United States: Supreme Court Decision Alert - June 30, 2014

Today, the Supreme Court issued two decisions, described below, of interest to the business community.

  • Religious Freedom Restoration Act—Protection Of Religious-Exercise Rights Of For-Profit Corporations and Their Owners—Standard For Finding A Substantial Burden On Religious Exercise And Determining The Least Restrictive Means Of Furthering A Compelling Government Interest
  • First Amendment—Compelled Association—Medicaid Providers

Religious Freedom Restoration Act—Protection Of Religious-Exercise Rights Of For-Profit Corporations and Their Owners—Standard For Finding A Substantial Burden On Religious Exercise And Determining The Least Restrictive Means Of Furthering A Compelling Government Interest

Burwell v. Hobby Lobby Stores, Inc., No. 13-354, and Conestoga Wood Specialties v. Burwell, No. 13-356 (previously described in the November 26, 2013, Docket Report)

The Religious Freedom Restoration Act of 1993 prohibits the federal government from taking any action that "substantially burden[s] a person's exercise of religion" unless that action is "in furtherance of a compelling governmental interest" and "is the least restrictive means of furthering that compelling governmental interest." 42 U.S.C. § 2000bb-1. The Act was originally passed in reaction to Employment Division v. Smith, 494 U.S. 872 (1990), in which the Supreme Court held that laws of general applicability that infringed on a person's exercise of religion would no longer be subject to the demanding "strict scrutiny" form of judicial review.

Today, in Burwell v. Hobby Lobby Stores, Inc., No. 13-354, and Conestoga Wood Specialties v. Burwell, No. 13-356, the Supreme Court held that regulations promulgated under to the Patient Protection and Affordable Care Act requiring employers, including closely held, for-profit corporations, to provide health-insurance coverage for certain forms of contraception in violation of the sincerely held religious beliefs of those closely held corporate employers violated RFRA.

The closely held corporate parties, Hobby Lobby Stores and Mardel in No. 13-354 and Conestoga Wood Specialties Corp. in No. 13-356, sought preliminary injunctions barring the enforcement of the Affordable Care Act's contraception-coverage requirement based on their owners' religious objections to four of the mandated contraceptives. The Tenth Circuit held that Hobby Lobby and Mardel were likely to succeed on the merits because they were "persons" for the purposes of RFRA and the contraception mandate is not the least restrictive means of advancing the government's compelling interest in providing free contraception for women. On remand, the district court found that the companies had satisfied the remaining requirements and entered a preliminary injunction. In contrast, the Third Circuit held that closely held, for-profit corporations were not persons under RFRA and that Conestoga Wood could not assert a RFRA claim on behalf of its owners. The Third Circuit also rejected Conestoga Wood's parallel free-exercise claims under the First Amendment. Thus, a preliminary injunction was not entered to bar the enforcement of the mandate against Conestoga Wood, and its insurer included the contested coverage over the company's objections.

In a majority opinion written by Justice Alito, the Supreme Court affirmed the Tenth Circuit's judgment and reversed the Third Circuit's judgment. The Court first determined that RFRA's protections apply to closely held, for-profit corporations. Such companies are "persons" as defined in the Dictionary Act, and that law provides "a quick, clear, and affirmative answer" to the scope of RFRA's coverage, the Court held. Prior precedents established that nonprofit corporations and individuals engaging in for-profit activities were both protected by RFRA, so neither corporate nor for-profit status could be a basis for distinguishing the corporate parties from other protected persons. The Court also rejected the government's arguments that the application of RFRA was limited by pre-Smith Free Exercise Clause jurisprudence and that corporations should not be protected because it would be difficult to determine the sincerely held beliefs of public corporations.

Because the corporate parties are persons under RFRA, the Court next addressed whether they were substantially burdened by the contraception mandate. Recognizing that the corporate parties would face "severe" financial penalties if they elected to provide no health insurance instead of providing insurance that included the contested forms of contraception, the Court held that the mandate imposed a substantial burden. The Court rejected the argument by amici that the potential penalties were less than or equal to the cost of providing health care because that argument ignored the corporate parties' religious beliefs that they should provide health insurance to all their employees and failed to account for all the potential business costs of not providing insurance. The Court refused to consider whether providing insurance coverage for contraception was too attenuated to infringe on sincerely held beliefs because "it is not for us to say that their religious beliefs" that providing the contested contraception coverage is immoral "are mistaken or insubstantial."

