Burwell v. Hobby Lobby Stores, Inc.
573 U.S. ___ (2014)

Annotate this Case
Justia Opinion Summary

Department of Health and Human Services (HHS) regulations implementing the 2010 Patient Protection and Affordable Care Act (ACA) require that employers’ group health plans furnish preventive care and screenings for women without cost sharing requirements, 42 U.S.C. 300gg–13(a)(4). Nonexempt employers must provide coverage for 20 FDA-approved contraceptive methods, including four that may have the effect of preventing a fertilized egg from developing. Religious employers, such as churches, are exempt from the contraceptive mandate. HHS has effectively exempted religious nonprofit organizations; an insurer must exclude contraceptive coverage from such an employer’s plan and provide participants with separate payments for contraceptive services. Closely held for-profit corporations sought an injunction under the 1993 Religious Freedom Restoration Act (RFRA), which prohibits the government from substantially burdening a person’s exercise of religion even by a rule of general applicability unless it demonstrates that imposing the burden is the least restrictive means of furthering a compelling governmental interest, 42 U.S.C. 2000bb–1(a), (b). As amended by the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA), RFRA covers “any exercise of religion, whether or not compelled by, or central to, a system of religious belief.” The Third Circuit held that a for-profit corporation could not “engage in religious exercise” under RFRA and that the mandate imposed no requirements on corporate owners in their personal capacity. The Tenth Circuit held that the businesses are “persons” under RFRA; that the contraceptive mandate substantially burdened their religious exercise; and that HHS had not demonstrated that the mandate was the “least restrictive means” of furthering a compelling governmental interest.

The Supreme Court ruled in favor of the businesses, holding that RFRA applies to regulations that govern the activities of closely held for-profit corporations. The Court declined to “leave merchants with a difficult choice” of giving up the right to seek judicial protection of their religious liberty or forgoing the benefits of operating as corporations. Nothing in RFRA suggests intent to depart from the Dictionary Act definition of “person,” which includes corporations, 1 U.S.C.1; no definition of “person” includes natural persons and nonprofit corporations, but excludes for-profit corporations. “Any suggestion that for-profit corporations are incapable of exercising religion because their purpose is simply to make money flies in the face of modern corporate law.” The Court rejected arguments based on the difficulty of ascertaining the “beliefs” of large, publicly traded corporations and that the mandate itself requires only insurance coverage. If the plaintiff companies refuse to provide contraceptive coverage, they face severe economic consequences; the government failed to show that the contraceptive mandate is the least restrictive means of furthering a compelling interest in guaranteeing cost-free access to the four challenged contraceptive methods. The government could assume the cost of providing the four contraceptives or could extend the accommodation already established for religious nonprofit organizations. The Court noted that its decision concerns only the contraceptive mandate, not all insurance-coverage mandates, e.g., for vaccinations or blood transfusions.

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued.The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.See United States v. Detroit Timber & Lumber Co., 200 U. S. 321 .

SUPREME COURT OF THE UNITED STATES

Syllabus

BURWELL, SECRETARY OF HEALTH AND HUMAN SERVICES, et al. v. HOBBY LOBBY STORES, INC., et al.

certiorari to the united states court of appeals for the tenth circuit

No. 13–354. Argued March 25, 2014—Decided June 30, 2014[1]

The Religious Freedom Restoration Act of 1993 (RFRA) prohibits the “Government [from] substantially burden[ing] a person’s exercise of religion even if the burden results from a rule of general applicability” unless the Government “demonstrates that application of the burden to the person—(1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.” 42 U. S. C. §§2000bb–1(a), (b). As amended by the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA), RFRA covers “any exercise of religion, whether or not compelled by, or central to, a system of religious belief.” §2000cc–5(7)(A).

