As a legal matter, the corporation is an entity wholly separate from the people who own it and work for it. For most purposes the corporation is treated as though it were a legal person, having most of the rights and obligations of real people, and having an identity wholly apart from its constituents. Accordingly, a corporation has most of the constitutional rights possessed by natural persons. See, e.g., First Nat’l Bank of Boston v. Bellotti, 435 U.S. 765, 784 (1978) (corporation has First Amendment right of free speech); Hale v. Henkel, 201 U.S. 43 (1906) (corporation gets Fourth Amendment protection against unreasonable searches and seizures but not protected by Fifth Amendment privilege against self-incrimination); Blake v. McClung, 172 U.S. 239 (1898) (corporation not covered by the privileges and immunities clause of the Fourteenth Amendment or of the comity clause of Article IV); Minneapolis & St. Louis Ry. Co. v. Beckwith, 129 U.S. 26, 28 (1888) (corporation entitled to due process of law under the Fifth and Fourteenth Amendments); Santa Clara County v. Southern Pacific Railroad Co., 118 U.S. 394, 416 (1886) (corporation entitled to equal protection of the law under the Fourteenth Amendment).
Most controversially, of course, the Supreme Court in Citizens United recognized a First Amendment right of for profit corporations to express themselves for political purposes. Now a divided 10th Circuit has held that corporations have free exercise rights. From the Law Blog:
A divided federal appeals court said Thursday that companies, whether for profit or not, have religious rights.
The ruling came in a challenge by arts and crafts chain Hobby Lobby Stores Inc. and Christian bookstore chain Mardel Inc. to a part of President Barack Obama‘s 2010 healthcare overhaul — namely, a requirement that employee health insurance plans include free contraceptive coverage.
The companies say the requirement violates their First Amendment right to the free exercise of religion, as well as the Religious Freedom Restoration Act, which guards against laws that substantially burden that right.
The U.S. Court of Appeals for the 10th Circuit ruled Thursday that Hobby Lobby and Mardel could likely make their case but stopped short of blocking the contraceptive mandate. The court instead sent the case back to a federal district judge for further consideration.
But five of the eight judges made a strong statement about corporate personhood — the idea that companies share some legal rights and protections with in-the-flesh people.
From the majority opinion:
RFRA provides, as a general rule, that the “Government shall not substantially burden a person’s exercise of religion.” 42 U.S.C. § 2000bb-1(a) (emphasis added). The parties dispute whether for-profit corporations, such as Hobby Lobby and Mardel, are persons exercising religion for purposes of RFRA. We thus turn to the question of whether Hobby Lobby, as a family owned business furthering its religious mission, and Mardel, as a Christian bookstore, can take advantage of RFRA’s protections. ...
We begin with the statutory text. RFRA contains no special definition of “person.” Thus, our first resource in determining what Congress meant by “person” in RFRA is the Dictionary Act, which instructs: “In determining the meaning of any Act of Congress, unless the context indicates otherwise * * * the word[] ‘person’ . . . include[s] corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.” 1 U.S.C. § 1. Thus, we could end the matter here since the plain language of the text encompasses “corporations,” including ones like Hobby Lobby and Mardel.
Given that no one disputes at least some types of corporate entities can bring RFRA claims, the next question is whether Congress intended to exclude for-profit corporations, as opposed to non-profit corporations, from RFRA’s scope. Notably, neither the Dictionary Act nor RFRA explicitly distinguishes between for-profit and non-profit corporations; the Dictionary Act merely instructs that the term “persons” includes corporations. ...
It is beyond question that associations—not just individuals—have Free Exercise rights: “An individual’s freedom to speak, to worship, and to petition the government for the redress of grievances could not be vigorously protected from interference by the State unless a correlative freedom to engage in group effort toward those ends were not also guaranteed.” Roberts v. U.S. Jaycees, 468 U.S. 609, 622 (1984) (emphasis added). Therefore, courts have “recognized a right to associate for the purpose of engaging in those activities protected by the First Amendment—speech, assembly, petition for the redress of grievances, and the exercise of religion. The Constitution guarantees freedom of association of this kind as an indispensable means of preserving other individual liberties.” Id. at 618 (emphasis added); see also Citizens United v. FEC, 558 U.S. 310, 342–43 (2010) (“First Amendment protection extends to corporations . . . [, and the Court] has thus rejected the argument that . . . corporations or other associations should be treated differently under the First Amendment simply because such associations are not natural persons.” (internal quotation marks omitted)). ...
