On Corporate Activism and American Polarization

In First Things today, I write about recent corporate activism and what it reveals about our deep cultural polarization. More and more, employees and customers expect that firms will take stands on contested political issues. This wasn’t supposed to happen. According to liberal theory, the market is supposed to diminish conflicts over religion and big questions. What’s going on?

All this is happening because, contrary to the doux commerce thesis, people do not easily check their values at the door when they enter the marketplace. And in a society as evenly divided and politically saturated as ours, it’s only natural that many people will want the firms for which they work or with which they do business to reflect their side in public debates. “Employees today…want to know what you stand for,” one CEO recently told the Wall Street Journal. That goes for customers, too. In fact, firms may no longer have the option of staying silent on public controversies, since customers increasingly expect corporations to have political and social commitments. “[I]n these fraught times,” a corporate lawyer recently explained at Harvard Law School’s Forum on Corporate Governance, customers often construe silence on a political controversy as itself “a statement.” 

Liberalism depends for its success on habits of mind that liberalism itself cannot create. The doux commerce thesis works fine where people mostly agree on public controversies, or where people believe they can safely remain indifferent to them. In a society like ours, though, where views are polarized and politics is everywhere, it is naïve to think the market will be an exception, or that commerce will somehow cause people to forget about their deep disagreements. Until America reaches a new social equilibrium, our market is likely to be as contentious as everything else.

You can read the essay here.

Around the Web

Here are some important law-and-religion news stories from around the web:

Shiffrin on Hobby Lobby

First Amendment scholar Steven Shiffrin has a typically thoughtful post on the Hobby Lobby decision. Part of what makes the post so good is that it follows from Steve’s own longstanding and (to me) persuasive criticisms of the extraordinary lengths to which we are prepared to recognize rights of free speech. Parenthetically, the last time I checked, Steve is not particularly well-known for his dyed-in-the-wool conservatism. But setting aside that rather tedious ideological point, it is quite striking to see the expansive interpretation of the rights of speech (whatever the source–constitutional or statutory) in conjunction with what critics of decisions like Hobby Lobby argue should be a narrowing of the rights of religious freedom. Steven goes through a few of the issues, but among the best parts of Steve’s post is the following:

I am puzzled by the selective tolerance of secular liberals. These liberals are prepared to protect speech involving depictions of animal cruelty, gruesomely violent video games sold to children, and the intentional infliction of emotional distress at military funerals. They would also agree that the state should not compel people to violate their conscience without substantial justification.

Although the Court’s decision in Hobby Lobby makes clear that none of the involved employees would be denied access to insurance coverage for contraceptives, most secular liberals would deny the freedom of religion claim….

Why protect those who traffic in depictions of the abuse of animals and the like, but not protect the conscience of conservative Christians?

Some Good Questions About the Corporate Law Scholars’ Hobby Lobby Amicus Brief

Corporate law is not my area and so I have not especially focused on this amicus brief in the Hobby Lobby litigation, filed by 44 corporate law scholars arguing that a corporation cannot (ever?) take on the religious beliefs of its shareholders. It seems to me that whether a corporation does or should take on such beliefs might depend on a number of factors (Michael Helfand, for example, has identified one such possible factor in this paper). But the notion that a corporation should never take on the religious beliefs of its shareholders seems  both counterintuitive and belied by the fact that we often encourage corporations and businesses generally to take on idealistic aims and aspire to socially beneficent ends.

The point is put well in this post by Keith Paul Bishop, a corporate attorney in California:

[T]he law professors make the following apocalyptic claim:

If this Court were to agree that, as a matter of federal law, shareholders holding a control bloc of shares in a corporation may essentially transfer their [social responsibility] beliefs to the corporation, the results could be overwhelming.

Ok, I substituted “social responsibility” for “religious”. However, if the transfer of stockholder religious beliefs to the corporation would be “overwhelming”, why wouldn’t the same be true of beliefs regarding climate change, the environment, or other beliefs animating the corporate social responsibility movement?

If you read only one amicus brief in the Hobby Lobby case…

Read this brief authored by Douglas Laycock on behalf of the Christian Legal Society and several other groups. Professor Laycock was right in the center of the legislative debates over the meaning of RFRA in the 1990s. In exploring the meaning of RFRA and its application, the brief describes those debates in very helpful detail, and it also discusses the legislative history of the Religious Liberty Protection Act, a statute that was in the offing (but ultimately was never passed, though portions of it made their way into the Religious Land Use and Institutionalized Persons Act, and portions were used to strengthen RFRA) after the Supreme Court struck down RFRA as applied against the states as in excess of Congress’s enforcement powers under section 5 of the 14th Amendment. Laycock demonstrates that Congress clearly intended RFRA (as well as RLPA) to apply to for-profit corporations, and reflected that intention in the words of the statute. There were many special interests that desired exemptions from RFRA. Those exemptions were rejected.

