Secular, For-Profit Corporations Can't Exercise Religion: 3rd Cir.

The Patient Protection and Affordable Care Act, aka Obamacare, is not without its detractors -- the Republican-controlled House has voted to repeal it 37 times, reports The Washington Post. But what is not achieved through the legislative process, people are hoping to achieve with the help of the judiciary.

Conestoga Wood Specialties Corporation, is a secular, for-profit, closely-held, family-owned company (say that fast three times). The Hahns, the family that owns Conestoga, are Mennonites who had a problem with two drugs they had to provide through their group health plans: the morning-after pill and the week-after pill. They claimed that Conestoga's right to free exercise of religion, under the First Amendment and the Religious Freedom Restoration Act ("RFRA"), was violated because the health plan required they make the drugs available.

The Third Circuit disagreed.

Can a Corporation Exercise Religion?

The court had to determine whether a for-profit, secular corporation could exercise religion. Conestoga relied on the U.S. Supreme Court's decision in Citizen's United, which held that "the Government may not suppress political speech on the basis of the speaker's corporate identity." But the Third Circuit was not convinced by this argument.

Looking back at Supreme Court precedent, the Third Circuit noted that First Amendment cases relating to political speech and free exercise of religion were two separate, and distinct, areas of the law.

The court determined that whether a right was "purely personal" in nature had to be looked at in context of the "historic function" of protecting the right. Noting that corporations can't pray, worship, or observe sacraments, the court stated: "we simply cannot understand how a for-profit, secular corporation -- apart from its owners -- can exercise religion."

The Third Circuit also expressly rejected the Ninth Circuit's "passed through" theory, creating a circuit split.

Circuit Split and Practical Implications

The Ninth Circuit has held that small family-owned corporations are an extension of the owners' personal beliefs, and allowed the companies standing to assert free exercise claims. The Third Circuit, however, found that the Ninth Circuit's holding flies in the face of established corporate law -- that a corporation is a distinct legal entity with its own rights and obligations. The court noted that business owners can't pick and choose when they will act distinctly at their own whim.

Finally, the Third Circuit rejected the RFRA claim because under the plain reading of the statute, the government could not "burden a person's exercise of religion."

Conestoga is an important case for many reasons. First, it creates a circuit split on the "passed through" theory as noted above. Second, it creates a circuit split with the Tenth Circuit's Hobby Lobby decision that ruled that a for-profit corporation does have Article III standing to pursue a free exercise of religion claim.

This is not the last we'll see of this issue; in fact, it's just the beginning. We're predicting this very issue will be addressed in almost all circuits -- and eventually the U.S. Supreme Court.

Related Resources:

• Hobby Lobby Has Right to Refuse Contraception Mandate (FindLaw's U.S. Tenth Circuit Blog)
• Stormans Inc. v. Selecky (FindLaw's CaseLaw)
• Stormans, Inc. v. Selecky, No. 07-36039 (FindLaw's U.S. Ninth Circuit Blog)
• 5 Things Corporate Counsel Need to Know About Obamacare (FindLaw's In House)