Hobby Lobby breathes again

When the U.S. Supreme Court handed down its Citizens United decision in 2010, providing First Amendment protections for corporations’ political speech, religious business owners didn’t know how useful that ruling would become three years later in challenges to Obamacare.

At the end of June the 10th U.S. Circuit Court of Appeals became the first to rule that corporations with religious business owners could be entitled to constitutional religious freedom protections. The 165-page decision based its argument in part on the Citizens United decision. The question of whether corporations have religious freedom protections is largely new to courts.

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

A full panel of the 10th Circuit ruled 5-3 that the federal contraceptive mandate inflicted significant harm on craft retailer Hobby Lobby, owned by the evangelical Green family. This came after a two-judge panel of the 10th Circuit had dismissed Hobby Lobby’s petition for a preliminary injunction in December.

At the latest ruling’s direction, a district judge immediately reheard the case and granted Hobby Lobby a temporary restraining order against the mandate, just as the company faced massive fines starting July 1.

Hobby Lobby’s employee health plan currently covers 16 of the 20 FDA-approved contraceptives: its owners object to the abortifacients Plan B and Ella, as well as two intrauterine devices. Without the restraining order, the company would face fines of $1.3 million a day for not providing the full menu of contraceptives, adding up to about $475 million a year.

With the administration’s announcement this month that it will delay the requirement that employers provide health insurance until 2015, Hobby Lobby could theoretically drop employee health insurance altogether without incurring any federal fines for another year. But the company has said it wants to continue to provide health coverage for its employees, and so the contraceptive mandate remains in effect. Even with the delay of the employer mandate, if Hobby Lobby provides its employees with insurance coverage, it must include contraceptives or face the daily $1.3 million fines.

A recent Obama appointee, Judge Robert Bacharach, joined the court’s majority agreeing the contraceptive mandate harmed Hobby Lobby under the Religious Freedom Restoration Act. But he didn’t agree with the court’s ruling that it was a constitutional violation. Other circuit courts have also granted injunctions to religious business owners, but not on constitutional grounds.

The 10th Circuit explained its position, noting that constitutional religious freedom covers more than the freedom of thought:

“[A]t the time of the [First] Amendment’s inception in Congress, a competing formulation for the ‘free exercise of religion’ was ‘rights of conscience,’” Tymkovich wrote. “Congress chose exercise, indicating that, as the Supreme Court has frequently held, the protections of the Religion Clauses extend beyond the walls of a church, synagogue, or mosque to religiously motivated conduct, as well as religious belief.”

He continued: “[S]incerely religious persons could find a connection between the exercise of religion and the pursuit of profit. … A religious individual may enter the for-profit realm intending to demonstrate to the marketplace that a corporation can succeed financially while adhering to religious values. As a court, we do not see how we can distinguish this form of evangelism from any other.”

The Obama administration released its finalized contraceptive mandate around the same time as the 10th Circuit’s ruling, saying in the regulation, “The departments are unaware of any court granting a religious exemption to a for-profit organization, and decline to expand the definition of eligible organization to include for-profit organizations.”

The issue is likely to find its way to the Supreme Court soon.