The Hobby Lobby and Conestoga Wood cases are, at bottom and after the swirling political fog is blown away, about the meaning of a statute. Professor Laycock’s brief is an important contribution in ascertaining that meaning. Here is the summary of the argument:

The Religious Freedom Restoration Act provides universal coverage. It applies to “all” federal law and to “all” cases where the free exercise of religion is substantially burdened.

The legislative history confirms the universality of the statutory text. The sponsors resisted all efforts to add exceptions to coverage. A definition in an early version of the bill, limiting coverage to “natural persons” and religious organizations, was eliminated in all later drafts.

After this Court invalidated RFRA as applied to the states, Congress sought to re-enact RFRA’s standard, in substantively identical language, for application to cases that could be reached under the Commerce and Spending Clauses. The debates on this bill, the Religious Liberty Protection Act (RLPA), reveal the public meaning of the nearly identical language in RFRA. The RLPA debate is highly probative because it was a serious fight on a live issue. It was not in any sense an attempt to make post enactment legislative history about RFRA, but it clearly demonstrates the public meaning of RFRA’s language.

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Supreme Court Agrees to Hear For-Profit Contraception Mandate Cases

The Supreme Court has granted certiorari on two cases involving for-profit corporations which brought claims pursuant to the Constitution and the Religious Freedom Restoration Act against the federal government’s contraception mandate (which is part of the Patient Protection Affordable Care Act). The two cases that the Court agreed to hear were the Hobby Lobby case out of the Tenth Circuit and the Conestoga Wood case out of the Third Circuit.

Note that these cases solely involve the issue of for-profit corporations. They do not concern the question of the “accommodation” granted to certain religious non-profit corporations which the government has decided are not exempt from the mandate. As this breakdown indicates, the Tenth Circuit found en banc that the corporation had free exercise rights which had been violated (it did not decide the issue of the rights of the individual owners), while the Third Circuit panel rejected all claims. One last note of interest (for now): neither of these corporations is owned by Catholics. Hobby Lobby’s ownership is Evangelical, while Conestoga Wood Specialties’ ownership is Mennonite.

Seventh Circuit Enjoins Enforcement of Contraception Mandate Against For-Profits

In an extensive decision, a divided panel of the U.S. Court of Appeals for the Seventh Circuit has enjoined the enforcement of the HHS contraception mandate against several for-profit corporations as well as the individual owners of those corporations. The majority held that “the corporate plaintiffs are ‘persons’ under RFRA and may invoke the statute’s protection; the contraception mandate substantially burdens the religious-exercise rights of all the plaintiffs; and the government has not carried its burden under strict scrutiny.” Since RFRA does not itself define “person,” the majority reached the conclusion that corporations are “persons” under RFRA by consulting the Dictionary Act and finding that nothing in the text of RFRA indicates that the Dictionary Act definition would be a “poor fit” with the statutory scheme (this is the standard announced in a 1993 Supreme Court case).  In both O Centro and Lukumi Babalu, the Supreme Court enforced the free exercise rights of corporations, so the relevant context did not indicate that the Dictionary Act definition of “person” was inapposite here. The court proceeded through a very thorough analysis of the strict scrutiny inquiry. Judge Rovner dissented.

I’ll use the occasion to update my running tally of where we are now in the circuit courts of appeals with respect to this class of litigation:

  • Circuits that have rejected claims in which for-profit corporations are plaintiffs as to the corporations and the individual owners: Third Circuit, Sixth Circuit.
  • Circuits that have accepted claims in which for-profit corporations are plaintiffs as to the corporations and the individual owners: Seventh Circuit.
  • Circuits that have accepted claims in which for-profit corporations are plaintiffs as to the corporations but not the individual owners: Tenth Circuit.
  • Circuits that have accepted claims in which for-profit corporations are plaintiffs as to the individual owners but not the corporations: D.C. Circuit.

D.C. Circuit Holds that Owners of For-Profit Corporations Are Injured by Contraception Mandate

This news is a little late in coming, but readers here should know that the United States Court of Appeals for the D.C. Circuit, in a 2-1 panel decision (as to this specific issue), has reversed the district court’s denial of a preliminary injunction barring enforcement of the federal government’s contraception mandate against the owners of a for-profit business. Though the panel was unanimous as to the issue of the individual plaintiffs’ standing to bring a claim under RFRA, only two judges (Judge Brown and Judge Randolph) held that the plaintiffs had satisfied the standard to obtain a preliminary injunction against the government. The court also held, 2-1, that corporations themselves do not have standing to exercise religion and so it dismissed those RFRA claims.

