Fourth Circuit distinguishes Concepcion and holds arbitration provision unenforceable for lack of mutual consideration

A dispute arising out of an inability to obtain a mortgage for the construction of a new million-dollar home in Maryland has resulted in a Fourth Circuit decision holding an arbitration provision unenforceable for lack of consideration. Judge Davis wrote the opinion for the court in Noohi v. Toll Bros, Inc., in which Judge King and Judge Shedd joined. Among other things, the opinion contains a discussion of appellate jurisdiction under the Federal Arbitration Act, issues of contract interpretation under Maryland law, and the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011).

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Fourth Circuit rejects copyright infringement claim arising out of similar residential architecture designs

The Fourth Circuit affirmed the grant of summary judgment to the defendant in a copyright infringement claim brought by a Charlotte, NC architecture firm (Building Graphics, Inc.) against a multi-state building company (Lennar Corp.) and an architecture firm hired by that company (Drafting & Design, Inc.). The appellate court concluded that the plaintiff firm had not “marshaled sufficient evidence to support a finding that there exists a reasonable possibility that [the defendants] had access to its copyrighted plans.” Judge Davis wrote the opinion for the court in Building Graphis v. Lennar Corp., in which Judge Keenan and Judge Gibney (EDVA) joined. (For those who are interested in the potential similarities, an appendix to the opinion includes floor plans and pictures of the houses.)

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Fourth Circuit rejects psychic’s free speech and free exercise challenges to Chesterfield County (VA) regulatory scheme

The Fourth Circuit today affirmed the grant of summary judgment to Chesterfield County (VA) on free speech, free exercise, RLUIPA, and equal protection challenges brought by Patricia Moore-King. Ms. Moore-King, who practices spiritual counseling as Psychic Sophie, had challenged various Chesterfield County licensing and zoning restrictions that apply to her because she fits within the County Code’s definition of a “fortune-teller.” (For news coverage of the oral argument, see here.) Judge Duncan wrote the opinion for the court, in which Chief Judge Traxler and Judge Wilkinson joined.

From a doctrinal perspective, two noteworthy aspects of  Moore-King v. County of Chesterfield are its discussion of the professional speech doctrine and its analysis of the difference between “religion” and a “way of life.”

With respect to professional speech, Judge Duncan writes that “the relevant inquiry to determine whether to apply the professional speech doctrine is whether the speaker is providing personalized advice in a private setting to a paying client or instead engages in public discussion and commentary.”

With respect to the definition of religion, Judge Duncan distinguishes between “personal and philosophical choices consistent with a way of life,” on one hand, and “deep religious convictions shared by an organized group deserving of constitutional solicitude,” on the other hand. The court determined that Moore-King’s practices fit in the philosophical-not-religious category: “That a wide variety of sources–the New Age movement, the teachings of Jesus, natural healing, the study of metaphysics, etc.–inform and shape Moore-King’s ‘inner flow’ does not transform her personal philosophical beliefs into a religion any more than did Thoreau’s commitment to Transcendentalism and idealist philosophy render his views religious.”

From a practice perspective, it may be worth noting that Chesterfield County prevailed even though the court knocked down its lead defense to the free-speech claim. That defense rested on two premises, both of which the panel rejected: “(1) fortune telling is inherently deceptive; and (2) inherently deceptive speech warrants no protection under the First Amendment.”

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Some JHW III for AMK and others re: same-sex marriage and indulging “the impulse to constitutionalize”

Times were different in 2006 when Judge Wilkinson wrote the Duke Law Journal piece excerpted below, Gay Rights and American Constitutionalism: What’s a Constitution For?

The California Supreme Court had not yet construed that State’s constitution to provide a right to same-sex marriage. But the citizens of Virginia were considering an amendment to that State’s constitution (an amendment that ultimately passed).

Judge Wilkinson argued against using a constitutional amendment as a ” preemptive strike against what some hypothetical court in some hypothetical jurisdiction might some day say.” He thought that “it would be astonishing for a court applying the rational basis scrutiny used in Romer and arguably in Lawrence to hold that a state lacks a rational basis to define marriage in its public policy, resting as that policy does on centuries of tradition and experience.” And  “[i]t would be particularly astonishing for courts to make such a pronouncement in the domestic relations sphere that lies at the heart of states’ competence.” Because “Lawrence and Romer are a far cry from this momentous step,” he argued, a constitutional amendment “would simply indulge the worst suspicions about the Supreme Court, preempting a decision that may never come.”