          At issue here are regulations promulgated by the Department of Health and Human Services (HHS) under the Patient Protection and Affordable Care Act of 2010 (ACA), which, as relevant here, requires specified employers’ group health plans to furnish “preventive care and screenings” for women without “any cost sharing requirements,” 42 U. S. C. §300gg–13(a)(4). Congress did not specify what types of preventive care must be covered; it authorized the Health Resources and Services Administration, a component of HHS, to decide. Ibid. Nonexempt employers are generally required to provide coverage for the 20 contraceptive methods approved by the Food and Drug Administration, including the 4 that may have the effect of preventing an already fertilized egg from developing any further by inhibiting its attachment to the uterus. Religious employers, such as churches, are exempt from this contraceptive mandate. HHS has also effectively exempted religious nonprofit organizations with religious objections to providing coverage for contraceptive services. Under this accommodation, the insurance issuer must exclude contraceptive coverage from the employer’s plan and provide plan participants with separate payments for contraceptive services without imposing any cost-sharing requirements on the employer, its insurance plan, or its employee beneficiaries.

          In these cases, the owners of three closely held for-profit corporations have sincere Christian beliefs that life begins at conception and that it would violate their religion to facilitate access to contraceptive drugs or devices that operate after that point. In separate actions, they sued HHS and other federal officials and agencies (collectively HHS) under RFRA and the Free Exercise Clause, seeking to enjoin application of the contraceptive mandate insofar as it requires them to provide health coverage for the four objectionable contraceptives. In No. 13–356, the District Court denied the Hahns and their company—Conestoga Wood Specialties—a preliminary injunction. Affirming, the Third Circuit held that a for-profit corporation could not “engage in religious exercise” under RFRA or the First Amendment, and that the mandate imposed no requirements on the Hahns in their personal capacity. In No. 13–354, the Greens, their children, and their companies—Hobby Lobby Stores and Mardel—were also denied a preliminary injunction, but the Tenth Circuit reversed. It held that the Greens’ businesses are “persons” under RFRA, and that the corporations had established a likelihood of success on their RFRA claim because the contraceptive mandate substantially burdened their exercise of religion and HHS had not demonstrated a compelling interest in enforcing the mandate against them; in the alternative, the court held that HHS had not proved that the mandate was the “least restrictive means” of furthering a compelling governmental interest.

Held: As applied to closely held corporations, the HHS regulations imposing the contraceptive mandate violate RFRA. Pp. 16–49.

     (a) RFRA applies to regulations that govern the activities of closely held for-profit corporations like Conestoga, Hobby Lobby, and Mardel. Pp. 16–31.

          (1) HHS argues that the companies cannot sue because they are for-profit corporations, and that the owners cannot sue because the regulations apply only to the companies, but that would leave merchants with a difficult choice: give up the right to seek judicial protection of their religious liberty or forgo the benefits of operating as corporations. RFRA’s text shows that Congress designed the statute to provide very broad protection for religious liberty and did not intend to put merchants to such a choice. It employed the familiar legal fiction of including corporations within RFRA’s definition of “persons,” but the purpose of extending rights to corporations is to protect the rights of people associated with the corporation, including shareholders, officers, and employees. Protecting the free-exercise rights of closely held corporations thus protects the religious liberty of the humans who own and control them. Pp. 16–19.

          (2) HHS and the dissent make several unpersuasive arguments. Pp. 19–31.

               (i) Nothing in RFRA suggests a congressional intent to depart from the Dictionary Act definition of “person,” which “include[s] corporations, . . . as well as individuals.” 1 U. S. C. §1. The Court has entertained RFRA and free-exercise claims brought by nonprofit corporations. See, e.g., Gonzales v. O Centro Espírita Beneficiente União do Vegetal, 546 U. S. 418 . And HHS’s concession that a nonprofit corporation can be a “person” under RFRA effectively dispatches any argument that the term does not reach for-profit corporations; no conceivable definition of “person” includes natural persons and nonprofit corporations, but not for-profit corporations. Pp. 19–20.

