Constitution Check: Do profit-making corporations have religious rights?

National Constitution Center

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Lyle Denniston looks at one company’s claim it has religious rights that exempt it from the Affordable Care Act’s requirement for free birth-control services.

The statements at issue:

“This Court has not previously addressed [religious freedom] or free exercise claims brought by closely held for-profit corporations and their controlling shareholders alleging that the mandatory provision of certain employee benefits substantially burdens their exercise of religion.”

—Supreme Court Justice Sonia Sotomayor, in an opinion on December 26, refusing a request to block the enforcement of the new federal health care law’s requirement that companies with more than 50 employees provide free health insurance coverage for birth control drugs and methods for their female workers.

“That Cyril and Jane Kortes operate their business in the corporate form is not dispositive of their claim…The contraception mandate applies to K&L Contractors as an employer of more than 50 employees, and the Kortes would have to violate their religious beliefs to operate their company in compliance with it.”

—Comment by a 2-1 majority of the Seventh U.S. Circuit Court of Appeals in Chicago, in an opinion on December 28, agreeing to block temporarily the mandate until the Kortes’ appeal can be decided.

We checked the Constitution, and…

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One of the big issues not settled by the 2012 presidential campaign is whether “corporations are people” and, like people, have constitutional rights. The issue continues in a new form: does the First Amendment’s right to the free exercise of religion protect profit-making corporations? The courts are just beginning to provide answers, and the answers so far are mixed.

Last week, using different legal analyses, a Supreme Court justice on one day made it clear that the question remained open and unsettled, while a federal appeals court panel’s majority two days later gave at least a temporary answer: yes. Those were the most significant statements so far as federal courts work their way through more than 40 lawsuits challenging the new Affordable Care Act’s requirement for free birth-control services for millions of working women.

The Supreme Court, of course, has ruled that corporations do, indeed, have some constitutional rights that they share with real people. Most notably, the court ruled in 2010 in favor of corporations’ First Amendment right to spend money to express their political views in election campaigns. In fact, that decision in Citizens United v. Federal Election Commission was what caused the rights of corporations to become a campaign issue in 2012.

The Citizens United decision, of course, was based on the First Amendment’s Free Speech Clause, and said nothing at all about the amendment’s Religion Clauses. Still, it is noteworthy that, when the Seventh Circuit judges issued their order against the contraceptives mandate as it applied to an Illinois corporation, they cited the Citizens United decision as the basis for their remark that the corporate form shares its owners’ right to religious freedom.

That is both a new constitutional perspective, and likely to become a very controversial one if the idea spreads. Most corporations that engage in ordinary business activities are organized as secular firms; that is, they enter the marketplace to carry out commercial, not religious, endeavors. But what is perhaps more important is that business people who form corporations do so to keep themselves independent from it: one of the main advantages of the corporate form is that the owners are not targeted when their company gets sued.

Moreover, it sounds somewhat strange for a commercial entity that is considered to have an artificial legal personality, like a corporation, to “exercise” religion.

But to the family-run corporations that have sued to challenge the new contraceptives mandate, that is not strange at all. In fact, Cyril and Jane Korte in their lawsuit explicitly claimed that their construction company has its own right to exercise religion, and as its principal owners, they have insisted that they run its operations every day to reflect their personal religious convictions. The company’s business is, to them, another form of putting their Roman Catholic faith into daily practice.

About Constitution Check

  • In a continuing series of posts, Lyle Denniston provides responses based on the Constitution and its history to public statements about its meaning and what duties it imposes or rights it protects.

The federal government challenged those claims in the Kortes’ lawsuit, noting that the family business was organized as a profit-making, secular business that makes no mention of a religious purpose in its incorporation papers, and that it sells no religious products or services. “The government is aware of no case in which a for-profit, secular employer with K&L’s characteristics prevailed” on a religious freedom claim, it said in a court document in the case.

The key dispute in this context thus appears to turn on whether the faith preferences of the owners of a profit-making corporation can be transferred to the business entity so that it is not an independent entity but rather, for constitutional purposes, an alter ego. The Kortes argue that, since the couple owns 88 percent of the construction company, they do treat it as an alter ego to express their faith. And it appears that, at least for the time being, that claim has prevailed in the courts in their case.

However, other judges on other federal courts have disagreed, and have concluded flatly that a secular corporation cannot exercise religion, and have warned that the contrary conclusion could raise the prospect of scuttling many laws that protect employees’ workplace rights.

Justice Sotomayor herself noted the conflicting results that have been emerging in the contraceptives mandate cases. And she also commented that the challengers, once they have had their day in the lower courts, will be free to bring the issue back to the Supreme Court. Given the intensity of the courthouse controversy over the mandate, such an appeal is all but certain, thus posing at some point a profound new twist on whether “corporations are people.”

Lyle Denniston is the National Constitution Center’s Adviser on Constitutional Literacy. He has reported on the Supreme Court for 54 years, currently covering it for SCOTUSblog, an online clearinghouse of information about the Supreme Court’s work.

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