Obamacare: are corporations “people” that can exercise religious freedom?

January 28, 2014 | By TIMOTHY SANDEFUR

The Supreme Court is poised to hear the next round of cases challenging the constitutionality of Obamacare, this time concerning the “contraception mandate” which requires employers to buy their employees insurance policies that include coverage for contraception and abortion. Religious employers across the country—including Hobby Lobby stores and many others—filed suit arguing that this requirement interferes with their rights under the Free Exercise Clause of the First Amendment and under a statute called the Religious Freedom Restoration Act.

But can these companies—which are not churches, but for-profit corporations—assert religious freedom rights? That’s the issue Pacific Legal Foundation argues in a friend-of-the-court brief, filed today.

The Third Circuit Court of Appeals (and, later the D.C. Circuit) answered the question no. While the Supreme Court has said that for-profit corporations have constitutional rights to private property, freedom of speech, and other things, the Third Circuit said corporations can’t assert Free Exercise rights because they “do not pray, worship, observe sacraments…apart from the intention and direction of their individual actors.” The Tenth Circuit, on the other hand, answered yes. Non-profit corporations, such as churches, have always been considered “persons” under the Constitution’s religion clauses, and there’s no reason to differentiate between them and for-profit companies. We agree with the Tenth Circuit.

The issue of “corporate personhood” has been a hot topic, particularly since the Supreme Court’s decision in Citizens United, which galvanized leftists to argue that corporations should be stripped of constitutional protections. But as we argue in our brief, not only has the law regarded corporations as “persons” since ancient Roman times, but they deserve constitutional protections. A corporation’s rights are really just the rights of the people who choose to do business as a corporation. To deny corporations constitutional protections would be to discriminate against the constitutional rights of people who use the corporate form.

It’s sometimes argued that corporations are “creatures of the state.” But that’s not true. In ancient days, corporations were, indeed, created by a government charter. But for almost 200 years now, corporations have been purely private enterprises—contractual relationships that people willingly enter into. The corporate “charter”—in those states that even use that term, still—is not a privilege the government gives people, but is simply a recognition of the agreements people have made among themselves; agreements that deserve legal respect. A corporation is no more a “creature of the state” than a marriage or the title to your house. There’s no ground for arguing that the issuing of a corporate license entitles the government to restrict the freedoms of the people who do business as a corporation. We already recognize these facts when it comes to First Amendment rights of corporations like the New York Times, or the right of corporations not to have their property taken without just compensation or their offices searched without a warrant. Why not the right of freedom of religion, as well?

People frequently exercise their religious freedom through corporations, including for-profit corporations. The Interfaith Center on Corporate Responsibility—an organization that urges people to use their shareholder status to influence corporations to act in accordance with religious values—reports that some $2 trillion in corporate assets are dedicated to what they call “socially responsible investing.” Whatever one thinks of their efforts, they certainly qualify as the exercise of religious freedom in the corporate form. Or take the simple case of kosher butchers—Hebrew National is a for-profit entity engaged in kosher meat production, and courts have already allowed that company to assert Free Exercise rights.

Religious institutions often blend for-profit and non-profit activities. The Amana Colonies and the Shakers in nineteenth century America were religious communes engaged in economic production; the Amana Colonies eventually evolved into today’s appliance company. The LDS church owns several for-profit entities that produce revenue applied to religious ends. In fact, the United States owes its own existence to religious “corporations” that blended for-profit and non-profit activities: the Massachusetts Bay Colony, Plymouth Colony, and other enterprises that brought religious settlers to the New World were chartered as for-profit commercial “joint stock companies” (ancestor of today’s corporations).

Our brief, joined by our friends at the Reason Foundation and the Individual Rights Foundation, argues that people put their values to work not only in non-profit enterprises, but in the for-profit corporations that they operate. Whatever one thinks of the constitutionality of the “contraception mandate” itself, the Supreme Court should make clear that the First Amendment applies to everyone.