Corporate Accountability

The Sixth Circuit’s Common Sense, Constitution Day Ruling: Business Corporations Do Not Exercise Religion, People Do

The next big test of corporate personhood is inching closer to Supreme Court review.  Deepening an already existing circuit split, the Sixth Circuit has become the second federal court of appeals to reject the argument that business corporations can evade the provisions of the Affordable Care Act and its regulations requiring them to provide their female employees with access to the full range of FDA-approved contraceptives because the law allegedly burdens the corporations’ right to the free exercise of religion.   In a ruling handed down on Constitution Day itself, the Sixth Circuit unanimously held that Autocam Corporation, a for-profit corporation engaged in auto manufacturing, was not a “person capable of religious exercise as intended by RFRA [the Religious Freedom Restoration Act]” and thus was unlikely to succeed on the merits of its claim that the Affordable Care Act’s contraceptive coverage requirement violated RFRA.  Respecting the Constitution’s promise of religious liberty as a fundamental human right owed to all persons, the Sixth Circuit rejected Autocam’s efforts to impose its owners’ religious beliefs on its employees, many of whom have a different set of religious views and want and need access to the full range of contraceptives.     

The court’s opinion, authored by Judge Julia Smith Gibbons, a conservative jurist appointed by President George W. Bush, made two important holdings.  First, the court held that the Kennedy family, Autocam’s individual owners, cannot invoke their own religious beliefs to justify disregarding the ACA’s contraception coverage requirement, a legal obligation that falls on Autocam, not its individual owners. Invoking the black letter law that “shareholders of a corporation cannot bring claims intended to redress injuries to a corporation, even when the corporation is closely held,” Judge Gibbons explained that “[w]e are without authority to ignore the choice the Kennedys made to create a separate legal entity to operate their business.”  To permit individual owners to assert their own free exercise rights to redress an injury to the corporation “abandon[s] corporation law doctrine at the point it matters most.”  This is no technical detail.  The individual owners of Autocam are seeking to raise their own religious beliefs – which of course are protected by the Constitution and RFRA – because the corporation’s claim that it has free exercise rights is such a weak one. (Indeed, it is meritless.)  Judge Gibbons and her colleagues were right to reject this attempt to circumvent the very foundations of corporate law.

Second, in her opinion for the court, Judge Gibbons concluded that “Congress did not intend to include corporations primarily organized for secular, profit-seeking purposes as ‘persons’ under RFRA,” agreeing with the Third Circuit’s prior ruling in Conestoga Wood Specialties Corp. v. Secretary of the U.S. Dep’t of Health and Human Services (which we discussed at length here).  Judge Gibbons reasoned that, as the Act’s title suggests, “Congress’ express purpose in enacting RFRA was to restore Free Exercise claims,” previously recognized by the Supreme Court, “claims which were very fundamentally personal,” that is exercised by human beings. Far from serving a restorative purpose, “[r]eading the term ‘person’ in the manner suggested by Autocam would lead to a significant expansion of the scope of the rights the Free Exercise Clause protect[s] . . . .  ‘During the 200-year span between the adoption of the First Amendment and RFRA’s passage, the Supreme Court consistently treated free exercise rights as confined to individuals and non-profit religious organizations.”  Nothing in RFRA, Judge Gibbons concluded, required overriding the basic, common sense difference between business corporations, which are given special privileges to make running a business more lucrative, and churches and other religious bodies, which exist to foster the exercise of religion by communities across our nation.   

Business corporations, hoping to build on their huge success in the Roberts Court, have pushed the idea that for-profit corporations should have the same constitutional right to the free exercise of religion as individuals have, even though corporations cannot, in any meaningful sense, pray, express devotion to a God, or act on the basis of a religious conscience.   But, as Judge Gibbons showed in Autocam, business corporations do not exercise religion, people do.  Her Constitution Day ruling is a fitting tribute to our Constitution’s fundamental protection of basic human rights.