In Hercules Industries v. Department of Health and Human Services, the Colorado corporation Hercules argued that the Affordable Care Act's requirement that employer health insurance plans offer family planning violates the Religious Freedom Restoration Act (“RFRA”). Specifically, Hercules argues that RFRA is violated because free exercise of religion is substantially burdened.”
Hercules Industries, Inc. is a Colorado corporation owned by William, Paul and James Newland and Christine Ketterhagen. In reaction to the passage of the Affordable Care Act, Hercules amended its articles of incorporation:
[F]or the past year and a half the Newlands have implemented within Hercules a program designed to build their corporate culture based on Catholic principles. Id. at ¶ 36. Hercules recently made two amendments to its articles of incorporation, which reflect the role of religion in its corporate governance: (1) it added a provision specifying that its primary purposes are to be achieved by “following appropriate religious, ethical or moral standards,” and (2) it added a provision allowing members of its board of directors to prioritize those “religious, ethical or moral standards” at the expense of profitability.
Hercules moved for a preliminary injunction. In its discussion of this motion, the court stated:
These arguments pose difficult questions of first impression. Can a corporation exercise religion? Should a closely-held subchapter-s corporation owned and operated by a small group of individuals professing adherence to uniform religious beliefs be treated differently than a publicly held corporation owned and operated by a group of stakeholders with diverse religious beliefs? Is it possible to “pierce the veil” and disregard the corporate form in this context? What is the significance of the pass-through taxation applicable to subchapter-s corporations as it pertains to this analysis? These questions merit more deliberate investigation. [Emphasis supplied.]The court continued its opinion with no further discussion of this dispositive issue, and proceeded to grant the requested relief. I will proceed to discuss the omitted question.
Corporations possess a myriad of constitutional rights, including under the First Amendment. In Citizens United v. FEC, the Supreme Court considered the issue of permissible government restrictions on corporate spending on political advertising. The Court stated:
The Court has recognized that First Amendment protection extends to corporations. Bellotti, supra , at 778, n. 14 (citing Linmark Associates, Inc. v. Willingboro , 431 U. S. 85 (1977) ; Time, Inc. v. Firestone , 424 U. S. 448 (1976) ; Doran v. Salem Inn, Inc. , 422 U. S. 922 (1975) ; Southeastern Promotions, Ltd. v. Conrad , 420 U. S. 546 (1975) ; Cox Broadcasting Corp. v. Cohn , 420 U. S. 469 (1975) ; Miami Herald Publishing Co. v. Tornillo , 418 U. S. 241 (1974) ; New York Times Co. v. United States , 403 U. S. 713 (1971) (per curiam); Time, Inc. v. Hill , 385 U. S. 374 (1967) ; New York Times Co. v. Sullivan, 376 U. S. 254 ; Kingsley Int’l Pictures Corp. v. Regents of Univ. of N. Y. , 360 U. S. 684 (1959) ; Joseph Burstyn, Inc. v. Wilson , 343 U. S. 495 (1952) ); see, e.g., Turner Broadcasting System, Inc. v. FCC , 520 U. S. 180 (1997) ; Denver Area Ed. Telecommunications Consortium, Inc. v. FCC , 518 U. S. 727 (1996) ; Turner , 512 U. S. 622 ; Simon & Schuster , 502 U. S. 105 ; Sable Communications of Cal., Inc. v. FCC , 492 U. S. 115 (1989) ; Florida Star v. B. J. F. , 491 U. S. 524 (1989) ; Philadelphia Newspapers, Inc. v. Hepps , 475 U. S. 767 (1986) ; Landmark Communications, Inc. v. Virginia , 435 U. S. 829 (1978) ; Young v. American Mini Theatres, Inc. , 427 U. S. 50 (1976) ; Gertz v. Robert Welch, Inc. , 418 U. S. 323 (1974) ; Greenbelt Cooperative Publishing Assn., Inc. v. Bresler , 398 U. S. 6 (1970) .There is logic to this view in that a corporation does in fact engage in "speech" of many varieties. However, a for profit secular corporation does not "exercise" religion because it does not hold beliefs. Corporations serves purposes. For profit corporations generally serve the purpose of making money. Again, with regard to political speech, lobbying for favorable laws that best serve the corporate purpose of making money is something for profit corporations would logically do.
Citizens United acknowledged that "The Court has upheld a narrow class of speech restrictions that operate to the disadvantage of certain persons, but these rulings were based on an interest in allowing governmental entities to perform their functions." The question then, as framed by the court was whether the particular restrictions at issue were permitted by the First Amendment. As we know now, the Court ruled they were not permitted by the First Amendment.
However, the concept of a for profit corporation exercising religion is novel, if not unprecedented. It is, to put it charitably, a question of first impression. In the Hercules case, it is a dispositive question and one a court must answer before deciding the questions presented in that case. Remarkably, the court in Hercules recognized this fact and did not discuss much less decide the question.
It is obvious that a for profit corporation does not have views on religion. It is a legal fiction after all. But might the exercise of religion be a corporate purpose? I suppose one imagine a scenario where a corporation is organized with the primary purpose being the exercise of religion. But Hercules Industries does not present such a scenario. As the court noted, Hercules is "engaged in the manufacture and distribution of heating, ventilation, and air conditioning (“HVAC”) products and equipment." That is what Hercules does. Hercules does not exercise religion.
After the fact, and in response to the passage of ACA, the owners of Hercules have now defined a corporate directive that 'its primary purposes are to be achieved by “following appropriate religious, ethical or moral standards,' and (2) it added a provision allowing members of its board of directors to prioritize those 'religious, ethical or moral standards' at the expense of profitability.'" Does this change cause the Hercules corporation to engage in the exercise of religion? No it does not. Hercules still engages in the exact same activity as it did prior to the adoption of these directives as a reaction to the passage of the Affordable Care Act.
Consider for a moment the logical conclusion to the view, apparently adopted sub silentio by the court, that Hercules is engaged in the exercise of religion. What laws would then be scrutinized for the question of whether they impinged on the free exercise of religion?
We all think of the exercise of religion as a matter of personal conscience. Even Ross Douthat does not cross the bridge that the court in Hercules does:
You can see this confusion at work in the Obama White House’s own Department of Health and Human Services, which created a religious exemption to its mandate requiring employers to pay for contraception, sterilization and the days-after pill that covers only churches, and treats religious hospitals, schools and charities as purely secular operations. The defenders of the H.H.S. mandate note that it protects freedom of worship, which indeed it does. But a genuine free exercise of religion, not so much.If Ross Douthat does not argue for the exercise of religion by a secular for profit corporation, who might besides the Hercules court? I leave you with one final thought: if Hercules Industries is engaged in the free exercise of religion, would it violate the separation of church and state for the government to do business with Hercules (or any other corporation engaged in the "exercise of religion"?
The expansion of religion into our secular world is a complicated business when we are considering overtly religious institutions. To extend the view to secular for profit corporations will lead to a whole other level of chaos.
NOTE: I am writing solely about the question presented in the title. There are other issues with the decision in Hercules that deserve consideration.