Friday, June 28, 2013

10th Circuit En Banc Gives Big Win To Hobby Lobby In Challenge To Contraceptive Coverage Mandate

Yesterday an 8-judge en banc panel of the U.S. 10th Circuit Court of Appeals gave an important win in a high profile case to for-profit businesses challenging the Affordable Care Act's contraceptive coverage mandate. In Hobby Lobby Stores, Inc. v. Sebelius, (10th Cir., June 27, 2013), in six separate opinions spanning 165 pages, the court held that two related family-owned corporate businesses, Hobby Lobby Stores and Mardel, Inc., had demonstrated a likelihood of success on their claim that their free exercise rights were substantially burdened in violations of the Religious Freedom Restoration Act.  The corporations and their owners objected to providing coverage for those contraceptives they regard as abortifacients.  Four of the 8 judges would have remanded with instructions for the district court to issue a preliminary injunction, but lacking a 5th vote for that, the court instead remanded for the district court to resolve two other issues as to whether an injunction should issue-- the balance of equities and the public interest-- before issuing the injunction.

Five of the 8 judges (those who joined Part V of Judge Tymkovich's opinion) held that corporations have free exercise rights, and that here they were substantially burdened without a compelling governmental interest.  Judge Tymkovich said in part:
... Congress did not exclude for-profit corporations from RFRA’s protections. Such corporations can be “persons” exercising religion for purposes of the statute.  ....  It is beyond question that associations—not just individuals—have Free Exercise rights: “An individual’s freedom to speak, to worship, and to petition the government for the redress of grievances could not be vigorously protected from interference by the State unless a correlative freedom to engage in group effort toward those ends were not also guaranteed.” ....
[T]he protections of the Religion Clauses extend beyond the walls of a church, synagogue, or mosque to religiously motivated conduct, as well as religious belief.... The distinction gains force here because religious conduct includes religious expression, which can be communicated by individuals and for-profit corporations alike......
... [S]incerely religious persons could find a connection between the exercise of religion and the pursuit of profit. Would an incorporated kosher butcher really have no claim to challenge a regulation mandating non-kosher butchering practices? The kosher butcher, of course, might directly serve a religious community—as Mardel, a Christian bookstore, does here. But we see no reason why one must orient one’s business toward a religious community to preserve Free Exercise protections. A religious individual may enter the for profit realm intending to demonstrate to the marketplace that a corporation can succeed financially while adhering to religious values. As a court, we do not see how we can distinguish this form of evangelism from any other.....
Judge Tymkovich went on to find that the corporation's religious beliefs were substantially burdened. Saying that "substantial burden" is a question of the intensity of coercion, not the theological merit of the belief, and explaining:
It is not the employees’ health care decisions that burden the corporations’ religious beliefs, but the government’s demand that Hobby Lobby and Mardel enable access to contraceptives that Hobby Lobby and Mardel deem morally problematic.... [W]e must accept Hobby Lobby and Mardel’s beliefs.
Judge Tymkovich then rejected the argument that the government has a compelling interest in imposing the mandate. The asserted interests in public health and gender equality are broadly formulated and do not justify refusal to grant exemptions for religious objectors. Moreover, tens of millions of people are already exempt from the mandate because they are insured under grandfathered plans or work for small employers.

Four, but only 4, of the 8 judges also concluded that the individual shareholders have standing to assert claims here as well. The other judges concluded that they need not reach that issue. Becket Fund issued a press release announcing the decision. AP reports on the decision.