In short, individuals may incorporate for religious purposes and keep their Free Exercise rights, and unincorporated individuals may pursue profit while keeping their Free Exercise rights. With these propositions, the government does not seem to disagree. The problem for the government, it appears, is when individuals incorporate and fail to satisfy Internal Revenue Code § 501(c)(3). At that point, Free Exercise rights somehow disappear. ...
... we cannot see why an individual operating for-profit retains Free Exercise protections but an individual who incorporates—even as the sole shareholder—does not, even though he engages in the exact same activities as before. ...
In addition, sincerely religious persons could find a connection between the exercise of religion and the pursuit of profit. Would an incorporated kosher butcher really have no claim to challenge a regulation mandating non-kosher butchering practices? The kosher butcher, of course, might directly serve a religious community—as Mardel, a Christian bookstore, does here. But we see no reason why one must orient one’s business toward a religious community to preserve Free Exercise protections. A religious individual may enter the for- profit realm intending to demonstrate to the marketplace that a corporation can succeed financially while adhering to religious values. As a court, we do not see how we can distinguish this form of evangelism from any other. ...
Because Hobby Lobby and Mardel express themselves for religious purposes, the First Amendment logic of Citizens United, 558 U.S. at 342–55, where the Supreme Court has recognized a First Amendment right of for- profit corporations to express themselves for political purposes, applies as well. We see no reason the Supreme Court would recognize constitutional protection for a corporation’s political expression but not its religious expression.
This is a huge development. It opens the door to people of faith whose business is incorporated being able to launch a major assault on Obamacare. If so, of course, it'll give the left even more reason to hate Citizens United.
If the 10th Circuit majority's approach takes hold, moreover, it will moot my proposal that courts use reverse veil piercing to address the issue of the free exercise rights of owners of incorporated employers. regular readers will recall that my article, Using Reverse Veil Piercing to Vindicate the Free Exercise Rights of Incorporated Employers (March 6, 2013). The Green Bag, Vol. 16, No. 3, Spring 2013. Available at SSRN: http://ssrn.com/abstract=2229414 explained how that approach would work:
Reverse veil piercing (RVP) is a corporate law doctrine pursuant to which a court disregards the corporation’s separate legal personality, allowing the shareholder to claim benefits otherwise available only to individuals. The thesis of this article is that RVP provides the correct analytical framework for vindicating certain constitutional rights.
Assume that sole proprietors with religious objections to abortion or contraception are protected by the free exercise clause of the First Amendment and the Religious Freedom Restoration Act (RFRA) from being obliged to comply with the government mandate that employers provide employees with health care plans that cover sterilizations, contraceptives and abortion-inducing drugs. Further assume that incorporated employers are not so protected. This article analyzes whether the shareholders of such employers can invoke RVP so as to vindicate their rights.
At least one court has recognized the potential for using RVP in the mandate cases, opining that these cases “pose difficult questions of first impression, including whether it is “possible to ‘pierce the veil’ and disregard the corporate form in this context.” The court further opined that that question, among others, merited “more deliberate investigation.” This article undertakes precisely that investigation.
Invoking RVP in the mandate cases would not be outcome determinative. Instead, it would simply provide a coherent doctrinal framework for determining whether the corporation is so intertwined with the religious beliefs of its shareholders that the corporation should be allowed standing to bring the case. Whatever demerits RVP may have, it provides a better solution than the courts’ current practice of deciding the issue by mere fiat.
I think my approach would be a lot less controversial than that of the 10th Circuit majority. Having said that, however, the majority's approach does strike me as a logical extension of Citizens United. But then again, having said that, I still think the Supreme Court's corporate personhood jurisprudence is entirely lacking in anything remotely resembling a coherent theory.
