What religion is General Motors? Has Apple converted from Zen Buddhism now that the late Steve Jobs is no longer at the helm? What are the firmly held beliefs and convictions of Proctor & Gamble?
These questions may sound ridiculous, but they might seem slightly less so if Hobby Lobby prevails in its attempt to topple the birth control mandate in the Affordable Care Act (ACA). Citing the religious beliefs of its owners, David Green and his family, Hobby Lobby is asserting that a corporation has a First Amendment right to a religious exemption from laws that its stockholders find abhorrent.
If Hobby Lobby wins, the ruling will transform our understanding of corporations in ways that will dwarf the impact of Citizens United. Corporations have always been a legal fiction designed to separate the individual liability of the shareholders from that of the company. To imbue a corporate entity with the religion of its owners would vastly undermine this separation.
Writing about the potential hypocrisy of conservative justices ruling in favor of Hobby Lobby because of this issue, Brian Beutler quoted an amicus brief in support of the government, submitted by 44 corporate and criminal law professors. They wrote:
Hobby Lobby and Conestoga argue that they should be exempt from federal law because of the religious values of their controlling shareholders, while seeking to maintain the benefits of corporate separateness for all other purposes. These corporations have benefited from their separateness in countless ways and their shareholders have been insulated from actual and potential corporate liabilities since inception. Yet now they ask this Court to disregard that separateness in connection with a government regulation applicable solely to the corporate entity. Hobby Lobby and Conestoga want to argue, in effect, that the corporate veil is only a one-way street: its shareholders can get protection from tort or contract liability by standing behind the veil, but the corporation can ask a court to disregard the corporate veil on this occasion. Hobby Lobby and Conestoga cannot have it both ways.
This undermining of our understanding of corporations and corporate law was also in play in Arizona’s recent attempt to provide an exemption from nondiscrimination laws for those who opposed same-sex marriage.
SB 1062 not only would have exempted individuals, but also “legal entities” such as corporations from having to comply with nondiscrimination statutes if the owners of the entity believed that compliance would violate their religious beliefs. Just as in Hobby Lobby, this push to give a corporation a religious belief and moral objections goes against the purpose of incorporation to create an entity separate and distinct from its owners and creators.
Separation of shareholders from the corporate entities they own is a critical benefit of corporate law and a large part of the purpose of incorporation. When Hobby Lobby and the Arizona Legislature attempt to give corporate entities the religious and moral beliefs of their owners, they undermine this separateness in critical ways. The Supreme Court should uphold the principals of corporate law and rule that legal fictions cannot have religious beliefs or moral objections just because their owners do.
Sam Ritchie is a writer for non-profits, and has worked for legal organizations including the ACLU and the Innocence Project. Find him at www.samritchie.com.