Some additional excerpts:

A tragedy is befalling American constitutional law. Both left and right in the gay rights struggle have indiscriminately indulged the impulse to constitutionalize.

* * *

Lawrence has been taken to task for overblown rhetoric, its overruling of precedent, its repudiation of traditional moral values, its reliance on unenumerated rights, and its resort to foreign law, most especially a decision of the European Court of Human Rights. Still, the result in Lawrence is eminently just and humane; the real flaw of the decision was to set the struggle over gay rights on a constitutional course. The Court’s lack of faith and trust in democracy was endemic. * * * [D]emocracy itself was on a decent and humane path, and the Court’s decision to preempt it with a problematic constitutional pronouncement was dangerously shortsighted.

* * *

It would be astonishing for a court applying the rational basis scrutiny used in Romer and arguably in Lawrence to hold that a state lacks a rational basis to define marriage in its public policy, resting as that policy does on centuries of tradition and experience. It would be particularly astonishing for courts to make such a pronouncement in the domestic relations sphere that lies at the heart of states’ competence.

* * *

The marriage amendment phenomenon then can only be viewed as a preemptive strike against what some hypothetical court in some hypothetical jurisdiction might some day say. This is an insufficient basis on which to amend foundational texts like state constitutions. A constitutional amendment is not by nature a preemptive device. It is instead an extraordinary mechanism–a tool of last resort properly reserved for situations which present no other choice. To amend a constitution preemptively, in anticipation of the proverbial rainy day, is, simply put, gratuitous. Such needless use of the amendment process is antithetical to the very essence of constitutional lawmaking and to the notion of a fundamental, guiding, and multigenerational charter. * * * Although a state with no other recourse is surely justified in responding to an activist constitutional interpretation, gratuitous amendments to our most basic documents of governance are hurtful and alienating in a way all their own.

* * *

It is the job of legislatures, not constitutions, to reflect evolving standards and to register change from whatever direction it may arrive. Statutes are more amenable to adjustment and modification than constitutional provisions are. And American constitutional tradition has always preserved for majorities the right to overrule courts on policy matters through statutory amendment rather than through the cumbersome process of constitutional change.

* * *

This difference between constitutional and statutory law bears quite directly on the question of gay rights. No constitution should ever assign its citizens pariah status. No constitution should relegate its citizens so symbolically and semipermanently to the shadows of national life. As a matter of statute, however, the balance changes. Statutes exist for the expression of values central to the imperative of social cohesion. Statutes legitimately articulate within limits a community’s aspirations for marriage, the raising of children, and the conduct of family life. It is in this difference between constitutional and statutory law that America strikes the balance between claims of personal rights and assertions of community prerogative.

* * *

[T]he chief casualty of the same-sex marriage debate has been the American constitutional tradition. Although electorates understandably are more concerned with results than with process, the Framers were concerned supremely with process, and that process has made possible our civility, self-governance, and greatness as a democratic nation. * * * It is not wrong for gay citizens to wish to share fully in the life of this country, to partake of its most basic and sacred institution, and to experience the intimacy, bonding, and devotion to another that only an institution such as marriage can bring. To embrace this view one need not believe that sexual infidelities will disappear, but only that many gay couples will make good on their vows and lead fuller, richer, and more productive lives as a result.

 That, however, is hardly the end of the matter. Marriage between male and female is more than a matter of biological complementarity–the union of the two has been thought through the ages more mystical and profound than the separate identities of each alone. Without strong family structures, there will be no stable and healthy social order, and alternative marriage structures may weaken the sanction of law and custom necessary for human families to flourish and children to grow. These are no small risks, and present trends are not often more sound than the cumulative wisdom of the centuries.

Is it too much to ask that judges and legislatures acknowledge the difficulty of this debate by leaving it to normal democratic processes? The dangers of doing otherwise are clear. When we  politicize our basic documents of governance, we deepen exponentially the wounds of civic life.

