Federal Appeals Court: For Profit Companies Cannot Flout Birth Control Law

Late last week, the United States Court of Appeals for the Third Circuit denied a for-profit company’s request for an order permitting it to ignore federal regulations requiring it to provide birth control coverage to its employees. As with many of these cases filed in other courts, the corporation argued that it should be immune to the law because the companies’ shareholders object to birth control on religious grounds. It should be noted that this is a preliminary order and that the court’s ultimate resolution of the case could be different. Nevertheless, a majority of the three judge panel concludes that “a secular, for-profit corporation, Conestoga has no free exercise rights under the First Amendment, and is not a ‘person'” for purposes of a federal law enhancing the protection available to people with religious objections to federal laws.

In a concurring opinion, Nixon-appointed Judge Leonard Garth explains why the owners of a for-profit corporation should not be able to impose their religious beliefs on the corporation’s employees:

[F]or-profit corporate entities, unlike religious non-profit organizations, do not—and cannot—legally claim a right to exercise or establish a “corporate” religion under the First Amendment or the RFRA. As the District Court noted, “[g]eneral business corporations … do not pray, worship, observe sacraments or take other religiously motivated actions separate and apart from the intention and direction of their individual actors.” Unlike religious non-profit corporations or organizations, the religious liberty relevant in the context of for-profit corporations is the liberty of its individuals, not of a profit-seeking corporate entity.

Conestoga further claims that it should be construed as holding the religious beliefs of its owners. This claim is belied by the fact that, as the District Court correctly noted, “‘[i]ncorporation’s basic purpose is to create a distinct legal entity, with legal rights, obligations, powers, and privileges different from those of the natural individuals who created it, who own it, or whom it employs’ . . . . It would be entirely inconsistent to allow the Hahns to enjoy the benefits of incorporation, while simultaneously piercing the corporate veil for the limited purpose of challenging these regulations.

To date, two other courts of appeal have rejected, at least for the time being, for-profit corporations’ claims that they should be immune from the birth control rules — although on varying grounds. Two other appeals courts have granted such immunity at least on a temporary basis.

It should be noted that these cases do not present a particularly difficult question under existing law. As the Supreme Court explained in United States v. Lee, religious liberty does not allow a commercial employer to “impose the employer’s religious faith on the employees,” such as by forcing employees to give up their own legal right to health care because of their employer’s objections to birth control.