Finally, the Court assumed that providing free access to the challenged contraceptives is a compelling government interest. But the Court held that the contraception mandate was not the least restrictive means of advancing that interest. The Court observed that the government could pay for the contraceptives directly, but declined to rely on that option to find that the existing regulation failed the least-restrictive-means test. Because HHS had already established an accommodation for nonprofit organizations with religious objections, "HHS itself has demonstrated that it has at its disposal an approach that is less restrictive than requiring employers to fund contraceptive methods that violate their religious beliefs." That same accommodation, the Court held, could simply be extended to for-profit businesses such as the plaintiffs in these cases. The Court expressly limited its holding to the contraception mandate because other federal requirements "may be supported by different interests" and "may involve different arguments about the least restrictive means of providing them." The Court did not reach the First Amendment religious-exercise claims raised in Conestoga Wood.

Justice Kennedy, who provided the critical fifth vote for the majority opinion, wrote a concurrence emphasizing that the availability of a preexisting accommodation for nonprofit organizations confirms that the contraception mandate is not the least restrictive means available. He explained that the government had already accommodated the religious objections of nonprofit organizations "by requiring insurance companies to cover, without cost sharing, contraception coverage for female employees who wish it. That accommodation equally furthers the Government's interest but does not impinge on the plaintiffs' religious beliefs." He concluded that "RFRA is inconsistent with the insistence of an agency such as HHS on distinguishing between different religious believers—burdening one while accommodating the other—when it may treat both equally by offering both of them the same accommodation."

Justice Ginsberg dissented, in an opinion joined by Justice Sotomayor in its entirety and Justices Breyer and Kagan except with respect to Justice Ginsberg's conclusion that for-profit corporations may not bring claims under RFRA. Justice Ginsberg argued that "Congress enacted RFRA to serve a far less radical purpose" than envisioned by the majority's decision that RFRA departed from pre-Smith law. Applying free-exercise doctrine as they believed it existed before Smith, the four dissenting Justices would have held that the contraception mandate did not impose a substantial burden because the connection between the individuals' beliefs and the mandate "is too attenuated to rank as substantial." The Justices also criticized the majority for discussing two alternatives to the contraception mandate as justification that it was the least restrictive means available without committing to either option. Justices Ginsberg and Sotomayor also would have rejected the corporate parties' claims because "[u]ntil this litigation, no decision of this Court recognized a for-profit corporation's qualifications for a religious exception."

Although the Court limited its decision to only the contraception-coverage requirement, today's decision is of interest to all for-profit business organizations that may seek to exercise religious beliefs that conflict with federal statutes or regulations that are not sufficiently tailored with respect to the government interest they serve, and to corporations that compete with businesses that invoke RFRA to obtain exemptions from generally applicable regulatory requirements.


First Amendment—Compelled Association—Medicaid Providers

Harris v. Quinn, No. 11-681 (described in the October 1, 2013, Docket Report)

The First Amendment, as incorporated by the Fourteenth Amendment, prohibits States from abridging the rights to free speech or association. Today, in a 5-4 decision, the Supreme Court held in Harris v. Quinn, No. 11-681,that the First Amendment prohibits States from requiring personal-care providers under an Illinois Medicaid program to pay fees to a union that the personal-care providers do not wish to join or support.

Both the majority opinion, written by Justice Alito, and the dissenting opinion, written by Justice Kagan, focused on the Court's prior decision in Abood v. Detroit Board of Education, 421 U.S. 209 (1977). There, the Court held that States may require public employees to pay a union fee to cover costs of the collective-bargaining process even if those public employees do not want to join or support the public-sector union. The majority in Harris severely criticized the Abood decision and held that Abood applied only to "fully-fledged public employees"; but it stopped short of overturning Abood. The majority ruled that Abood did not apply to "partial-public employees, quasi-public employees, or simply private employees," and thus did not cover the personal-care providers under Illinois' Medicaid program, who are, for most purposes, employed by their patients rather than by the State. Having concluded that Abood did not govern, the majority held that "generally applicable First Amendment standards" applied and that the union fee was unconstitutional because it did "not serve a compelling state interest . . . that cannot be achieved through means significantly less restrictive of associational freedoms."

Justice Kagan, joined by Justices Ginsburg, Breyer, and Sotomayor, dissented, arguing that Abood should control as long as the employees are at least jointly employed by the government, and therefore that Illinois should be permitted to require personal-care providers to pay a collective-bargaining fee to the union.

The issues in this case are important to businesses and labor unions that are involved in providing care under Medicaid. Many States require collectivization of personal-home-care providers, and the union fees for many of those programs may now be challenged. More broadly, the Court's decision calls into question any collective-bargaining fee requirement for employees who do not work fully and directly for the federal or state government. In addition, given the Court's express disapproval of Abood, the Court may decide to overrule Abood in a future case presenting the question whether a government can require even full-fledged public employees to pay collective-bargaining fees to a public-sector union that the employee does not wish to join or support.


Please visit us at www.appellate.net

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2014. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.