 The more passionate an issue, the less justification there often is for constitutionalizing it. Constitutions tempt those who are much too sure they are right. Certainty is, to be sure, a constant feature of our politics–some certainties endure; others are fated to be supplanted by the certainties of a succeeding age. Neither we nor the Framers can be sure which is which, but the Framers were sure that we should debate our differences in this day’s time and arena. Their message is as clear today as it was at the Founding: Leave Constitutions alone!

Excerpts from: J. Harvie Wilkinson III, Gay Rights and American Constitutionalism: What’s A Constitution for?, 56 Duke L.J. 545 (2006).

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Proceed with caution = Orval Faubus?

Defenders of Proposition 8 argue that it is reasonable for California to proceed with caution when changing such a basic social institution as marriage. (p. 48) In my view, a desire to proceed with caution is one good reason, among others, that many Californians had in mind when voting to repeal the judicial construction of California’s constitution to create a right to same-sex marriage.

The plaintiffs’ lawyers in Hollingsworth v. Perry reject this reason. They assert, among other things, that “[i]t cannot be the law that public concern about equal treatment itself can justify a denial of equal treatment.” Their authority for this exceedingly general proposition is Cooper v. Aaron. If the law allowed concern for equal treatment to justify denial of equal treatment, they argue, “then in Little Rock in 1958, the ‘drastic opposing action on the part of the Governor of Arkansas who dispatched units of the Arkansas National Guard to the Central High School grounds and placed the school “off limits” to colored students’ itself could have been enough to justify the continuation of segregation. Cooper v. Aaron, 358 U.S. 1, 9 (1958).” (p. 48)

That’s one way of looking at things, I suppose. Asserting that society should proceed with caution before rejecting the idea that marriage requires a man and a woman is just like calling out the troops to prevent black kids from attending school with white kids. I’ve never made that connection before. But the argument is just one step removed from equating (a) the claim that marriage requires a man and a woman, with (b) the claim that a “Negro woman” should not marry a “white man.” Loving v. Virginia. And that equation has been a staple of arguments for “marriage equality” for a long time.

I hope that the Supreme Court of the United States can appreciate distinctions that plaintiffs’ lawyers apparently cannot.

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What is Harvard Law Review’s new gender-based affirmative-action membership policy?

The Harvard Crimson reports that the Harvard Law Review “has expanded its affirmative action policy to include gender as a criteria in its editor selection process.” (HT: How Appealing) I hope that the editors know what they are doing, but I fear that they do not. In fact, the new policy may not be a “policy” at all, in that it apparently specifies only that gender ought to be taken into account in some unspecified way in making membership decisions. 

I hesitate to write because there may have been changes since I served as an editor on Volumes 114 and 115. But the affirmative action policy described in the Crimson Article now seems very much like the one in place then. According to the article, the prior policy was to set aside a certain number of slots to be filled by a “discretionary committee,” with the committee members taking into account “applicants’ grades, writing test scores, race, and any physical disabilities.” The way that these were to be taken into account was unspecified. And it appears that this remains unspecified. The new policy appears simply to charge the discretionary committee to “consider gender in addition to its existing criteria.”

I was a member of the discretionary committee for Volume 115. Our direction was just to take the various factors into account and then exercise our discretion. That is it. There were some very easy calls, such as applicants who missed the cut-off by a hair’s breadth mathematically. But there was no guidance at all for the tougher calls. The “policy” was nothing more than a list of factors.

At least as of Volume 115, the only people who knew what role various factors played in membership decisions for any given year were the members of that year’s discretionary committee (and even they did not know the identities of individuals selected through that process because everything was done through an anonymous numbering system). As far as the rest of the review was concerned, the committee was a black-box mechanism whose only inputs were a small number of editors and a list of factors for them to “consider” in some unspecified way. The trade-offs made each year were unknown, even to the incoming members of the discretionary committee.  If that structure remains the same, then there is no way to track what effect the existing affirmative action policies are having. And if there is no way to track that, there is no way to know what effect a change to the policies would have. Nor is there any way to know when the policies should end.