               (ii) HHS and the dissent nonetheless argue that RFRA does not cover Conestoga, Hobby Lobby, and Mardel because they cannot “exercise . . . religion.” They offer no persuasive explanation for this conclusion. The corporate form alone cannot explain it because RFRA indisputably protects nonprofit corporations. And the profit-making objective of the corporations cannot explain it because the Court has entertained the free-exercise claims of individuals who were attempting to make a profit as retail merchants. Braunfeld v. Brown, 366 U. S. 599 . Business practices compelled or limited by the tenets of a religious doctrine fall comfortably within the understanding of the “exercise of religion” that this Court set out in Employment Div., Dept. of Human Resources of Ore. v. Smith, 494 U. S. 872 . Any suggestion that for-profit corporations are incapable of exercising religion because their purpose is simply to make money flies in the face of modern corporate law. States, including those in which the plaintiff corporations were incorporated, authorize corporations to pursue any lawful purpose or business, including the pursuit of profit in conformity with the owners’ religious principles. Pp. 20–25.

               (iii) Also flawed is the claim that RFRA offers no protection because it only codified pre-Smith Free Exercise Clause precedents, none of which squarely recognized free-exercise rights for for-profit corporations. First, nothing in RFRA as originally enacted suggested that its definition of “exercise of religion” was meant to be tied to pre-Smith interpretations of the First Amendment. Second, if RFRA’s original text were not clear enough, the RLUIPA amendment surely dispels any doubt that Congress intended to separate the definition of the phrase from that in First Amendment case law. Third, the pre-Smith case of Gallagher v. Crown Kosher Super Market of Mass., Inc., 366 U. S. 617 , suggests, if anything, that for-profit corporations can exercise religion. Finally, the results would be absurd if RFRA, a law enacted to provide very broad protection for religious liberty, merely restored this Court’s pre-Smith decisions in ossified form and restricted RFRA claims to plaintiffs who fell within a category of plaintiffs whose claims the Court had recognized before Smith. Pp. 25–28.

          (3) Finally, HHS contends that Congress could not have wanted RFRA to apply to for-profit corporations because of the difficulty of ascertaining the “beliefs” of large, publicly traded corporations, but HHS has not pointed to any example of a publicly traded corporation asserting RFRA rights, and numerous practical restraints would likely prevent that from occurring. HHS has also provided no evidence that the purported problem of determining the sincerity of an asserted religious belief moved Congress to exclude for-profit corporations from RFRA’s protection. That disputes among the owners of corporations might arise is not a problem unique to this context. State corporate law provides a ready means for resolving any conflicts by, for example, dictating how a corporation can establish its governing structure. Courts will turn to that structure and the underlying state law in resolving disputes. Pp. 29–31.

     (b) HHS’s contraceptive mandate substantially burdens the exercise of religion. Pp. 31–38.

          (1) It requires the Hahns and Greens to engage in conduct that seriously violates their sincere religious belief that life begins at conception. If they and their companies refuse to provide contraceptive coverage, they face severe economic consequences: about $475 million per year for Hobby Lobby, $33 million per year for Conestoga, and $15 million per year for Mardel. And if they drop coverage altogether, they could face penalties of roughly $26 million for Hobby Lobby, $1.8 million for Conestoga, and $800,000 for Mardel. P. 32.

          (2) Amici supporting HHS argue that the $2,000 per-employee penalty is less than the average cost of providing insurance, and therefore that dropping insurance coverage eliminates any substantial burden imposed by the mandate. HHS has never argued this and the Court does not know its position with respect to the argument. But even if the Court reached the argument, it would find it unpersuasive: It ignores the fact that the plaintiffs have religious reasons for providing health-insurance coverage for their employees, and it is far from clear that the net cost to the companies of providing insurance is more than the cost of dropping their insurance plans and paying the ACA penalty. Pp. 32–35.

