Today's ruling temporarily bars the government from enforcing against their companies the penalties for failing to provide contraceptive coverage under their health care plans. Three decisions regarding the contraceptive mandate's constitutionality, originating from other circuits, are in the certiorari stage before the Supreme Court already and it's likely that one of them will be the vehicle for a decision this term.
The ruling is here, and I'll go through the nuts and bolts below the gnocchi.
Francis and Philip Gilardi are the sole owners of Freshway Foods and Freshway Logistics, food processing companies in Sidney, Ohio, with about 400 employees. They're Catholic, which does matter here, because they oppose contraception, sterilization, and abortion, and the ACA forces them into one of three options: (1) provide the mandated contraceptive services in contravention of their religious beliefs, (2) pay a penalty amounting to over $14 million per year, or (3) drop health care coverage altogether, which they regard as "morally unthinkable."
The Circuit panel first found that the companies themselves had no free exercise rights to advance here. RFRA allows that “[a] person whose religious exercise has been
burdened” can sue, but the Court was unwilling to declare corporations to be "persons" for these purposes. "The query is simple," asks the Court. "Do corporations enjoy the shelter of the Free Exercise Clause? Or is the free-exercise right a 'purely personal' one, such that it is 'unavailable to corporations and other organizations because the ‘historic function’ of the particular guarantee has been limited to the protection of individuals'?" And today's Court ultimately decides that while it applies to individuals and religious organizations, religous corporations are a horse of a different color:
Citing Citizens United v. FEC, the Freshway companies argue that corporations—religious or otherwise—are entitled to the full array of First Amendment protections, including the right to free exercise. They are not the only proponents of this position...Nor could the companies themselves seek to vindicate the free-exercise rights of their owners, despite the Court recognizing that under Catholic doctrine, “faith without works is dead.” (James 2:26) and that under Catholic doctrine, “instructing or encouraging someone else to commit a wrongful act is itself a grave moral wrong.”
Perhaps Appellants’ constitutional arithmetic, Citizens United plus the Free Exercise Clause equals a corporate free-exercise right, will ultimately prevail. But we must be mindful that Citizens United represents the culmination of decades of Supreme Court jurisprudence recognizing that all corporations speak. When it comes to the free exercise of religion, however, the Court has only indicated that people and churches worship. As for secular corporations, the Court has been all but silent.
No such corpus juris exists to suggest a free-exercise right for secular corporations. Thus, we read the “nature, history, and purpose” of the Free Exercise Clause as militating against the discernment of such a right. When it comes to corporate entities, only religious organizations are accorded the protections of the Clause. And we decline to give credence to the notion that the for-profit/non-profit distinction is dispositive, as that, too, is absent from the Clause’s history..
But as to the owners themselves, acting through the corporation, the Court was willing to recognize their rights as meaningful:
If the companies have no claim to enforce—and as nonreligious corporations, they cannot engage in religious exercise—we are left with the obvious conclusion: the right belongs to the Gilardis, existing independently of any right of the Freshway companies....And here's the crux:
We begin with the peculiar step of explaining what is not at issue. This case is not about the sincerity of the Gilardis’ religious beliefs, nor does it concern the theology behind Catholic precepts on contraception. The former is unchallenged, while the latter is unchallengeable...
The only dispute touches on the characterization of the burden. The burden is too remote and too attenuated, the government says, as it arises only when an employee purchases a contraceptive or uses contraceptive services. We disagree with the government’s foundational premise. The burden on religious exercise does not occur at the point of contraceptive purchase; instead, it occurs when a company’s owners fill the basket of goods and services that constitute a healthcare plan. In other words, the Gilardis are burdened when they are pressured to choose between violating their religious beliefs in managing their selected plan or paying onerous penalties....
The Framers of the Constitution clearly embraced the philosophical insight that government coercion of moral agency is odious. Penalties are impertinent, according to Locke, if they are used to compel men “to quit the light of their own reason, and oppose the dictates of their own consciences.” JOHN LOCKE, A LETTER CONCERNING TOLERATION 13–14 (J. Brook ed., 1792) (1689). Madison described conscience as “the most sacred of all property,” James Madison, Property, NAT’L GAZETTE, Mar. 29, 1792, at 174, reprinted in JAMES MADISON’S “ADVICE TO MY COUNTRY” 25, 83–84 (David B. Mattern ed., 1997), and placed the freedom of conscience prior to and superior to all other natural rights. Religion, he wrote, is “the duty which we owe to our Creator . . . being under the direction of reason and conviction only, not of violence or compulsion,” 1 MADISON PAPERS 174 (1962), “precedent” to “the claims of Civil Society,” JAMES MADISON, MEMORIAL AND REMONSTRANCE AGAINST RELIGIOUS ASSESSMENTS (1785); see also United States v. Macintosh, 283 U.S. 605, 633–34 (1931) (Hughes, C.J., dissenting) (“[I]n the forum of conscience, duty to a moral power higher than the state has always been maintained. . . . The essence of religion is belief in a relation to God involving duties superior to those arising from any human relation.”).
