Mardel Inc. affiliate are part of a family-owned enterprise with 14,000 employees, based in Oklahoma City, Oklahoma. The businesses, craft stores and bookstores located in 41 states, operate under a Christian charter and promote biblical principles. Conestoga is a woodworking company owned by a Mennonite family.
The cases ask the Supreme Court to decide whether the constitutional guarantee for free exercise of religion extends to for-profit corporations, in effect equating them with people. The suits arises from portions of the Affordable Care Act, which require new health plans to pay for contraception and various fertility treatments. Among the central questions, according to the federal government's Supreme Court petition, does the Religious Freedom Restoration Act of 1993,
"[allow] a for-profit corporation to deny its employees the health coverage of contraceptives to which the employees are otherwise entitled by federal law, based on the religious objections of the corporation’s owners."
While many legal experts disagree with the Citizens United ruling, they say it at least stemmed from legal precedents. If Hobby Lobby prevails, the case would mark a radical break from constitutional law, and it would penalize employees and businesses alike.
"Secular for-profit corporations have never been understood to share in the protection of the Free Exercise Clause," says Elizabeth Wydra, chief counsel for the Constitutional Accountability Center. CAC filed an amicus brief in support of the federal government.
"We could see more claims for exemptions from generally applicable federal laws, like anti-discrimination laws," Wydra says.
That means, for example, employee protections for gender, race, religion, and national origin established in Title VII of the Civil Rights Act of 1964 could come under attack. So, a win for Hobby Lobby and Conestoga could have negative consequences for women who decide to have children out of wedlock. It could also mean new difficulties for same-sex couples who decide to get married, Wydra says.
Businesses also have something to fear if Hobby Lobby prevails. By defining a company as a person, rather than a company, a decision in favor of the plaintiffs could pierce the corporate veil and make you personally liable in court.
Big businesses and leading small business associations such as the U.S. Chamber of Commerce and National Federation of Independent Business have remained largely silent on the issue. The majority of the amicus briefs filed with the Supreme Court come from religious organizations, legal associations, or minority groups such as the U.S. Women's Chamber of Commerce and National Gay & Lesbian Chamber of Commerce.
"We joined with [U.S. Women's Chamber of Commerce] on this amicus brief because of real concerns about workplace fairness if employees are asked to have discussions about wages and benefits by religiously motivated superiors," says Justin Nelson, co-founder and president of National Gay & Lesbian Chamber of Commerce. "Religion is the right of each individual, but it should not be a mandate in the corporate boardroom that determines what benefits and workplace protections are offered to which employees."