          (3) HHS argues that the connection between what the objecting parties must do and the end that they find to be morally wrong is too attenuated because it is the employee who will choose the coverage and contraceptive method she uses. But RFRA’s question is whether the mandate imposes a substantial burden on the objecting parties’ ability to conduct business in accordance with their religious beliefs. The belief of the Hahns and Greens implicates a difficult and important question of religion and moral philosophy, namely, the circumstances under which it is immoral for a person to perform an act that is innocent in itself but that has the effect of enabling or facilitating the commission of an immoral act by another. It is not for the Court to say that the religious beliefs of the plaintiffs are mistaken or unreasonable. In fact, this Court considered and rejected a nearly identical argument in Thomas v. Review Bd. of Indiana Employment Security Div., 450 U. S. 707 . The Court’s “narrow function . . . is to determine” whether the plaintiffs’ asserted religious belief reflects “an honest conviction,” id., at 716, and there is no dispute here that it does. Tilton v. Richardson, 403 U. S. 672 ; and Board of Ed. of Central School Dist. No. 1 v. Allen, 392 U. S. 236 –249, distinguished. Pp. 35–38.

     (c) The Court assumes that the interest in guaranteeing cost-free access to the four challenged contraceptive methods is a compelling governmental interest, but the Government has failed to show that the contraceptive mandate is the least restrictive means of furthering that interest. Pp. 38–49.

          (1) The Court assumes that the interest in guaranteeing cost-free access to the four challenged contraceptive methods is compelling within the meaning of RFRA. Pp. 39–40.

          (2) The Government has failed to satisfy RFRA’s least-restrictive-means standard. HHS has not shown that it lacks other means of achieving its desired goal without imposing a substantial burden on the exercise of religion. The Government could, e.g., assume the cost of providing the four contraceptives to women unable to obtain coverage due to their employers’ religious objections. Or it could extend the accommodation that HHS has already established for religious nonprofit organizations to non-profit employers with religious objections to the contraceptive mandate. That accommodation does not impinge on the plaintiffs’ religious beliefs that providing insurance coverage for the contraceptives at issue here violates their religion and it still serves HHS’s stated interests. Pp. 40–45.

          (3) This decision concerns only the contraceptive mandate and should not be understood to hold that all insurance-coverage mandates, e.g., for vaccinations or blood transfusions, must necessarily fall if they conflict with an employer’s religious beliefs. Nor does it provide a shield for employers who might cloak illegal discrimination as a religious practice. United States v. Lee, 455 U. S. 252 , which upheld the payment of Social Security taxes despite an employer’s religious objection, is not analogous. It turned primarily on the special problems associated with a national system of taxation; and if Lee were a RFRA case, the fundamental point would still be that there is no less restrictive alternative to the categorical requirement to pay taxes. Here, there is an alternative to the contraceptive mandate. Pp. 45–49.

No. 13–354, 723 F. 3d 1114, affirmed; No. 13–356, 724 F. 3d 377, reversed and remanded.

     Alito, J., delivered the opinion of the Court, in which Roberts, C. J., and Scalia, Kennedy, and Thomas, JJ., joined. Kennedy, J., filed a concurring opinion. Ginsburg, J., filed a dissenting opinion, in which Sotomayor, J., joined, and in which Breyer and Kagan, JJ., joined as to all but Part III–C–1. Breyer and Kagan, JJ., filed a dissenting opinion.

Notes

1  Together with No. 13–356, v. on certiorari to the United States Court of Appeals for the Third Circuit.
Primary Holding
The Religious Freedom Restoration Act (RFRA) permits a closely held for-profit corporation to deny its employees the health coverage of contraceptives to which the employees are otherwise entitled by the federal Patient Protection and Affordable Care Act of 2010 (ACA), based on the religious objections of the corporation’s owners.
Facts
David Green, a wealthy Evangelical Christian, founded and operated an arts and crafts company known as Hobby Lobby. One of his sons, Mart, operated a company known as Mardel Christian and Educational Supply. Until 2012, Green provided health insurance coverage for contraceptives to the women among the 21,000 employees of Hobby Lobby. However, his religious views led to Hobby Lobby becoming the leading supporter of the National Christian Charitable Foundation, which funds conservative political groups. Green and his family felt that contraception was immoral because they believed that life begins at the time of a woman's fertilization. As a result, they challenged a new requirement under federal law that their company provide health insurance coverage for emergency contraceptive pills (Plan B and Ella) and intrauterine devices (ParaGard, Mirena, and Skyla) to their female employees. All of these contraceptives were approved by the FDA, but the Greens argued that a for-profit family business should not be forced to fund the use of devices that were contrary to their anti-abortion beliefs.