The contraceptive mandate demands that owners like the Gilardis meaningfully approve and endorse the inclusion of contraceptive coverage in their companies’ employer-provided plans, over whatever objections they may have. Such an endorsement—procured exclusively by regulatory ukase—is a “compel[led] affirmation of a repugnant belief.” That, standing alone, is a cognizable burden on free exercise. And the burden becomes substantial because the government commands compliance by giving the Gilardis a Hobson’s choice. They can either abide by the sacred tenets of their faith, pay a penalty of over $14 million, and cripple the companies they have spent a lifetime building, or they become complicit in a grave moral wrong. If that is not “substantial pressure on an adherent to modify his behavior and to violate his beliefs,” we fail to see how the standard could be met.And the government, rules this panel, lacks a sufficiently compelling interest in enforcing the contraceptive mandate to overcome these burdens on religious practice:
In suggesting that no substantial burden lies with the Gilardis, the government invokes the principles undergirding the bargain for the corporate veil. True, it is an elementary principle of corporate law that “incorporation’s basic purpose is to create a distinct legal entity, with legal rights, obligations, powers, and privileges different from those of the natural individuals who created it, who own it, or whom it employs.” a sacrifice because the corporation can generally exercise some analogue of the forgone right. As a corporation is “capable of making and executing contracts, possessing and owning real and personal property in its own name, suing and being sued,” a shareholder cannot expect to exercise the right to take these actions in his or her personal capacity. This is no less true with constitutional rights.
Mindful of these principles, consider the ramifications of the government’s argument. It contends free exercise is an individual right. If the Gilardis had run their businesses as sole proprietorships, they would presumably have a viable RFRA claim under the government’s theory.... This interpretation is perplexing and troubling. It is perplexing because we do not believe Congress intended important statutory rights to turn on the manner in which an individual operates his businesses.
The government cites several concerns to bolster its claim that the contraceptive mandate serves a compelling interest (or interests), but its recitation is sketchy and highly abstract. Perhaps the government thought it best to focus on justiciability, hoping its ipse dixit would be sufficient to survive strict scrutiny. After all, if no one has standing to object, the state avoids the searching inquiry into its means. Here, the articulated concerns range from “safeguarding the public health” to “protecting a woman’s compelling interest in autonomy” and promoting gender equality. But the government does little to demonstrate a nexus between this array of issues and the mandate.Then, citing one of those "abortion leads to breast cancer" quack groups ...
For example, as a standalone principle, “safeguarding the public health” seems too broadly formulated to satisfy the compelling interest test. It has been used to justify all manner of government regulations in other contexts.... The nebulousness of the government’s interest  prevents us from engaging in the type of exacting scrutiny warranted here. What exactly is the government trying to ameliorate? Is it the integrity of “the health and insurance markets”? Surely, that cannot be the answer; the comprehensive sweep of the Affordable Care Act will remain intact with or without the mandate. Or is it a need to provide greater access to contraceptive care? If so, as we note below, the reasons underpinning that need are tenuous at best.
Equally unconvincing is the government’s assertion that the mandate averts “negative health consequences for both the woman and the developing fetus.” From the outset, we note the science is debatable and may actually undermine the government’s cause. For the potential mother, as one amicus notes, the World Health Organization classifies certain oral contraceptives as carcinogens, marked by an increased risk for breast, cervical, and liver cancers. Br. of the Breast Cancer Prevention Institute, at 8–9. On the other hand, the contraceptives at issue have been approved by the Food and Drug Administration, supported by research touting their benefits. This tug-of-war gives us pause because the government has neither acknowledged nor resolved these contradictory claims.Senior Judge Harry Edwards, dissenting, agreed that the owners had standing, but did not find the contraceptive mandate to pose a substantial burden to their free exercise rights:
Even giving the government the benefit of the doubt, the health concerns underpinning the mandate can be variously described as legitimate, substantial, perhaps even important, but it does not rank as compelling, and that makes all the difference.
