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Federal Appellate Court Holds that a For-Profit Corporation Can Challenge the Contraception Mandate under the RFRA – Hobby Lobby Stores, Inc. v. Sebelius

Published online by Cambridge University Press:  06 January 2021

Jeremy Thomas Harbaugh
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Recent Case Developments
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American Journal of Law & Medicine , Volume 39 , Issue 4 , December 2013 , pp. 692 - 695
Copyright
Copyright © American Society of Law, Medicine and Ethics and Boston University 2013

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References

1 723 F.3d 1114 (10th Cir. 2013), petition for cert. filed, 82 U.S.L.W. 3139 (U.S. Sept. 19, 2013) (No. 13-354).

2 See Press Release, Administration Issues Final Rules on Contraception Coverage and Religious Organizations (Aug. 5, 2013), http://www.hhs.gov/news/press/2013pres/06/20130628a.html; see generallyChelsea Rutherford, Federal Court Hears Challenges to HHS Mandated Contraception Coverage – Belmont Abbey College v. Sebelius and Wheaton College v. Sebelius, 39 AM. J.L. & MED. 182 (2013) (describing the interim rules and cases leading up to the June 28, 2013 final rules).

3 See Hobby Lobby, 723 F.3d at 1121-22 (reversing the district court's decision denying Hobby Lobby's and Mardel's motion for a preliminary injunction against the Mandate). Without a preliminary injunction, Hobby Lobby and Mardel were at risk of accruing penalties beginning on July 1, 2013 for not complying with the Mandate. Id. at 1120.

4 See Autocam Corp. v. Sebelius, 730 F.3d 618, 625 (6th Cir. 2013), petition for cert. filed, 82 U.S.L.W. 3245 (Oct. 15, 2013) (No. 13-482) (acknowledging that the Tenth Circuit's holding in regards to a corporation's standing under RFRA is contrary to its own holding and that of the Third Circuit). According to the mandates of RFRA, the “[g]overnment shall not substantially burden a person's exercise of religion.” 42 U.S.C. § 2000bb-1(a) (2006 & Supp. V 2011) (emphasis added).

5 Hobby Lobby Stores, Inc. v. Sebelius, No. CIV-12-1000-HE, 2013 WL 3869832, at *2 (W.D. Okla. July 19, 2013). The court originally issued the preliminary injunction until Oct. 1, 2013, id. at *2, but the HHS petition for writ of certiorari will allow the preliminary injunction to continue until the district court proceedings resume. Petition for Writ of Certiorari, Sebelius v. Hobby Lobby Stores, Inc., No. 13-354 (U.S. petition for cert. filed Sept. 19, 2013).

6 Hobby Lobby Stores, Inc. v. Sebelius, 870 F. Supp. 2d 1278, 1284 (W.D. Okla. 2012) rev'd and remanded, 723 F.3d 1114 (10th Cir. 2013), petition for cert. filed, 82 U.S.L.W. 3139 (Sept. 19, 2013) (No. 13-354). Hobby Lobby operates 514 stores in 41 states; Mardel operates 35 stores in 7 states. Id.

8 Id. at 1124-25.

9 Plaintiffs assert that the penalties for not complying with the Mandate could be as large as 75 million per year, while discontinuing employee health insurance altogether would subject them to a fine of 26 million per year. Id. at 1125.

10 See 42 U.S.C. § 300gg-13(a)(4) (2006 & Supp. V 2011).

11 Hobby Lobby, 723 F.3d at 1125. Plan B, Ella, and two types of approved intrauterine devices can prevent implantation of fertilized eggs. Id. at 1123.

12 Id. at 1124 (Hobby Lobby and Mardel do not meet any of the possible exceptions, such as having a grandfathered health plan or qualifying as a “religious employer.”).

13 Id. at 1125. Free Exercise Clause and RFRA jurisprudence have led to two different legal standards for claimants to challenge generally applicable laws that interfere with their free exercise of religion. SeeGonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 424 (2006). Congress responded to the Supreme Court's decision in Emp't Div., Dep't of Human Res. of Oregon v. Smith, 494 U.S. 872 (1990), by enacting RFRA. See Gonzales, 546 U.S. at 424. While RFRA has been ruled unconstitutional as applied to the states, it has been applied in challenges to federal laws. Compare City of Boerne v. Flores, 521 U.S. 507, 532 (1997) (denying RFRA applicability to states), with Gonzales, 546 U.S. at 423 (utilizing RFRA to challenge federal laws).

14 Hobby Lobby Stores, Inc. v. Sebelius, 870 F. Supp. 2d 1278, 1296-97 (W.D. Okla. 2012) rev'd and remanded, 723 F.3d 1114 (10th Cir. 2013), petition for cert. filed, 82 U.S.L.W. 3139 (U.S. Sept. 19, 2013) (No. 13-354).

15 Id. at 1291-92.

16 Hobby Lobby Stores, Inc. v. Sebelius, No. 12-6294, 2012 WL 6930302, at *3 (10th Cir. 2012) (citing Hobby Lobby, 870 F. Supp. 2d at 1294 (alteration in original) (internal quotation marks omitted)).

17 Hobby Lobby Stores, Inc. v. Sebelius, 133 S. Ct. 641, 642 (Sotomayor, Circuit Justice 2012); see28 U.S.C. § 1651(a) (2006).

