Five Appellate Court Decisions Regarding The ACA Birth Control Mandates Have Created A Deep Circuit Split, Increasing the Odds for Supreme Court Review

We previously described and analyzed the U.S. Court of Appeals for the Tenth Circuit’s en banc decision in Hobby Lobby Stores, Inc. et al. v. Sebelius, No. 12-6294 (10th Cir. June 27, 2013), which held that for-profit religious employers possessed standing under the Religious Freedom and Restoration Act (RFRA) to challenge certain birth control mandates contained in the Patient Protection and Affordable Care Act (ACA).  The mandates generally require employers to provide some methods of birth control—such as Plan B and intrauterine devices—that arguably prevent implantation of a fertilized egg.  As we noted, the RFRA provides, as a general rule, that the federal government “shall not substantially burden a person’s exercise of religion.”  Since the Hobby Lobby decision was issued, four federal appellate courts have also addressed whether the RFRA or the First Amendment’s Free Exercise Clause allows for-profit employers to challenge the birth control mandates contained in the ACA, and the U.S. Supreme Court looks likely to take up the issue soon.

In Conestoga Wood Specialties Inc. v. Sebelius, No. 13-1144 (3d Cir. June 26, 2013), for instance, the Third Circuit held that for-profit religious employers do not have standing under the RFRA or the Free Exercise Clause to pursue challenges to the birth control mandates.  The court noted that such rights are normally exercised by individuals, and the fact that they are occasionally exercised by churches or non-profit religious organizations in some contexts does not mean that for-profit corporations may exercise the same legal rights in challenging the ACA mandates.  Plaintiffs attempted to support their claims by citing out-of-circuit case law (including the Hobby Lobby opinion) establishing that for-profit corporations could indeed bring suits to vindicate their owners’ religious beliefs, but the Third Circuit rejected these lines of authority.  The plaintiffs also cited the Supreme Court’s decision in Citizens United v. Federal Election Commission—wherein the Court affirmed the right of corporations to make unlimited contributions to non-connected Political Action Committees—in arguing that corporations were able to exercise First Amendment rights in other contexts.  But the Court rejected the analogy to campaign finance case law, and concluded that Conestoga was unlikely to prevail on the merits of its claim.  The denial of its request for a preliminary injunction was therefore affirmed.

Similarly, in the Sixth Circuit’s brief opinion in Autocam Corporation v. Sebelius, No. 12-2673 (6th Cir. Sept. 17, 2013), the court rejected the efforts of religious entities and their owners to obtain a preliminary injunction against the birth control mandate.  The court first rejected the argument that individual owners could bring a claim on their own, noting by analogy that shareholders to a corporation generally cannot bring an action for injuries suffered by the corporation.  As to the corporations themselves, the court went beyond holding, as the Third Circuit had, that for-profit corporations cannot exercise religious rights.  Instead, it held corporations were not even considered “persons” who were covered by the RFRA, and that the RFRA was not meant to expand the Free Exercise Clause to apply to corporations.  Like the Third Circuit in Conestoga, the court rejected the analogy to Citizens United and other campaign finance cases involving free speech rights under the First Amendment.

On the other hand, the D.C. Circuit recently offered a split decision in Gilardi v. U.S. Department of Health  & Human Services, No. 13-5069 (D.C. Cir. Nov. 1 2013), holding that while for-profit corporations could not challenge the mandates under the RFRA or the Free Exercise Clause, individual owners of a closely held corporation were able to invoke their personal rights to challenge the mandates.  The court first held, in a 2-1 vote, that for-profit corporations were not “persons” who could invoke religious rights, just as the Sixth Circuit had.  But the court was unanimous in holding that the individual owners in this context were “persons” for that purpose, and two of those judges ruled that the plaintiffs were in fact likely to succeed on the merits of their challenge.  The court therefore remanded the case to the U.S. District Court for the District of Columbia to rule on the other preliminary injunction factors.

After a series of losses for corporations, the Seventh Circuit last week handed down the most recent decision  in Korte v. Sebelius, No. 12-3841 (7th Cir. Nov. 8, 2013).  In this decision, the court of appeals offers the broadest possible relief to plaintiffs:  both individual owners and their corporations can bring challenges under the RFRA.  Moreover, instead of remanding the case to the district court to review other preliminary injunction factors, the court went further and instructed that such an injunction be ordered below.  In a 2-1 decision, the court noted the RFRA does not distinguish between non-profit corporations like churches and for-profit corporations such as those at issue in the case, and noted further that several RFRA or Free Exercise cases involved corporations that had invoked their religious rights, without the parties or the courts questioning the viability of those rights.  In a 90-page dissent, one judge responded that to view corporations as holding religious beliefs is logically strained, poses significant complications where multiple owners have different degrees of faithfulness, and subjects parties to endless re-litigating of cases whenever company ownership changes.

The U.S. Supreme Court is scheduled to address three of these cases in its November 26, 2013 conference.  A fourth petition for writ of certiorari was filed this week in the Gilardi case.  The likelihood that the Court will grant certiorari to some or all of these cases has increased as the legal issues involved in the challenges to the ACA mandates continue to deeply divide the federal circuit courts.  Littler continues to monitor these cases closely and will provide updates as the case law develops further.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.