Meanwhile, the Hahn family owned a furniture company called Conestoga Wood Specialties. Due to their Mennonite beliefs, the Hahns resisted providing contraceptives to the women in their staff of about 1,000 employees. This case was consolidated with the Hobby Lobby case, as was a similar challenge involving Mardel.

These cases lay at the intersection of the First Amendment and three recent federal laws. In 2000, Congress had passed the Religious Land Use and Institutionalized Persons Act (RLUIPA), which expanded the Religious Freedom Restoration Act (RFRA) in response to the Supreme Court decision in Employment Division v. Smith (1990). This law required the Court to apply the strictest standard of review to laws that interfered with any exercise of religion, whether or not it was central to a system of religious belief. (Congress was responding to the relatively lenient level of scrutiny used by Justice Antonin Scalia in Smith.) While RLUIPA stood on dubious ground with regard to the states, the Court had found that it was constitutional with regard to federal laws.

The federal law challenged in this case was the Affordable Care Act (ACA), by which the administration of President Barack Obama had revolutionized the American health care system. Part of this 2010 law gave authority to the Department of Health and Human Services (HHS) to determine what employers would be required to cover in the area of contraceptives and other preventive care for women. HHS and its subordinate agency, the Health Resources and Services Administration (HRSA), decided that religious employers, non-profit organizations that oppose contraception, employers with fewer than 50 employees, and a few other narrowly defined types of businesses did not need to provide coverage in this area. However, they imposed coverage requirements on all other employers for all 20 contraceptives that were approved by the FDA. To facilitate compliance, HRSA fined companies $100 per day per individual whose coverage was withheld. It also offered the alternative of paying higher wages and a tax.

Arguing that the actions of HRSA and HHS under the ACA were invalid under RFRA, RLUIPA, and the First Amendment, Hobby Lobby sought to have an injunction against its enforcement as applied to its employees. The Greens initially were denied a preliminary injunction, but the Tenth Circuit ruled that they were covered by RLUIPA and sent the case back to the lower court to grant a preliminary injunction. Other circuits were divided as to whether closely held for-profit businesses with religious beliefs had the right to withhold coverage for contraceptives from female employees.
Attorneys
  • Paul D. Clement (plaintiffs)
  • Donald Verrilli, Jr. (defendant)

Issues & Holdings

Issue: Whether the right to free exercise of religion, as envisioned by RFRA and RLUIPA, extends to for-profit businesses as well as non-profit organizations.
Holding: Yes. There is no meaningful distinction between those types of entities that justifies treating them differently under these laws.

Opinions

Majority

  • Samuel A. Alito, Jr. (Author)
  • John G. Roberts, Jr.
  • Antonin Scalia
  • Anthony M. Kennedy
  • Clarence Thomas

Applying strict scrutiny, as required by RLUIPA, Alito found that the government did not meet this standard in requiring closely held corporations with religious beliefs to include contraceptives in their health insurance coverage. He argued that the rule created by HHS was not the least restrictive means of attaining the government's objective. Alito did not reach the constitutional question, since he believed that the case could be decided on strictly statutory grounds.

