In the SCOTUSblog symposium on the contraceptive mandate cases, Elizabeth Wydra argues that:
Allowing the religious values of the individual owners of a company to be passed through to the corporation itself would not only run counter to well-established constitutional law, but it would also run counter to fundamental principles of corporate law. As a brief filed by corporate law scholarsexplains, “[t]he first principle of corporate law is that for-profit corporations are entities that possess legal interests and a legal identity of their own—one separate and distinct from their shareholders.” In fact, as recounted in the brief, this legal separateness is “the corporation’s most precious characteristic,” according to one early American treatise writer, because it creates “limited liability” for business founders and investors, shielding their personal assets. If the Court were to accept attempts by Hobby Lobby and Conestoga Wood to blur the distinction between a corporation and its owners, it could undermine key features of corporate law.
The difficulty with Wydra's argument, of course, is that the Brief is a crock. As I explain in A Critique of the Corporate Law Professors’ Amicus Brief in Hobby Lobby and Conestoga Wood, which is now forthcoming in the Virginia Law Review Online:
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