18 See Hobby Lobby, 723 F.3d at 1125.

19 Id. at 1121.

20 Id. at 1129.

21 Id. at 1121. The four elements are: “(1) a likelihood of success on the merits; (2) a likely threat of irreparable harm to the movant; (3) the harm alleged by the movant outweighs any harm to the non-moving party; and (4) an injunction is in the public interest.” Id. at 1128 (citing Winter v. NRDC, 555 U.S. 7, 20 (2008).

22 Id. at 1159 (Bacharach, J., concurring). Judge Bacharach thought that the Greens and their companies had proven a likelihood of success on the merits and a likely threat of irreparable harm. Id.(Bacharach, J., concurring).

23 Id. at 1167 (Briscoe, C.J., dissenting in part).

24 Id. at 1188-89 (Matheson, J., dissenting in part) (noting that the “Greens’ injury is direct and personal regardless of whether the corporations are covered by RFRA”).

25 Hobby Lobby Stores, Inc. v. Sebelius, No. CIV-12-1000-HE, 2013 WL 3869832, at *1 (W.D. Okla. 2013).

26 The estimated 13,000 employees at issue in this case still have coverage for some forms of contraceptives. Id.The district court thus weighed the government's interest in making available to these employees all forms of FDA-approved contraceptives against the 1,300,000 per day cost to Hobby Lobby and Mardel. Id.

28 On October 3, 2013, the Tenth Circuit upheld a preliminary injunction against the Mandate for Hercules Industries, Inc., a for-profit corporation, in light of the Hobby Lobbydecision. See Newland v. Sebelius, No. 12-1380, 2013 WL 5481997, at *3 (10th Cir. Oct. 3, 2013).

29 Conestoga Wood Specialties Corp. v. Sec’y of the U.S. Dep't of Health and Human Servs., 724 F.3d 377 (3rd Cir. 2013), petition for cert. filed, 82 U.S.L.W. 3139 (U.S. Sept. 19, 2013) (No. 13-356).

30 Id. at 388.

31 Autocam Corp. v. Sebelius, 730 F.3d 618, 625 (6th Cir. 2013), petition for cert. filed, 82 U.S.L.W. 3245 (Oct. 15, 2013) (No. 13-482). To the contrary, the Seventh Circuit recently rejected such a “nonprofit limitation on organizational free-exercise rights.” Korte v. Sebelius, No. 12-3841, 2013 WL 5960692, at *21 (7th Cir. Nov. 8, 2013). The Seventh Circuit further held that the particular claimants in the case, closely-held, for-profit corporations, are “persons” under the RFRA, but the court stopped short of recognizing a general right for all for-profit corporations under the RFRA. Id. at *22.

32 Petition for Writ of Certiorari, Sebelius v. Hobby Lobby Stores, Inc., No. 13-354 (U.S. petition for cert. filed Sept. 19, 2013); Petition for Writ of Certiorari, Conestoga Wood Specialties Corp. v. Sebelius, No. 13-356 (U.S. petition for cert. filed Sept. 19, 2013).

33 See Lyle Denniston, U.S., Business Appeal on Birth-Control Mandate, SCOTUSBLOG (Sept. 19, 2013, 2:29 PM), http://www.scotusblog.com/2013/09/birth-control-mandate-issue-reaches-court/ (concluding that “[t]he chances are strong that the Court will agree to rule on one or more of the challenges, since federal appeals courts are now split on the question”).

34 See Letter from U.S. Conference of Catholic Bishops to Members of Congress (Sept. 26, 2013), http://www.usccb.org/issues-and-action/religious-liberty/conscience-protection/upload/omalley-lori-letter-to-house-2013-09-26.pdf (“Such access is threatened by Congress's continued failure to protect the right of conscience”) (on file with author). But see Conestoga Wood, 724 F.3d at 382 (noting that “Conestoga is currently complying with the Mandate”).

35 Employment-based health insurance coverage was estimated to be about fifty-seven percent of total health insurance coverage in 2012. SeeCONG. BUDGET OFFICE, 43472, Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision, tbl.3 at 20 (2012), http://www.cbo.gov/sites/default/files/cbofiles/attachments/43472-07-24-2012-CoverageEstimates.pdf (estimating that in 2012, out of a total population of 269 million non-elderly people, 154 million received employer-based health insurance coverage).

36 See Ed Whelan, Sloppy Sixth Circuit Ruling Rejects Challenge to HHS Mandate, NAT’L REV. ONLINE (Sept. 18, 2013, 4:30 PM), http://www.nationalreview.com/bench-memos/358888/sloppy-sixth-circuit-ruling-rejects-challenge-hhs-mandate-ed-whelan. Whelan applies the reasoning of the Sixth Circuit in a different context to illustrate how it would eviscerate any such balance, noting that family members who manage a kosher deli according to the owner's religious beliefs would be unable to challenge an Obama administration mandate to serve pork under the RFRA due to their fiduciary relationship with the deli. Id.

38 See id. at 1125.

39 See Conestoga Wood Specialties Corp. v. Sec. of HHS, 724 F.3d 377, 414 (3d Cir. 2013), petition for cert. filed, 82 U.S.L.W. 3139 (U.S. Sept. 19, 2013) (No. 13-356 ) (“[T]he government has already exempted from its reach grandfathered plans, employers with under 50 employees, and what it defines as “religious employers”, … thus voluntarily allowing millions upon millions of peopleby some estimates 190 millionto be covered by insurance plans that do not … [provide] contraceptives.”).

40 Hobby Lobby, 723 F.3d at 1129, 1135.