Breaking News: Corporations Are Not Always People

You may remember that a month ago, the Tenth Circuit Court of Appeals issued a laboriously-reasoned opinion saying that Hobby Lobby’s owners could forcibly impose their religion on employees and opt out of certain contraceptive-providing provisions of a mandated government health benefits program, the Affordable Care Act, also known as Obamacare.

Today, the Third Circuit respectfully disagrees.

In a case with identical facts handed down  just hours ago, the Third Circuit – like the Tenth Circuit, a federal court just one level below the U.S. Supreme Court – said that for purposes of exercising religion, corporations are not people and therefore do not have the right to free exercise of religion. The basic issue in Conestoga Wood Specialties Corp. v. United States is “whether the Free Exercise Clause has historically protected corporations, or whether the guarantee is purely personal or is unavailable to corporations based on the nature, history, and purpose of the Free Exercise Clause.” (That awkward phrasing is the appellate court’s, not mine.)

This sets the case up for appeal to the Supreme Court, since now two circuits are in direct disagreement.

What about the Citizens United case, that said corporations are people?

To reach its conclusion, the Third Circuit distinguished the Conestoga Wood case from the facts of Citizens United by pointing out that in numerous cases, corporations have been granted free speech. Most notable among these are NY Times v. Sullivan (a defamation case brought against a newspaper), and 1st Nat’l Bank of Boston v. Bellotti, which said corporations could help fund referendums (referenda?).

Freedom of corporate religion is a novel concept, however.

Citing Abington School Dist. v. Schempp (the case that halted daily Bible readings in Pennsylvania public schools), the Third Circuit said, “The Free Exercise Clause is to secure religious liberty in the individual by prohibiting any invasions thereof by civil authority.” (Emphasis in the original.)

Churches — the means by which individuals practice religion — do get the protections of the Free Exercise Clause. however, by their very nature, churches are all about religion, and are the vehicle through which religion is exercised. That’s not the case when the corporation is a for-profit, secular entity, and there is no reason to think that artificial entities which exist solely to produce profit for their owners should have religious protections.

The Third Circuit declined to follow the precedents in other Circuit Courts of Appeals that say a corporation that is wholly-owned by a single family with a single religious opinion can exercise religion as an extension of that family. The majority opinion said that those opinions

rest on erroneous assumptions regarding the very nature of corporate form. … It is a fundamental principle that ‘incorporation’s basic purpose is to create a distinct legal entity, with legal rights, obligations, powers, and privileges different from those of the natural persons who created the corporation.

As a practicing attorney, I can confirm that the primary reason we advise our clients to set up corporations and LLCs and such is so that they are indeed separate entities, and so that if the corporation does something stupid (like, say, violate someone’s civil rights), the owners aren’t personally at risk for the damages.

Furthermore, the Religious Freedom Restoration Act (RFRA) – misleadingly named because certain Republicans thought their right to free exercise of religion had been abrogated seeing as how they couldn’t willy-nilly impose it however they wanted on others not of the same creed – also doesn’t apply to corporations. Only people can have beliefs. Corporations are artificial constructs and cannot.

Even computers and robots, which at least have the ability in some rudimentary form, to reason all by themselves, don’t have beliefs.

“Even if we were to disregard the lack of historical recognition of the right, we simply cannot understand how a for-profit, secular corporation — apart from its owners — can exercise religion.”

That’s the bottom line, and I think it takes daring mental gymnastics to be able to reason otherwise.

 

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Got a legal question? Email me at anne@aramink.com. I’m a lawyer, but there’s only a 2% chance I’m licensed in your state. Whether I answer your question or not, sending me an email or reading this blog post does not create an attorney-client relationship between us. I’m on Twitter as @aramink, and you can see my regular blog at www.aramink.com.

  • islandbrewer

    Yay!

    All eyes on SCOTUS trying to bowl the 3-10 Circuit split!

    (Ok, bad joke, but I tried.)

    • Mackinz

      More like 5 – 4 split. Reality is that conservatives in Supreme Court a corrupt there’s nothing we can do about it except hope that Kennedy votes in our favor and not in the favor of Thomas and Scalia who want to replace the Constitution with their own.

      • islandbrewer

        The 3-10 was a reference to the 3rd and 10th Circuits, actually. Circuit court splits, as they’re known, often force SCOTUS to rule on a case, was what I was, you know, talking about …

        • Mackinz

          I got the joke. I just felt reminding my fellows of the extreme partisanship in the Supreme Court because that’s what it is going to come to when this gets to the Supreme Court. Pretty much guaranteed.

  • 23cal

    Thanks, Anne. Good info and wonderful analysis.

  • Greg G.

    Some of the religions of corporations might involve animal sacrifice and humans would be considerd animals.

  • GubbaBumpkin

    … said that for purposes of exercising religion, corporations are not
    people and therefore do not have the right to free exercise of religion.

    This issue of ‘personhood’ is being trumped up too much. As former justice John Paul Stephens points out, not all persons have the same rights at all times. For example, someone under 16 does not have the right to drive, someone under 18 does not have the right to vote, and someone under 21 does not have the right to drink. Corporations could be fictional ‘persons’ and still not be granted all the rights given to actual persons.

    • Zinc Avenger

      Corporations: Why can’t they vote, my friend? I’m a human just like you – see my human hair!

      Why can humans – sacks of chemicals with delusions of sentience – vote, when the corporate superorganisms they exist to service simply have to accept the fleshbags that other fleshbags choose?

      When will true equality be realized? When will we have the first corporation as President of the United States of America? I weep for democracy.

      • Anon

        Is the united states a corporation and if so does the president run it.

  • Leo Buzalsky

    OK, totally off topic!

    “I’m a lawyer, but there’s only a 2% chance I’m licensed in your state.”
    I think I see what you did there. 50 states and you’re licensed in 1. 1/50 * 100 = 2. But that’s not how you calculate the probability. A much better estimate would be the population of your state divided by the entire US population (if we don’t include international readers…sorry). To get a potentially more accurate statement, you could use statistics of JT’s readership for your state versus his US readership as a whole.

  • Plutosdad

    This is great for the freedom of religion of the EMPLOYEES, whose religious rights should supersede the company’s in every case. No employer should be able to tell it’s employees what rules and regulations of a religion they should follow, or tell them they can’t take advantage of taxes and insurance because of the OWNER’s religion. It’s the employee’s religion that matters.

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