Bainbridge, Stephen M., A Critique of the Corporate Law Professors’ Amicus Brief in Hobby Lobby and Conestoga Wood (February 21, 2014). UCLA School of Law, Law-Econ Research Paper No. 14-03. Available at SSRN: http://ssrn.com/abstract=2399638:
Abstract: The Patient Protection and Affordable Care Act (ACA) effected numerous changes in the legal regime governing health care and health insurance. Among the ACA’s more controversial provisions is the so-called contraceptive mandate, which requires employer-provided health care insurance plans to provide coverage of all FDA approved contraceptive methods.
On March 25, 2014, the Supreme Court will hear oral argument in the Hobby Lobby and Conestoga Wood cases, in which the shareholders of two for-profit family-owned corporations argue that requiring them to comply with the contraception mandate violates the Religious Freedom Restoration Act.
Forty-four law corporate law professors filed an amicus brief in these cases, arguing that the essence of a corporation is its “separateness” from its shareholders and that, on the facts of these cases, there is no reason to disregard the separateness between shareholders and the corporations they control. The Brief is replete with errors, overstated claims, or red herrings, and misdirection.
Contrary to the Brief’s arguments, basic corporate law principles strongly support the position of Hobby Lobby and Conestoga Wood. In particular, the doctrine known as reverse veil piercing provides a clear and practical vehicle for disregarding the legal separateness of those corporations from their shareholders and thus granting those shareholders standing to assert their free exercise rights.
Keywords: Hobby Lobby, contraceptive mandate, free exercise, piercing the corporate veil, reverse veil piercing, amicus brief, corporate law professors, constitution, supreme court, Affordable Care Act, Obamacare, RFRA, Religious Freedom Restoration Act
JEL Classification: K22
In an ideal world, some law review will accept it and publish it more or less as is (block quotes and all) before the March 25th oral argument in these cases or, at least, before the end of the Supreme Court term. [Hint, hint.] In a less than ideal world, some law review will decide it should be published next fall as a document of historical interest. [Hint, hint.]
But the main point is to rebut the Brief and to defend my argument in Using Reverse Veil Piercing to Vindicate the Free Exercise Rights of Incorporated Employers, 16 Green Bag 2d 235 (2013), from the attack directed at that article by the Brief.