Court Confronts Religious Rights of Corporations
By ADAM LIPTAK, NY TIMES
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WASHINGTON — Hobby Lobby, a chain of crafts stores, closes on Sundays, costing its owners millions but honoring their Christian faith.

The stores play religious music. Employees get free spiritual counseling. But they do not get free insurance coverage for some contraceptives, even though President Obama’s health care law requires it.

Hobby Lobby, a corporation, says that forcing it to provide the coverage would violate its religious beliefs. A federal appeals court agreed, and the Supreme Court is set to decide on Tuesday whether it will hear the Obama administration’s appeal from that decision or appeals from one of several related cases.

Legal experts say the court is all but certain to step in, setting the stage for another major decision on the constitutionality of the Affordable Care Act two years after a closely divided court sustained its requirement that most Americans obtain health insurance or pay a penalty.

“The stakes here, symbolically and politically, are very high,” said Douglas Laycock, a law professor at the University of Virginia, citing the clash between religious teachings and the administration’s embattled health care law.

In weighing those interests, the Supreme Court would have to assess the limits of a principle recognized in its 2010 decision in Citizens United, which said corporations have free speech rights under the First Amendment. The question now is whether corporations also have the right to religious liberty.

In ruling for Hobby Lobby, the United States Court of Appeals for the 10th Circuit said it had applied “the First Amendment logic of Citizens United.”

“We see no reason the Supreme Court would recognize constitutional protection for a corporation’s political expression but not its religious expression,” Judge Timothy M. Tymkovich wrote for the majority.

A dissenting member of the court, Chief Judge Mary Beck Briscoe, wrote that the majority’s approach was “nothing short of a radical revision of First Amendment law.”

But Judge Harris L Hartz, in a concurrence, said the case was in some ways easier than Citizens United. “A corporation exercising religious beliefs is not corrupting anyone,” he wrote.

Among Hobby Lobby’s lawyers is Paul D. Clement, who led the 2012 Supreme Court challenge to the health care law. The new case opened another front in a larger war on the law, which, as Hobby Lobby put it in its Supreme Court brief, “imposes massive obligations on individuals and corporations alike in the process of attempting to fundamentally reorder the nation’s health care system.”

Mr. Clement’s main adversary in the 2012 case, Solicitor General Donald B. Verrilli Jr., told the justices that the 10th Circuit’s “unprecedented ruling” in this case would allow “for-profit corporations to deny employees the health coverage to which they are otherwise entitled by federal law, based on the religious objections of the individuals who own a controlling stake in the corporations.”

The Supreme Court is generally receptive to appeals from the solicitor general, especially when a lower court has effectively held a federal law unconstitutional. The justices are also apt to step in when, as here, lower courts are divided on an important legal question. Even Hobby Lobby, which won in the appeals court, agrees that the justices should hear the administration’s appeal.

“This is a perfect storm,” said Richard Garnett, a law professor at Notre Dame, adding that it is also a worrisome one. “Debates about campaign finance in Citizens United and abortion and Obamacare,” he said, “could distort the court’s analysis of religious freedom.”

Hobby Lobby was founded in 1970 in Oklahoma City by David Green, and it now has more than 500 stores and 13,000 employees of all sorts of faiths. Mr. Green and his family own Hobby Lobby through a privately held corporation.

The Greens told the justices in their brief that some drugs and devices that can prevent embryos from implanting in the womb are tantamount to abortion and that providing insurance coverage for those forms of contraception would make the company and its owners complicit in the practice. They said they had no objection to 16 other forms of contraception approved by the Food and Drug Administration, including condoms, diaphragms, sponges, several kinds of birth control pills and sterilization surgery.

But Hobby Lobby’s failure to offer comprehensive coverage could, it said, subject it to federal fines of $1.3 million a day. Dropping insurance coverage for its employees, it added, would be disruptive and unfair and lead to fines of $26 million a year.

Mr. Verrilli countered that requiring insurance plans to include comprehensive coverage for contraception was justified by the government’s interest in “the promotion of public health” and in ensuring that “women have equal access to health care services.” Doctors rather than employers should decide which form of contraception is best, he added.

The administration has excluded many religious organizations from the law’s requirements; it has grandfathered some insurance plans that had not previously offered the coverage; and, under the health care law, small employers need not offer health coverage at all. In June, a federal judge in Tampa, Fla., estimated that a third of Americans are not subject to the requirement that their employers provide coverage for contraceptives.

But the administration drew a line at larger, for-profit, secular corporations.

“Congress has granted religious organizations alone the latitude to discriminate on the basis of religion in setting the terms and conditions of employment, including compensation,” the Justice Department told the 10th Circuit appeals court, in Denver.

“No court has ever found a for-profit company to be a religious organization for purposes of federal law,” the brief went on. “To the contrary, courts have emphasized that an entity’s for-profit status is an objective criterion that allows courts to distinguish a secular company from a potentially religious organization, without conducting an intrusive inquiry into the entity’s religious beliefs.”

The appeals court disagreed, ruling that Hobby Lobby is a “person” for purposes of the relevant federal law, the Religious Freedom Restoration Act of 1993.

Religious liberty, Judge Tymkovich wrote, cannot turn on whether money changes hands. “Would an incorporated kosher butcher really have no claim to challenge a regulation mandating non-kosher butchering practices?” he asked.

Other federal appeals courts considering challenges to the health care law’s so-called contraception mandate have ruled that the 1993 law does not apply to corporations.

After finding that Hobby Lobby was entitled to the law’s protections, the 10th Circuit went on to say that the company’s sincere religious beliefs had been compromised without good reason, noting the limited number of contraception methods at issue and the many employers exempt from the law’s requirements.

Professor Laycock said that only one thing was certain about the issues presented in the case, Sebelius v. Hobby Lobby Stores, No. 13-354.

“They’re almost sure to take it,” he said of the justices, “and no one has any idea how it’s going to come out.”