The Crimson quotes the incoming HLR President as saying that “it’s too soon to tell what impact the policy will have.” Unless the law review has some mechanism in place to provide accountability for how the discretionary committee exercises its discretion, however, the passage of time will not reveal too much about the effect of the policy. It’s a safe prediction that the number of female editors will drift upward and that some kind of mushy quota will result. But nobody will know what trade-offs the discretionary committee is making with the discretion it is charged with exercising. That is why I fear the editors do not know what “policy” they are adopting in adding gender to the discretionary committee’s list of factors to consider.

As Orin Kerr writes at Volokh Conspiracy, a policy like this has long been debated. The inability to know how the policy would function and the lack of a clearly articulated goal to be achieved by the policy have always seemed to me like good arguments against adopting such a policy. Apparently this year’s editors have found some way of overcoming those arguments.

(It should go without saying, but I should probably add that I would welcome factual corrections about the nature of the policies now in effect. In particular, if there is some kind of assessment or accountability mechanism in place, I would love to hear about it.)

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RFRA Sponsors’ Amici Curiae Brief in Hobby Lobby case

Several federal legislators who voted for the Religious Freedom Restoration Act of 1993 and continue to serve in the Senate or the House of Representatives filed an amici curiae brief in the Tenth Circuit earlier today. The lead amicus curiae is Senator Orrin G. Hatch, the principal Republican co-sponsor of RFRA.

I was pleased to have had the opportunity to work on the brief with superb lawyers not only here in Virginia (Matthew Fitzgerald and John Adams of McGuireWoods), but also in New Jersey (Brendan Walsh of PashmanStein) and Oklahoma (Andy Lester and Carrie Williams Vaughan of Lester, Loving & Davies). I will highlight various aspects of the brief in later posts, but for now I’ve posted the Statement of Interest and Summary of Argument below the fold.

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Conscience, con science, and coverage of contraceptives: Misuse of the IOM Report

A common claim made by supporters of the HHS Mandate is that the mandate is rooted in science: Congress and the HHS tasked an objective scientific organization, the Institute of Medicine, with developing coverage recommendations; that group met, considered the evidence, and conveyed their coverage recommendations.

Except that’s not what happened . . . at least according to the IOM itself.

The IOM Report that forms the basis of the HHS Mandate for employers of 50 or more employees to provide no-copay coverage of all FDA-approved contraceptives explicitly disclaims having considered most of the factors that go into intelligent insurance coverage recommendations. The committee that wrote the report understood its charge to focus on clinical efficacy; its assessments of what preventive services should be considered by HHS were rooted in guidance provided for primary caregivers and patients. The committee explicitly noted, by contrast, that “[c]overage decisions often consider a host of other issues, such as established practices; patient and clinician preferences; availability; ethical, legal, and social issues; and availability of alternatives.” [pp. 6-7, emphases added] In developing the IOM recommendations, “cost-effectiveness was explicitly excluded as a factor that the committee could use in developing recommendations, and so the committee process could not evaluate preventive services on this basis.” [7]

The 250-page report issued by the IOM not only explicitly disclaims coverage recommendations, but also chides the dissenting member of the committee for suggesting that the committee failed to consider how its report would be misused in formulating coverage recommendations. Rather than counter the dissent’s statement that the IOM report’s recommendations were based in large part on task force recommendations that “were never intended to provide a basis for insurance coverage determinations” [233, App. D], the majority of the committee noted that “cost considerations were outside the scope of the [committee’s] charge,” and that “HHS . . . may consider other factors including cost in its development of coverage decisions.” [235, App. D.]

All of this matters a great deal when evaluating claims about the government’s interest in forcing employers of 50 or more full-time employees to provide no-copay coverage of all FDA-approved contraceptives. The IOM report does not purport to address the relationship between no-copay insurance coverage of contraceptives and unintended pregnancy. The report cites some studies about related issues. But the report contains no evidence about the effect that the required coverage would have on the health outcomes of the relevant population.

