Suggested citation: Ron Fein, Why Every Single Supreme Court Justice Got Hobby Lobby Wrong, JURIST- Hotline, Sep. 18, 2014, http://jurist.org/hotline/2014/09/ron-fein-hobby-lobby.php
As Hobby Lobby’s case worked its way through the courts, both sides took one thing for granted: they assumed that the Supreme Court had already extended the religious freedom protections of the First Amendment and the Religious Freedom Restoration Act (RFRA) to nonprofit corporations. Under that assumption, the next question was whether that supposed rule should be extended to for-profit corporations. But what if the assumption is wrong: what if nonprofit corporation—even churches—don’t themselves independently hold religious free exercise rights?
When we think of corporations, we usually think of businesses, like ExxonMobil, Wal-Mart—or Hobby Lobby. But there are also nonprofit corporations, like the Sierra Club and the National Right-to-Life Committee. Many religious congregations, such as churches, synagogues or mosques, find it useful for legal purposes to incorporate.
That brings us to Hobby Lobby. In the past few decades, there were a handful of Supreme Court cases involving religious claims where the named plaintiff was an incorporated church. But does that mean that the church corporation itself had religious rights?
Nearly everyone reading these cases assumed that the nonprofit corporations themselves have religious freedom rights. And so the argument in Hobby Lobby was about whether for-profit corporations also have religious rights.
But this assumption is wrong. Incorporated nonprofit religious institutions—including churches—don’t have, and never had, their own independent religious rights. They come into court as representatives of their members.
Let’s look at some of those cases. In Hobby Lobby, Justice Alito wrote: “[w]e have entertained RFRA and free-exercise claims brought by nonprofit corporations.” His first example was Gonzales v. O Centro Espírita Beneficiente União do Vegetal, a 2006 decision involving a request for a RFRA exemption from federal anti-drug laws by a small (incorporated) church whose members sought to use a hallucinogenic tea in religious ceremonies.
But the O Centro decision doesn’t say anything about religious rights for nonprofit corporations; it doesn’t even mention the word “corporation.” Rather, the opinion explained that RFRA should yield an “exception for the 130 or so American members of the [church] who want to practice” their religion. Members of the church: that’s people, not corporations.
It turns out that the church, which is incorporated, filed its RFRA suit as “a New Mexico corporation on its own behalf and on behalf of all its members in the United States.”
Their case was based on a legal concept known as associational standing. To file a case in federal court, you must show that you suffered harm from whatever the defendant did or didn’t do, and this violated your legal rights. This is called standing. And to have standing, you have to argue your own rights; you can’t come into court and argue that the defendant violated someone else’s legal rights.
But there are exceptions, and one of the most important is associational standing. This means that an association can bring a claim that really belongs to its members. Let’s take environmental law. Suppose a factory pollutes a river and the Sierra Club wants to sue the factory under the Clean Water Act [PDF]. But how is the Sierra Club harmed? The polluted water isn’t coursing through the Sierra Club’s San Francisco headquarters. Instead, the Club needs to identify a few members who regularly kayak through that river. Those members fill out affidavits saying that they can’t kayak the river any more because the pollution is making it so bad. And then—here’s the legal device—the Sierra Club can bring the lawsuit on its members’ behalf, because people pay dues to the Sierra Club to do exactly this sort of thing, and the Sierra Club’s lawyers can present the case in court more effectively than a few individual kayakers could.
That’s the magic of associational standing: it lets an association that has no injury or legal right of its own file a lawsuit on behalf of its members.
Let’s return to O Centro. The church’s lawyers were apparently worried that the government might pull some clever maneuver to get the case kicked out of court, because they came up with every possible plaintiff you could imagine: the church on its own behalf; the church using associational standing to argue on behalf of its members; and then 15 of those members (more than 10 percent of its total membership!) as individual plaintiffs.
And because of this abundance of plaintiffs, none of the courts involved spent too much time worrying about whether the church corporation itself had religious rights. After all, at least one of the plaintiffs could raise the claim for a RFRA exemption, so why quibble over who gets to be a plaintiff?
