On Monday June 30, 2014, the Supreme Court ruled that requiring family owned corporations to pay for insurance coverage for contraception under the Affordable Care Act (“ACA”) violated a federal law protecting religious freedom. As noted in my previous entry, the contraception coverage requirement was challenged by corporations whose owners claimed that they run their businesses according to their faith-based beliefs. The parties to the case engaged in heated oral arguments before the Court in late March of this year. The Court’s ruling in favor of Hobby Lobby signifies an important shift in corporate rights. As Justice Ruth Bader Ginsburg asserted in the dissent, this ruling could apply to numerous commercial enterprises and countless laws. Questions abound as companies try to make sense of this sensationalized decision.
What does this ruling mean in plain English?
The court held that the requirement that the companies provide contraception coverage imposed a substantial burden on the companies’ religious liberties. Put simply, the ACA mandate hindered the companies’ religious freedom. This ruling extends the religious rights of corporations, classifying them as “persons” under the Religious Freedom Restoration Act (“RFRA”).
Does the ruling really apply to all corporations?
According to the majority decision, the ruling does not apply to all corporations. The opinion states that the decision only applies to closely held, for profit corporations run on religious principles. Justice Samuel Alito also emphasized that these types of corporations are not necessarily likely to prevail if they object to complying with other laws on religious grounds.
Why is this ruling relevant to corporations other than Hobby Lobby?
This decision of “startling breadth” may have opened the door to challenges from other corporations. Essentially, despite the limited scope of the ruling, nothing would stop similar corporations from arguing that other laws that burden their religious liberty are unconstitutional. These companies may then seek exemptions from the requirements of these laws. Prior to the decision, Hobby Lobby faced annual fines of hundreds of millions of dollars if it failed to comply with the ACA mandate.
What are the legal implications moving forward?
The Court will one day have to decide clearly whether publicly traded companies and other corporate forms are also protected under RFRA. The ACA mandate has been challenged in at least 50 other cases. Hobby Lobby Stores Inc. is a family owned chain of 500 craft stores with 13,000 employees. This large company made substantial, formal commitments to run the stores according to religious principles years prior to signing on to the lawsuit and winning before the high court. The question remains: will other large corporations try to jump on the proverbial Hobby Lobby bandwagon?
If you wish to view the full Supreme Court opinion, you may do so at the link here.