To the contrary, the dissenting opinion notes–without contravention–that the extent to which “coverage of preventive service leads to a reduction in healthcare expenditure depends on the fraction of enrollees using the service before the service becomes covered and the magnitude of the response among enrollees who experience the reduction in out-of-pocket price.” [234 App. D.] This is common sense. If employees are using contraception because the benefits outweigh the costs regardless of insurance coverage, then their usage will not change once no-copay employer coverage is added. Instead, usage will remain constant and the mandate will only shift costs. The IOM report contains no discussion of cost-benefit considerations specific to mandated contraceptives coverage for women with full-time employment and benefits provided by an employer of fifty or more FTEs.

The problem for the government is even more acute in the cases brought by employers who offer group health plans that include no-copay coverage for most contraceptives and exclude only abortion-causing drugs and devices. The magnitude of any change in contraceptive use with and without those coverage must be really low. I have not seen any evidence (is there any?), but it is hard to believe that a woman with full-time employment and health benefits who has no-copay access to all other contraceptives will access emergency contraception (available over the counter for $40-$50) at a significantly lower rate than other women due to her employer’s lack of no-copay coverage for that back-up method of birth control.

None of this is to deny that the IOM Report is based in science. But that science is limited to clinical efficacy. And nobody disputes that FDA-approved contraceptives are clinically efficacious in reducing unintended pregnancy. That is not what the dispute is about. The dispute, rather, is about an insurance mandate. And the IOM Report simply does not speak to issues of cost and coverage. To invoke the IOM Report in response to conscience claims against the IOM-derived insurance mandate is not to fight fire with fire, but to drown conscience in con science.

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A thought on life tenure and Pope Benedict XVI’s resignation

Like everyone else, I was surprised by the announcement of Pope Benedict XVI’s resignation. But apparently unlike many, this announcement did not strike me as extraordinary. Rather, I was surprised to learn how unusual papal resignation has been throughout history.

It is more difficult for me to understand why fewer have resigned than it is to understand why Pope Benedict XVI would do so. The Pope has life tenure in office. But the purpose of life tenure–to guarantee independence–is compatible with voluntary resignation of office. The Petrine office is demanding in many ways. When its current holder freely arrives at the conclusion that he can no longer carry out all the demands of office, it is entirely appropriate for him to resign.

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JOTWELL review of Crowe, Building the Judiciary

JOTWELL has posted my short book review of a fantastic book on the growth of the federal judiciary as an institution of American government: Justin Crowe, Building the Judiciary: Law, Courts, and the Politics of Institutional Development (Princeton Univ. Press 2012).

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If RFRA protects for-profit corporations, what’s to stop Jehovah’s Witnesses’ companies from refusing coverage for blood transfusions?

An argument against recognizing RFRA coverage of for-profit corporations that seems to be popping up with some regularity goes like this: Once courts recognize the right of evangelical employers to buy insurance coverage that excludes abortion-causing drugs and devices, or the right of Catholic employers to buy insurance coverage that excludes contraceptives, there is nothing to stop Jehovah’s Witness employers from buying insurance coverage that excludes coverage for blood transfusions. See, e.g., Matthew Boudway at dotCommonweal (“Should an overzealous Jehovah’s Witness be able to get a group plan that excludes coverage for emergency blood transfusions, even if none of his employees are coreligionists?”); Americans United for Separation of Church and State (“The logic of Plaintiffs’ argument would transcend the provision of coverage for contraception. A Jehovah’s Witness could choose to exclude blood transfusions from his company’s health-insurance coverage.”).

This argument obviously appeals to some, or they would not bother making it. But there are several reasons that the argument is weak. And the fact that some advance this argument seriously in reasoned public debate may work against improving mutual understanding of religious liberty. Consider:

(1) Has any Jehovah’s Witness employer ever made such a claim? I’m not aware of any. Yet all of the legal tools available to make such a claim have been available for years. It is hard to see how the roll down the slippery slope to this location would get started by rulings about the contraceptives mandate if it has not yet started in some other way.

(2) RFRA prohibits the government from substantially burdening the exercise of religion. The religiously objecting employer under RFRA seeks protection from a government mandate. I’m not aware of any blood transfusion coverage mandate by the government–probably because there is no problem out there of employers limiting coverage in this particular way. If Jehovah’s Witness employers have not sought to limit coverage even when there is no mandate preventing them from doing so, figuring out the scope of their religious freedom in this regard seems like an idle exercise.