A critical basis for the decision was the exemption that HHS had created for non-profit organizations that held conservative beliefs. They were allowed to certify religious objections to insurance providers and were not required to to pay for contraceptives. Alito felt that there was no reason for the government to distinguish between for-profit and non-profit corporations in this regard, noting that many for-profit corporations support charitable organizations and have goals beyond maximizing their profits. He placed great significance on the rights of corporate shareholders and managers to express their religious beliefs. The government mandate substantially burdened this right, according to Alito, even though the health insurance coverage did not directly result in the destruction of embryos. (Nothing in the company policies prevented female employees from getting contraceptives outside the health insurance plan.)

Taking an almost religious viewpoint, Alito wrote that people or companies should not be forced to compromise their own morality by facilitating what they perceive as the immoral acts of others. He noted that Hobby Lobby might face adverse consequences in the form of attracting female employees and potentially increased wages to help employees pay for individual coverage plans, so it had plenty of incentives to comply with the ACA. The fact that these incentives were not enough to persuade the Greens to provide coverage for contraceptives showed the strength of their beliefs. Alito was not concerned that alleged religious beliefs might be used to mask discrimination in hiring practices under a broad interpretation of RLUIPA, finding that it did not interfere with the enforcement of federal laws prohibiting employment discrimination.

Concurrence

  • Anthony M. Kennedy (Author)

Determined to limit the scope of this decision, Kennedy noted that the government does have a compelling interest in incentivizing employers to provide health care insurance coverage, including contraceptives, for female employees. He wrote that the outcome stemmed only from the agency's failure to use the least restrictive means of achieving that objective. Kennedy pointed out that the way in which HHS handles non-profit corporations with religious objections meets that standard and provides a clear alternative for it to use.

Dissent

  • Ruth Bader Ginsburg (Author)
  • Sonia Sotomayor
  • Stephen G. Breyer
  • Elena Kagan

Ginsburg argued that the majority had deviated from Court precedent in finding that for-profit corporations are not required to comply with laws that they believe to conflict with their religious beliefs. In contrast to Alito, she did find that there was a meaningful difference between for-profit and non-profit enterprises. Whereas non-profit religious organizations generally comprise members who share the same beliefs and a desire to promote them, for-profit entities tend to employ individuals with a broad spectrum of beliefs who are working for them simply to earn a salary.

Finding that the majority had applied a standard of review even more stringent than what RLUIPA required, Ginsburg wrote that the requirement of the least restrictive alternative should not be so narrowly construed to the extent that the burdens on religiously exempt entities would be transferred to the government and taxpayers. She also briefly questioned the identification of a corporation as something that could hold and exercise religious beliefs. Ginsburg felt that the Free Exercise Clause of the First Amendment should apply only to people, rather than artificially created entities. (Breyer and Kagan did not join this part of her opinion.)

Dissent

  • Stephen G. Breyer (Author)
  • Elena Kagan (Author)

In a one-paragraph dissent, these two Justices stated that the case could be decided in favor of the government without needing to distinguish between for-profit and non-profit corporations. They would have rejected the claim on its merits, even if RFRA and RLUIPA applied.

Case Commentary

It remains unclear whether the decision extends beyond the specific mandate challenged by Hobby Lobby. Gay rights activists voiced concern that businesses claiming a similar religious objection might start to withhold health insurance coverage for certain anti-HIV drugs that disproportionately benefit members of the LGBT community. Although proponents of RFRA and RLUIPA argue to the contrary, these laws have been generally used to uphold religious objections with conservative rather than liberal orientations.

Many members of the legal academy as well as the mainstream media felt that the Court had blurred an important line in deciding that companies have the right to exercise religious beliefs. This is the distinction between permitting the free exercise of religion and imposing the employer's religious beliefs on others. Most would agree that Green and his family were entitled to contribute to conservative causes and express anti-abortion views. However, the Court's decision legitimized actions that affected deeply personal areas of their employees' lives more directly than they affected the Greens. Objectors to that perspective would point out that there are many businesses in the economy that provide health insurance coverage for contraceptives, so women seeking that coverage have alternative employment options. They also might suggest that companies will operate more smoothly if they are comprised of people who share similar beliefs.

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