What R v Big M Drug Mart Can Teach the US Supreme Court about Corporate Religious Freedom

Late last year, the United States Supreme Court agreed to hear two cases challenging the constitutionality of the Patient Protection and Affordable Care Act’s (“Obamacare”) contraception mandate, with oral arguments to take place in March. At issue in Sebelius v Hobby Lobby Stores, Inc. [Hobby Lobby] and Conestoga Wood Specialties Corp. v Sebelius [Conestoga Wood], which will be consolidated at the Supreme Court, is whether provisions of Obamacare requiring companies with more than 50 employees to provide insurance that includes coverage for contraception violates those corporations’ right to religious freedom under the First Amendment and Religious Freedom Restoration Act (“RFRA”).

The most interesting issue raised by this case is whether a corporation is capable of religious belief. However, as Chief Justice Dickson wrote in R v Big M Drug Mart, [1985] 1 SCR 295, this is the wrong question to be asking.

The Circuit Split

The passage of President Obama’s signature healthcare legislation in 2010 unleashed a fury of litigation, the most important being National Federation of Independent Business v Sebelius, 648 F.3d 1235, where the Roberts Court upheld the individual mandate under Congress’ taxation power but not, importantly, under its constitutional authority to regulate interstate commerce. While this ruling upheld the lynchpin of the legislative scheme, a large number of cases have continued to challenge the outer edges of the law. The contraception mandate alone, which exempts, among others, religious organizations, has given rise to over 50 cases at the trial court level brought by Christian employers. Specifically, these groups take issue with the requirement that employers provide “abortion causing” drugs like the morning-after pill, which they argue directly conflicts with the core beliefs of the business.

Two such cases recently percolated to the 10^th and 3^rd US Circuit Courts of Appeals, yielding two contradictory judgments. On July 28, 2013, the 3^rd Circuit upheld the provision, holding that “for-profit, secular corporations cannot engage in religious exercise” (10-11). Judge Robert Cowen, writing for the two-judge majority, examined other First Amendment jurisprudence relating to corporate freedom of speech (particularly the 2010 Citizens United case), and found that while there was “a long history of protecting corporations’ rights to free speech,” there was no such history of protecting the free exercise of religion. He sensibly added that a holding to the contrary “would eviscerate the fundamental principle that a corporation is a legally distinct entity from its owners” (30).

The 10^th Circuit came to the opposite conclusion. Writing for the court, Judge Tymkovich held that the companies bringing the action—Hobby Lobby, a craft store, and Mardel, a Christian bookstore chain—operated their businesses to reflect their religious values and that the contraception mandate substantially burdened these beliefs.

The Doctrine

Until congressional intervention in 1993, this would have been a relatively straightforward case for the court to decide, but for rather counterintuitive reasons. In the 1990 case of Employment Division of Oregon v Smith, 494 US 872 (1990), the Supreme Court held that the Free Exercise Clause of the First Amendment could not exempt Native Americans seeking to use peyote for religious rituals from the laws prohibiting its use.

Writing for the majority, Justice Scalia stated that granting these groups an exemption under the Constitution “would be courting anarchy” and held that the appropriate standard of review with respect to government regulations infringing the Free Exercise clause was rational basis (the most deferent standard of review). In response, a Democrat-controlled Congress passed the 1993 RFRA, which reinstated strict scrutiny and, consequently, forced the government to provide both a compelling reason for limiting the right and evidence that the law was appropriately tailored so as to minimally restrict the right.

Further, the RFRA provides, as a general rule, that the “Government shall not substantially burden a person’s exercise of religion” (42 USC § 2000bb-1(a)), with the word “person” left undefined in the Act. This omission led the 10^th Circuit to rely on the Dictionary Act, which states that “[i]n determining the meaning of any Act of Congress, unless the context indicates otherwise … the word ‘person’ … include[s] corporations, companies, associations, firms, partnerships, societies, and joint stock companies” (1 USC § 1).

In Hobby Lobby, the government made two arguments on this point: (1) that as a matter of statutory interpretation, the RFRA should be read to carry forward the pre-existing distinction in all civil rights statutes and labour law between religious, non-profits and secular, for-profit companies, the latter of which would not be subject to the RFRA; and (2) that Congress did not intend the RFRA to expand the Free Exercise Clause. Both arguments were rejected by the 10^th Circuit.

If these arguments are rejected by the Supreme Court, and there is strong reason to believe they will be, two questions arise. The preliminary question is whether a secular, for-profit corporation—regardless its owners’ beliefs—is captured by the scope of the Free Exercise Clause.

Assuming the Court decides in the affirmative, the analysis will then turn to whether the contraception mandate withstands strict scrutiny. The government objective, to lower the economic burden placed on women seeking birth control, would most likely be seen to be a pressing one. Further, in providing exemptions to religious organizations, the Obama Administration would seemingly have a strong argument for the law being sufficiently tailored. Nevertheless, it’s worth noting that regulations subject to strict scrutiny rarely survive. Given this fact, the case will largely turn on the question of whether a corporation is capable of religious belief.

The Big Lesson

In Big M Drug Mart, the SCC struck down the Alberta Lord’s Day Act, which required businesses to close on Sundays, for violating section 2(b) of the Charter. The litigant, Big M Drug Mart, was a corporation charged under the impugned legislation with unlawfully carrying on the sale of goods on a Sunday. In defending the law, the Attorney General for Alberta challenged the standing of Big M Drug Mart to raise the question of a possible infringement of religious freedom, given its status as a corporation.

In considering whether Big M Drug Mart could even bring the claim, Chief Justice Dickson relied on section 52 of the Constitution Act, which sets out the principle of constitutional supremacy. The corollary of this principle “is that no one can be convicted of an offence under an unconstitutional law” (para 38). Because the corporation in question was an accused for the purposes of the litigation, “[w]hether a corporation can enjoy or exercise religious freedom is therefore irrelevant” and a law “which itself infringes religious freedom is, by that reason alone, inconsistent with s.2(a) of the Charter” (para 40). In other words, the Court looked past the question of a corporation’s capacity for religious belief and focused exclusively on the unconstitutional effect of the law.

This is really what is at issue in Hobby Lobby and Conestoga Wood. Including corporations within the ambit of the First Amendment’s Free Exercise Clause invites a host of mind-numbing issues. In what ways does a corporation’s legal personhood overlap with that of its owners? If the religious beliefs of a corporation’s owners are sincerely held, does this allow it to impose those views on its employees? Can a company owned by Jehovah’s Witnesses deny a whole host of healthcare options to its employees on this basis?

A corporation’s right to speech is justified in that a corporation may be said to have pecuniary interests furthered by the right to free expression (e.g., advertising, lobbying, disclosure obligations). It’s much less obvious that a corporation benefits in any material way by its free exercise of religion. In coming to its decision, the Supreme Court should get to the heart of what is really at issue—the religious freedom of the owners. Does requiring employers to pay for their employees’ health insurance, some of which will go to covering forms of birth control that they disagree with, violate their religious freedom? And, if so, does the law survive on the basis of its narrowly tailored regulatory objective?