(3) The people putting this argument forward may not even understand what Jehovah’s Witnesses actually believe. While the religion teaches its adherents to avoid blood transfusions, it is not at all clear (at least to me, anyway) that the religion teaches this as a matter of the moral law binding on all, rather than a form of divine positive law that is not binding on those outside the community of religious adherents. (For an articulation of this distinction, see this discussion by Mark Shea.)

(4) RFRA is not a free pass for a religious exemption, but its application does trigger the requirement for the government to satisfy strict scrutiny, and the government can sometimes satisfy that test. The application of strict scrutiny should stop the roll down the slippery slope from reaching the point where the government cannot use certain regulatory tools to achieve a compelling government interest. Even assuming that a substantial burden analysis comes out the same, the compelling interest is easier to identify in with respect to emergency blood transfusions. The need for an emergency blood transfusion is unpredictable. And in comparison with emergency contraception, which is available over the counter at most pharmacies (for around $40 for a generic or $50 for a brand name), emergency blood transfusions are much more expensive.

(5) The casual deployment of this Jehovah’s Witness example is sometimes coupled with related arguments that reveal a misunderstanding of the religious beliefs of other groups. For example, the same amicus curiae brief in which Americans United for Separation of Church and State advanced the Jehovah’s Witness argument also argued that “Catholic owners could deprive their companies’ employees of coverage for end-of-life hospice care and for medically necessary hysterectomies.” With statements like this, it is difficult to believe that this brief was reviewed before filing by someone familiar with Catholic moral teaching. Catholics object neither to end-of-life hospice care nor to medically necessary hysterectomies.

(6) A casual approach to religiously based moral beliefs that differ in some ways from majority-held moral beliefs can easily lead to harm through a failure to appreciate and offer reasonable accommodations. While my research into this issue did not uncover an example of a Jehovah’s Witness employer denying insurance coverage for a blood transfusion, it did reveal a case in which a state denied to a Jehovah’s Witness on public aid coverage for a bloodless liver transplant that was available out-of-state at lower cost than an in-state transplant requiring a transfusion. Mary Stinemetz eventually prevailed on her Free Exercise challenge to this denial, but by the time the case was over, her condition had apparently deteriorated too far for her to any longer be eligible for a transplant.

(7) Most of the people who are advancing this particular slippery-slope argument probably have no idea of the contributions that Jehovah’s Witnesses have made to the law of religious liberty in the United States. See, e.g.,Thomas v. Review Bd.; West Virginia Bd. of Educ. v. Barnette.

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The Third Circuit is wrong: RFRA protects corporations, without any carve-out of for-profit corporations from its protections

A split panel of the Third Circuit recently joined the minority of federal courts that have denied preliminary injunctive relief to for-profit corporations and their owners in RFRA and Free Exercise challenges to the HHS Mandate. Both judges in the majority (Judge Rendell and Judge Garth) endorse the district court’s conclusions that “a secular, for-profit corporation . . . has no free exercise rights under the First Amendment, and is not a “person” under RFRA.” Writing in dissent, Judge Jordan contends (powerfully) that these conclusions rest on erroneous premises and merit further consideration by the court. If anything, Judge Jordan’s dissent understates the problems with the majority’s adoption of these conclusions because the standard of review did not require him to reach definitive conclusions. There is no legal basis for a judicial carve-out of “secular, for profit corporations” from RFRA’s protections.

RFRA provides that “[g]overnment shall not substantially burden a person’s exercise of religion” unless the government satisfies strict scrutiny. 42 U.S.C. § 2000bb-1(a) (emphasis added). In the U.S. Code, “person” ordinarily encompasses “corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.” 1 U.S.C. § 1. Nothing in RFRA excludes corporations generally. To the contrary, it is plain that corporations can assert claims under RFRA. The only Supreme Court case applying RFRA against the federal government involved a claim asserted by a corporation, O Centro Espírita Beneficente União do Vegetal.

Rather than adopt the obviously incorrect interpretation of “person” to exclude corporations, courts have carved up the category of corporations into “religious corporations” and “secular, for-profit corporations.” But there is no textual basis for this distinction in the statutory term “person.”