First, the Mandate does not require the Gilardis to use or purchase contraception themselves. Second, the Mandate does not require the Gilardis to encourage Freshway’s employees to use contraceptives any more directly than they do by authorizing Freshway to pay wages. Finally, the Gilardis remain free to express publicly their disapproval of contraceptive products....And the government's interest in this mandate, he explains, is compelling and substantial:
[T]he Gilardis cannot claim that they are being forced to use contraceptives, which would directly conflict with their religious beliefs. Rather, they complain that because their companies are required to purchase insurance that includes coverage for contraception, they as owners are enabling third parties to engage in conduct that they oppose. This is a specious claim. The Gilardis can find no support for their position in the controlling case precedents. No Free Exercise decision issued by the Supreme Court has recognized a substantial burden on a plaintiff’s religious exercise where the plaintiff is not himself required to take or forgo action that violates his religious beliefs, but is merely required to take action that might enable other people to do things that are at odds with the plaintiff’s religious beliefs.
Furthermore, the Mandate does not require the Gilardis to directly facilitate employees’ use of contraception. The Gilardis do not contend that their religious exercise is violated when Freshway pays wages that employees might use to purchase contraception, and the Mandate does not require the Gilardis to facilitate the use of contraception any more directly than they already do by authorizing Freshway to pay wages. Amici supporting the Gilardis’ position attempt in vain to distinguish between the Mandate and paying wages. First, they argue that the Mandate requires the Gilardis to become an “essential cause” of increasing the number of employees who use contraception. Br. of 28 Catholic Theologians and Ethicists at 22-23. But the Gilardis are no more of an “essential cause” of increasing the use of contraception when they authorize Freshway to pay for a benefits plan that employees might use to get contraception than they are when they authorize wages that an employee might use to purchase contraception she would not otherwise be able to afford.
Contraceptive products are used for health care purposes beyond preventing unwanted pregnancy. They are prescribed to prevent disease. Contraceptives reduce the risk of ovarian, endometrial, and gynecologic cancers. Contraceptives and sterilization also preserve the health of adult women with diabetes, lupus, and heart conditions, who would be at physical risk if they became pregnant.In conclusion:
Coverage for contraceptive products eliminates gender discrimination because the cost of contraception falls disproportionately on women, and the costs of health care are generally much higher for women than men. Br. for the Appellees at 41 (“Congress found that . . . ‘women of childbearing age spend 68 percent more in out-of-pocket health care costs than men.’” (quoting 155 CONG. REC. S28843 (daily ed. Dec. 1, 2009) (statement of Sen. Gillibrand))). Gender inequality in the cost of health care is caused, in part, by the fact that many health services specific to women have historically been excluded from insurance coverage. Furthermore, it is critical to the functioning of the Affordable Care Act’s statutory scheme that exemptions from the Mandate are, like exemptions from the Social Security tax, extremely limited. Allowing religious exemptions to for-profit, secular corporations would undermine the universal coverage scheme: If the Gilardis’ companies were exempted from covering contraception, another corporation’s owners might just as well seek a religious exemption from covering certain preventative vaccines. A Christian Scientist, whose religion has historically opposed conventional medical treatment, might claim that his corporation is entitled to a religious exemption from covering all medical care except healers who treat medical ailments with prayer. Muslim or Jewish business owners might claim a religious exemption from covering any medication derived from pork products (for instance, the gelatin used to make capsules or coating of many pills).
Freshway and other for-profit orporations are different from religious non-profits in that they use labor to make a profit, rather than to perpetuate a religious values-based mission. In choosing to use labor for financial gain, the corporation and its owners submit themselves to legislation—such as Title VII, the Fair Labor Standards Act, the Americans with Disabilities Act, and the Affordable Care Act—designed to protect the health, safety, and welfare of employees. They cannot voluntarily capitalize on labor but invoke their personal religious values to deny employees the benefit of laws enacted to promote employee welfare.We'll keep you posted.
Because the Gilardis have voluntarily chosen to capitalize on labor, they have agreed to accept certain limitations on their conduct that arise from the Government’s compelling interest in securing the safety and welfare of their employees. For this reason, even if the Mandate were a substantial burden on the Gilardis’ religious exercise—which it is not—this record supports the conclusion that the burden is justified by the Government’s compelling interest in enforcing a public-welfare statutory scheme that, like the Social Security tax, simply “could not function” if for-profit employers of various “denominations were allowed to challenge the . . . system because . . . payments were spent in a manner that violates their religious belief.”