I recommend this thorough analysis and critique of the opinion by Kevin Walsh. For the record, and by my count (though I may have erred in my counting, and please write me if so), we now have the following breakdown among the federal circuit court of appeals:

  • Circuits that have rejected claims in which for-profits are plaintiffs on behalf of the corporation and the individual owners: Third Circuit, Sixth Circuit.
  • Circuits that have accepted claims in which for-profits are plaintiffs on behalf of the corporation but not the individual owners: Tenth Circuit.
  • Circuits that have accepted claims in which for-profits are plaintiffs on behalf of the individual owners but not the corporation: D.C. Circuit.

Sixth Circuit Holds that “Secular, Profit-Seeking” Corporations are Not “Persons” under RFRA

In a terse and unsatisfying opinion, the United States Court of Appeals for the Sixth Circuit has held that “secular, profit-seeking” corporations have no standing to sue under the Religious Freedom Restoration Act. The plaintiffs, Roman Catholic owners of a closely held corporation that manufactures automotive and medical products, alleged that the HHS Contraception Mandate violated their religious free exercise under RFRA. After holding that the individual plaintiffs did not have standing, the court said this about the corporation’s standing:

Looking to RFRA’s relevant context, we find strong indications that Congress did not intend to include corporations primarily organized for secular, profit-seeking purposes as “persons” under RFRA. Again, Congress’s express purpose in enacting RFRA was to restore Free Exercise Clause claims of the sort articulated in Sherbert and Yoder, claims which were fundamentally personal . . . .

While the Supreme Court has recognized the rights of sole proprietors under the Free Exercise Clause during this period, it has never recognized similar rights on behalf of corporations pursuing secular ends for profit . . . .

Moreover, the Supreme Court has observed that the purpose of the Free Exercise Clause “is to secure religious liberty in the individual by prohibiting any invasions thereof by civil authority.” Sch. Dist. of Abington Twp., Pa. v. Schempp, 374 U.S. 203, 223 (1963) (emphasis added); see also Conestoga, 2013 WL 3845365, at *5 (“[W]e simply cannot understand how a for-profit, secular corporation–apart from its owners–can exercise religion.”).

Where to begin? The court recognizes that its emphasis on religious freedom that is “personal” or “individual” has, in fact, been totally irrelevant in many, many cases involving the Free Exercise Clause and RFRA in which the plaintiff corporations have prevailed. So why emphasize it? The distinction can do nothing by itself to justify the outcome, and the court seems to say as much.

“Personal” vs. “Group or Corporate” is doing no work here. Instead, there are two phrases that ground the decision: “secular” and “profit-seeking.” And, as I have said before, if courts are to deny religious freedom claims by corporations on these grounds–on the ground of a distinction between the secular and the religious, on the one hand, or of a distinction between profit-seeking and non-profit-seeking, on the other–then they will need to develop a theory of what “secular” means, and what “religious” means, and why the distinction matters in law. Or, they will need to make arguments about what precisely the difference is between “for profit” and “nonprofit” in this context and why it matters.

I should say straightaway that there may well be a discussion to be had, and arguments to be made, about the legal significance of the distinction between the “secular” and the “religious.” I recommend especially much of Steven D. Smith’s recent work on this issue, including this article. But there is not a single word in this decision about that distinction. Likewise, there is nothing about the conceptual distinction between for-profit and nonprofit in this specific context and its import (there is, at the end of the decision, a dubious interpretation of RFRA’s legislative history, but there is nothing of the sort of conceptual work that would be necessary to sustain a holding of this kind).

The Sixth Circuit joins the Third Circuit in reaching this result. Both courts are at odds with the Tenth Circuit. The case is Autocam Corp. v. Sebelius.

Third Circuit Denies Rehearing En Banc in Corporate Free Exercise Case

Yesterday, the U.S. Court of Appeals for the Third Circuit denied rehearing en banc in Conestoga Wood Specialties Corp. v. Secretary of the U.S. Department of Health and Human Services. The vote was 7 to 5.

In light of the many problems with Judge Cowen’s opinion for the panel majority as well as the circuit split that is developing over the issue of corporate free exercise of religion (for constitutional and statutory purposes) and the dichotomous confusions that the issue is generating (religious vs. secular, for-profit vs. non-profit), it would not be surprising if one or more of these cases found their way to the Supreme Court relatively soon. On the other hand, these kinds of predictions have an uncanny way of being wrong.