When one analyzes the claim, it turns out that the argument is not really about the meaning of the word “person” (even though the conclusion of the argument purports to be a claim about the meaning of this word). Rather, the argument pivots on “exercise of religion.” In the words of the district court opinion adopted by the Third Circuit, “a for-profit, secular corporation cannot exercise religion.”

Again, the claim is not that corporations cannot engage in exercise of religion. After all, corporations can, and do, exercise religion. Consider, for example, Church of Lukumi Babalu Aye, Inc. or Corporation of the Presiding Bishop of the Church of Jesus Christ of Latter-Day Saints. The claim, rather, is limited to “secular, for-profit corporations.” But the claim rests on a mistake about “exercise of religion” under federal law and a mistake about corporate action.

As to “exercise of religion,” it is plain that a religiously based refusal to do something otherwise required by law is an “exercise of religion.” Indeed, two of the leading cases on the meaning of the Free Exercise Clause involved individuals who refused, in the course of their employment (profit-seeking employment!) to do something. Because of their religious beliefs, Eddie Thomas refused to fabricate tank turrets and Adele Sherbert refused to work on Saturdays. These religion-based refusals were their protected exercises of religion.

A corporation’s religion-based refusal to engage in a particular action is also an “exercise of religion.” A corporation’s religion-based refusal to open its stores on Sundays, for example, is as much an exercise of religion as an individual’s refusal to  work on Saturdays. The involvement of a profit motive makes no difference. People work for money, and some choose not to work on certain days for religious reasons. Similarly, for-profit corporations operate for money, and some choose not to operate on certain days for religious reasons.

Some judges seem to think that a for-profit corporation can do nothing but seek profits. In the Third Circuit decision mentioned above, for example, Judge Garth insists that “the purpose–and only purpose–of the plaintiff Conestoga is to make money!” There is no reason to characterize corporate purpose so narrowly, and certainly no basis in corporate law to do so. Even a publicly traded corporation with an obligation to act in the best interests of shareholders can be “socially responsible” and incur various costs in pursuit of long-term value and goodwill.

Unfortunately, the misunderstandings involved run even deeper. Judge Garth approvingly adopts Judge Heaton’s reasoning in the Hobby Lobby case that “[g]eneral business corporations . . . do not pray, worship, observe sacraments or take other religiously-motivated actions separate and apart from the intention and direction of their individual actors.” But this reasoning applies as well, of course, to religious corporations. All corporations act through “the intention and direction of their individual actors.” When performed under certain circumstances, however, the actions of individuals count as the action of the corporation. We have no problem understanding this concept in the context of discrimination. If a for-profit corporation were to announce a policy to refuse to hire Muslims, or adherents of some other religion, there would be no difficulty in attributing that religion-based discrimination to the corporation. The law recognizes corporate intention and corporate motivation all over the place. If a for-profit corporation can discriminate on the basis of religion, why can’t a for-profit corporation perform some other act on the basis of religion? When Hobby Lobby Stores, Inc., for example, decides to honor the Sabbath by staying closed on Sundays (and thereby forgoing profits the corporation would otherwise earn), that is a corporate act on the basis of religion–a corporate “exercise of religion.” And just as a corporate refusal, for religious reasons, to operate on a particular day is a corporate “exercise of religion” under federal law, so too is a corporate refusal, for religious reasons, to include particular drugs and devices in the group health plan offered by the corporation to its employees.

Statutory law does sometimes distinguish between for-profit and not-for-profit corporations. Under Title VII, for example, for-profit corporations may not limit hiring to co-religionists, while some not-for-profit corporations can. But this only shows that Congress knows how to make that distinction when it wishes to do so. Congress made no such distinction in RFRA.

If people think that, as a matter of good public policy, there should be such a difference, then Congress can amend RFRA. Or Congress can amend the PPACA to explicitly exclude the application of RFRA’s protections from the statutory scheme. These exclusions might raise some constitutional questions, but we are not even close to that right now. Instead, some courts are incorrectly carving out certain corporations from RFRA’s blanket coverage. These judicial carve-outs are based on mistaken statutory interpretation, a mistaken understanding of the meaning of “exercise of religion,” and a mistaken understanding of corporate action.

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