My friend and UCLAW colleage Adam Winkler has joined with those who think that people of faith lose their free exercise rights when they decide to incorporate their business. In a Slate article, he makes a number of arguments, but two of them are ones that my regular readers should be able to debunkon their own by now. But let's review.
What the owners [of Hobby Lobby] want is for the Supreme Court to “pierce the corporate veil”—legalese for looking behind the corporation’s legal identity and basing a ruling on the interests and desires of the owners of the firm. But Hobby Lobby’s owners only want to pierce the veil for this one issue. They want the court to vindicate their personal beliefs on birth control, yet they still keep the protections of the corporate form for everything else, including limited liability.
That's not what Hobby Lobby is arguing, in point of fact. As I explained in my article A Critique of the Corporate Law Professors’ Amicus Brief in Hobby Lobby and Conestoga Wood, in response to the same argument as advanced by the law professors:
No one arguing on behalf of Hobby Lobby or Conestoga Wood has claimed that they are somehow immune to the ordinary rules of corporate veil piercing. They are not asking for a one-way street. Rather, they are asking that the law as it stands be applied them both forward and in reverse.
In any case, as we all know, just because a corporation's veil gets pierced doesn't mean that you lose "the protections of the corporate form for everything else," so the argument simply doesn't hold water.
Second, Adam argues:
Hobby Lobby is a for-profit corporation whose business doesn’t require it to have religious freedom. In fact, granting Hobby Lobby an exemption from providing contraception coverage, a requirement that applies to other companies, would make the firm less attractive to potential employees.
The corporate law professors' brief made this argument too. So, back to my article:
The most obvious defect in this argument is that it assumes that providing insurance to employees will put employers at a competitive disadvantage with competitors which do not provide such coverage. But the cost to the employer brings a benefit to the employee, which might well result in a competitive advantage to the employer.
Finally, let's remember what the basic issue here is. As I explain in Using Reverse Veil Piercing to Vindicate the Free Exercise Rights of Incorporated Employers, there was a telling colloquy between U.S. District Court Judge Reggie Walton and U.S. Department of Justice lawyer Benjamin Berwick in the Tyndale House Publishers, Inc. v. Sebelius case, which raised essentially the same issues as Hobby Lobby.
Berwick argued that employers who chose to incorporate their business are precluded from raising First Amendment free exercise of religion-based objections to regulations affecting their business. In response, Judge Walton posed the following hypothetical:
[M]y wife has a medical practice. She has a corporation, but she’s the sole owner and sole stock owner. If she had strongly-held religious belief and she made that known that she operated her medical practice from that perspec- tive, could she be required to pay for these types of items if she felt that that was causing her to violate her religious beliefs?
Berwick replied that the corporation and its shareholders are separate legal persons. The judge thereupon summarized his understanding of the government’s position as being that his wife would “have to go as an individual proprietor with no corporation protection in order to assert her religious right.” Berwick did not contest that characterization.
I take Adam would not contest it either.
Both Adam and Berwick--not to mention those 44 corporate law professors--thus are arguing that form trumps substance. But nobody has yet explained to me why form ought to prevail over substance in this case, where allowing it do so would defeat basic rights to freely exercise one's religious beliefs.