Another For-Profit Corporation Asks SCOTUS to Recognize Rights Under RFRA

Eden Foods, Inc. (Eden) and its sole shareholder, Michael Potter, filed a petition for certiorari seeking Supreme Court review of the Sixth Circuit ruling rejecting their challenge to the contraceptive coverage mandate (the mandate) in the regulations implementing the health reform legislation. Eden is a secular, for-profit corporation that sells organic and natural food. Potter, its sole owner, opposes contraception because of his Catholic faith. Eden and Potter contend that the mandate violates their rights to free exercise of religion under the First Amendment to the United States Constitution and the Religious Freedom Restoration Act (RFRA).

Pending Petitions

Similar petitions have been filed previously seeking review of the Tenth Circuit decision in Hobby Lobby Stores, Inc. v Sebelius, the Sixth Circuit decision in Autocam Corp. v Sebelius, the Third Circuit decision in Conestoga Wood Specialties Corp. v Sebelius, and the D.C. Circuit decision in Gilardi v Department of Health and Human Services. The Supreme Court has scheduled discussion of the Hobby LobbyAutocam, and Conestoga Wood petitions for November 26, 2013. The Gilardi petition was filed too recently to be scheduled with the other cases; the response is not due until December 9, 2013.

Issues Raised

In each case, a closely held for-profit corporation and its individual shareholders sought an injunction against the application of the contraceptive coverage mandate under the Free Exercise Clause of the First Amendment and the RFRA. The government argued that: (1) the individual owners had no standing to sue because they had no personal liability under the mandate because the employer was the corporation, a separate legal entity; (2) the secular, for-profit corporations had no rights under the RFRA because they do not exercise religion; and (3) the link between paying for health insurance coverage and the employees’ use of contraception is too attenuated to impose a burden on the exercise of religion. The Circuit Courts have been divided on these issues.

The Litigation

The district court considered the case solely on affidavits, without any live testimony. In an unpublished opinion, it ruled that: (1) Potter had no obligations under the mandate, so his religious freedom was unaffected; and (2) because religious belief occurs in the hearts and minds of individuals, the RFRA did not apply to the corporation.

Relying heavily on its decision in Autocam, the Court of Appeals affirmed the district court. First, Potter had no standing to challenge the mandate because the corporation is a distinct legal entity. Second, Eden had no rights under the RFRA because that law applies only to individuals.

Arguments in Petition

Potter and Eden contend that Potter’s exercise of religion is burdened because he is the sole shareholder of Eden. The penalties that would accrue for Eden’s purchase of insurance that does not comply with PPACA would “cripple” the business. Eden employs 128 employees, of whom “more than 50” work full time. At $100 per employee per day, Eden calculates that the purchase of noncompliant insurance would cost $4,672,000 per year. Failure to offer any insurance at all would cost $2,000 per plan participant per year, which Eden calculates at $196,000. Potter and Eden compare the intrusion upon their religious freedom to a requirement that a strictly kosher store sell pork or that a Muslim financial institution charge interest.

They argue that the Sixth Circuit made several distinctions that had no support in previous Supreme Court decisions, i.e., distinguishing corporations from individuals and distinguishing secular, for-profit corporations from nonprofits, and freedom of religion from other First Amendment rights. Because the Supreme Court has recognized that corporations have First Amendment rights to freedom of speech and has allowed incorporated churches to enforce their right to free exercise of religion, it must take the next logical step to allow commercial corporations to claim a right to freedom of religion.

Alleged Fact-Finding by the Appeals Court

Potter and Eden also object to what they describe as “fact-finding” by the Sixth Circuit. The district court assumed the truth of the allegations of the complaint that Potter’s deeply held Catholic beliefs prohibited him from supporting or paying for contraception. The appeals court so noted, but it also referred in a footnote to an article published on salon.com that quoted contradictory statements made by Potter. In the petition for certiorari, Potter objected to this “evidence;” he did not deny making the statements quoted but argued that salon.com was not real journalism because of other articles it has published.

Need for Supreme Court Review

Potter and Eden argue that the Supreme Court must resolve the conflict among the circuits. In addition, they claim that their case presents solely a question of law and is the “cleanest” on the facts. Therefore, the court should hear this case together with the others. If the Court grants certiorari to hear any of the cases it will discuss on November 26, it will have no need to consider Eden’s petition.