DENVER — Do laws protecting religious freedom apply to businesses?

Faced with an explosion of lawsuits filed by companies that refused to comply with the federal contraception mandate on moral grounds, the Obama administration asserted in legal briefs that “secular” for-profit employers had no right to an exemption.

This week, the administration’s argument suffered a stinging rebuttal when the Denver-based 10th Circuit issued a June 27 ruling on Hobby Lobby’s closely watched appeal. The 5-3 ruling said the craft-store chain was likely to succeed in its quest for relief from the federal mandate, and it ordered a lower court to revisit its decision to deny a preliminary injunction.

“Because the contraceptive-coverage requirement places substantial pressure on Hobby Lobby and Mardel to violate their sincere religious beliefs, their exercise of religion is substantially burdened,” a majority of the judges concluded.

The day after the 10th Circuit ruling, the district court provided a temporary restraining order that will shield the Christian company from massive financial penalties that would be imposed after Hobby Lobby’s new health plan began on July 1.

“Hobby Lobby and the Green family faced the terrible choice of violating their faith or paying massive fines starting this Monday morning,” said Kyle Duncan, general counsel with the Becket Fund for Religious Liberty, a public interest group that represents Hobby Lobby. 

“We are delighted that both the 10th Circuit and the district court have spared them from this unjust burden on their religious freedom.”

The Register is a service of the Eternal Word Television Network (EWTN), which is also represented by the Becket Fund in its legal challenge to the federal mandate.

David Green, the Christian founder and CEO of Hobby Lobby, said he was  “encouraged by today’s decision from the 10th Circuit.” 

“My family and I believe very strongly in our conviction that life begins at conception, and the emergency contraceptives that we would be forced to provide in our employee health plan under this mandate are contrary to that conviction,” said Green in a statement issued after the ruling.

“We believe that business owners should not have to be forced to choose between following their faith and following the law. We will continue to fight for our religious freedom, and we appreciate the prayers of support we have received.”


Likely Supreme Court Case?

During a June 28 press call, Eric Rassbach, deputy general counsel at the Becket Fund, was asked if Hobby Lobby might be the first Health and Human Services' mandate case to reach the U.S. Supreme Court.

Rassbach said he would “not speculate on what case the U.S. Supreme Court will find attractive” or whether it would select a legal challenge filed by a church-affiliated charity or college.

But he suggested that there was little difference between the two types of cases. “I don’t buy the government’s attempt to make a distinction between nonprofits and for-profits,” he said. “All of us can engage in religious exercise whether we earn a living or not.”

Rassbach noted that if Hobby Lobby did not obtain a temporary restraining order from the district court, its refusal to comply with the mandate would trigger financial penalties of $1.3 million a day. Further, the company would also incur additional annual penalties of $2,000-$3,000 per employee.

In his summary of the 10th Circuit Court of Appeals ruling, Judge Timothy Tymkovich stated that Hobby Lobby and Mardel, a Christian bookstore and educational supply company, “are entitled to bring claims under RFRA [Religious Freedom Restoration Act], have established a likelihood of success that their rights under this statute are substantially burdened by the contraceptive-coverage requirement and have established an irreparable harm.”

Judge Tymkovich said the 10th Circuit had remanded the case “to the district court for further proceedings on two of the remaining factors governing the grant or denial of a preliminary injunction.” The following day, the district court provided the temporary restraining order, and a future court date has been scheduled for July.

Legal challenges to the federal mandate filed by nonprofit and for-profit employers have argued that the federal law violates the constitutionally protected free exercise of religion, as well as the 1993 Religious Freedom Restoration Act.

RFRA states: “Government shall not substantially burden a person’s exercise of religion,” unless the state has a compelling interest. In such case it will use the least restrictive means possible to advance that interest.


HHS: No Accommodation for For-Profits

Among the 60 lawsuits challenging the HHS mandate, 32 were filed by for-profit companies, according to the Becket Fund. It reported that “of the 28 for-profit plaintiffs that have obtained rulings touching on the merits of their claims against the mandate, 21 have secured injunctive relief against it, for a current score of 21-7.”

On June 28, the administration approved its limited “accommodation” for religious employers that objected to the mandate. During the press call, Chiquita Brooks-LaSure, deputy director of policy and regulation at the Center for Consumer Information and Insurance Oversight at HHS, confirmed that for-profit companies would not receive any exemption.

The Obama administration and some legal scholars have argued in legal briefs filed in cases across the country that the Free Exercise Clause and RFRA were not intended to protect the conscience rights of business owners like Hobby Lobby.

However, the majority of judges on the 10th Circuit rejected the administration position, at least with regard to the merits of the Hobby Lobby case.

“Because the contraceptive-coverage requirement places substantial pressure on Hobby Lobby and Mardel to violate their sincere religious beliefs, their exercise of religion is substantially burdened,” stated the majority opinion.

Douglas Laycock, an expert on religious-freedom issues at University of Virginia's law school, told the Register that “Congress plainly understood RFRA to apply to for-profit businesses.”

“This was very clear in the debates in 1998-99 over the identical language in the Religious Liberty Protection Act. The big fight was over an amendment to exclude all civil-rights claims, and everyone on both sides assumed that for-profit businesses would have claims,” noted Laycock.

“Having said that, the size of the business surely matters to the government’s compelling interest and to whether religion is really being exercised through the business and really being substantially burdened. Publicly traded corporations will not have a claim, and maybe even privately owned businesses beyond some size will have trouble proving a claim,” said the law professor.

Hobby Lobby operates 525 retail stores across the country, with an estimated 13,000 full-time employees.

The company filed suit against the federal government last September because its Christian owners said they could not provide abortion-inducing drugs in their employee health plan.

“We simply cannot abandon our religious beliefs to comply with this mandate,” David Green said at the time.

Joan Frawley Desmond is the Register's senior editor.