Something similar happened in another case that Alito mentioned, Church of the Lukumi Babalu Aye, Inc. v. Hialeah, involving a ban on animal slaughtering practices that was targeted at the Santería religion. The case is named after the first plaintiff on the complaint: the church corporation. But it could just as easily been called Pichardo v. Hialeah, after the other plaintiff: Ernesto Pichardo, a Santería priest, who was listed second. And the religious rights of Santería practitioners like Ernesto Pichardo, not any corporation’s rights, were at stake in the case. Indeed, the Supreme Court opinion focused on the “religious exercise of Santería churchmembers.” Same with another case that Alito cited, Hosanna-Tabor Evangelical Lutheran Church and School v. Equal Employment Opportunity Commission, which held that churches are exempt from discrimination law when hiring and firing ministers. The problem with applying discrimination law to ministers isn’t that the government is forcing a minister on the church corporation, but on its congregants.
We can now understand the court’s previous cases in a new way. When an incorporated church challenges a restriction on its members’ right to engage in religious activities, it can do so not because the corporation itself has any religious rights, but because its members have religious rights.
So both the majority and the dissent in Hobby Lobby got it wrong: O Centro and similar cases don’t establish that nonprofit corporations have a special status under the law of religious exercise. Rather, they’re just examples of an associational standing concept that applies across many different areas of law. The church corporations didn’t have, and didn’t need, their own religious rights; they were just asserting the rights of their members using associational standing.
Once we understand O Centro and related cases in this way, we see that both Alito’s majority opinion and Justice Ginsburg’s dissent asked the wrong question in Hobby Lobby. The question shouldn’t be whether the court’s “tradition” of “special solicitude” for nonprofit corporations raising religious freedom claims should be extended to for-profit corporations. Rather, we start with the baseline assumption that corporations don’t have religions and ask whether for-profit corporations can use associational standing to represent their investors’ religious claims in court.
The Supreme Court has addressed this issue in other contexts. Membership-oriented nonprofit organizations, the court has explained, can typically rely on associational standing because “the primary reason people join an organization is often to create an effective vehicle for vindicating interests that they share with others.” And with a nonprofit, we rarely worry about whether an organization seeking a religious exemption is truly representing the religious interests of its members, or whether it’s all a money-making ruse, since the nonprofit can’t distribute extra funds as profits.
That’s not true of business corporations. They don’t have members—they have investors. They aren’t associations of individuals joined together for a common religious purpose—they’re separate legal entities that are authorized by state law to issue stock to be purchased by stockholders. These corporations can’t raise associational standing claims on behalf of their stockholders.
That’s not to say that for-profit business corporations can never raise someone’s religious claims. In some cases, a business can argue that the rights of a third party are being violated, but the third party isn’t in a good position to bring the case directly. For example, if the government banned kosher slaughter, a kosher food company could challenge the law by arguing that its customers’ religious rights were at stake. The company might argue that it could hire fancier lawyers than individual customers and it would have factual information about slaughterhouse practices that customers wouldn’t have. And it would be arguing for a well-established standing exception, not a radical extension of the law.
But in Hobby Lobby, these factors didn’t apply. The company didn’t bring its claims on behalf of its customers, or employees—indeed, it essentially brought its claim against its employees’ interests.
So the question that the court should have asked was whether Hobby Lobby—a corporation with no religion, which has special state-granted privileges that (unlike a nonprofit) enable it to accumulate much more wealth for its investors than would be possible without the privileges of incorporation—should be able to use associational standing to raise those investors’ claims. And under traditional rules of both standing and corporate law, corporations aren’t associations of their stockholders and can’t raise these types of claims.
Why does this way of thinking about corporate rights claims matter?
First, this approach will help us think more clearly about religious nonprofit organizations that aren’t churches, like religiously-affiliated hospitals. It forces us to ask: exactly whose religious rights are they claiming?
Second, the court often works out its corporate rights thinking with non-profits and then extends those rights to business corporations. For example, consider Citizens United, which allows unlimited corporate spending in elections. The court started by describing Citizens United itself (a nonprofit) as an “association of citizens” and then generalized to all corporations, including multinational conglomerates. Similarly, inHobby Lobby, the majority started by wrongly assuming that O Centro and similar cases had already established that nonprofit corporations could raise religious claims (when in fact the better analysis involved associational standing) and then generalized to for-profit corporations. The more the justices do this, the easier they’ll find it to blur the differences between a citizens’ association and a for-profit business corporation.
In Hobby Lobby, a misinterpretation of a few cases involving churches and their worshippers led to 13,000 employees of a for-profit retail enterprise losing insurance coverage, as will many thousands more working at other companies trying to claim this new exemption. To fix this, we must start with one basic premise: corporations, no matter what type, are not people.
Ron Fein is the Legal Director for Free Speech for People. He submitted an amicus brief to the Supreme Court in the Contestoga Wood Specialties Corporation case.