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Regulation and Compliance > Federal Regulation

Hobby Lobby: The magic case

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(Bloomberg) — Every few years a U.S. Supreme Court case comes along that seems magically to involve every important issue of the day.

Hobby Lobby v. Sebelius, which will be argued tomorrow, does the trifecta one better: It involves the Affordable Care Act (ACA), religious liberty, contraception and the question of whether a corporation is a person with fundamental rights. It would be the professor’s all-time dream question for a final exam in constitutional law — except that even the best students couldn’t possibly have time to address all the issues.

In deference to its complexity, the Supreme Court has decided to give the lawyers, Paul Clement and Don Verrilli, an extra 15 minutes each. Clement served as solicitor general for George W. Bush, and Verrilli has the job now. They argued the ACA case against each other. Giving these two extra time is like telling Ali and Frazier that they can fight 18 rounds. It will be fun to watch, but a challenge for the fighters to stay alive.

To make sense of the complexity of the case, you need a scorecard, so here it is, broken down by the four crucial issues in play.

Start with the Affordable Care Act itself, as applied by the Obama administration through regulations it has enacted. The law requires companies with more than 50 employees to provide health-care coverage that includes contraception. If the employer balks, it pays a hefty penalty. Hobby Lobby, the privately held hobby shop chain that is the petitioner in one of the two companion cases that will be argued, says it would have to pay $1.3 million a day in fines if it didn’t comply.

The ACA itself is silent about religious organizations. But the Obama administration has enacted regulations that exempt them from compliance with the contraceptive mandate. The claims of organizations formed for specific religious purposes — and therefore organized as tax-exempt nonprofits — are not before the court. It is also not legally relevant that the ACA is President Barack Obama’s legacy legislation or that it remains wildly unpopular among many business owners and other concerned capitalists. But the fact that the ACA is a partisan touchstone cannot be kept out of the politics of the case — especially for Chief Justice John Roberts, who incurred the wrath of conservatives by casting the deciding vote in writing the opinion upholding the individual mandate component of the law two years ago come June.

The second crucial issue is religious liberty, primarily as provided for by a federal statute, the Religious Freedom Restoration Act. Before 1990, Hobby Lobby would have claimed an exemption pursuant to the clause of the Constitution guaranteeing the free exercise of religion. But in that year, the court issued an epochal decision called Employment Division v. Smith. Justice Antonin Scalia wrote the opinion, which held that if a law is neutral and generally applicable, rather than intentionally targeting religion, an individual is not entitled to a free exercise exemption even if his religious practice is substantially burdened by the law.

The decision was wildly unpopular among civil libertarians and evangelicals alike. RFRA was passed overwhelmingly — the Senate vote was 98-0, and the law was co-sponsored by Democrat Edward M. Kennedy and Republican Orrin Hatch. The purpose of RFRA was to reverse the Smith decision and establish by statute that if someone’s religious exercise is substantially burdened, he or she will get an exemption unless the government can show that the law fulfills a compelling state interest and is narrowly tailored to protect religious liberty as much as possible. The Supreme Court, angry at being overturned, subsequently limited RFRA to federal law; because the ACA is federal, the law applies here.

In the Hobby Lobby companion case, Conestoga Wood Specialties v. Sebelius, the Mennonite woodworking business also invoked the free exercise clause. The Supreme Court has signaled in recent years that it might be willing to revisit the Smith decision. But that’s unlikely to happen in this case, primarily because adding yet a further wrinkle to this overwhelmingly complex set of issues would probably put the justices over the top. The main religious liberty issue therefore will be the proper interpretation of RFRA. Nevertheless, the feeling that the Smith decision went too far is part of the context for the restoration of a robust sense of religious liberty by the court.

That brings us to contraception, the third issue — not to say third rail — in the case. Polls suggest that even many American lay Catholics are comfortable with birth control. Yet to advocates of religious liberty, contraception functions as a stand-in for abortion. If Congress can lawfully require coverage of contraceptives, they fear, laws mandating abortion coverage must be lawful as well. For their part, women’s rights activists, too, see contraception not only as an important public health issue in its own right, but also as a stalking horse for abortion. Roe v. Wade is still the most controversial decision issued by the Supreme Court in the last half-century. Anytime reproductive rights come before the court, the stakes rise — and so do the justices’ temperatures.

If all this weren’t enough for you, the fourth issue is arguably more important than the first three: whether corporations are people, too. In Citizens United v. FEC, decided in 2010, the Supreme Court held that free-speech rights should extend to corporations because organizing people to speak more effectively in concert was one of the functions that corporations serve. The case — which as interpreted by the lower courts gave us super-PACs — involved a nonprofit corporation, but it extended to for-profit companies as well. Criticized by Obama in the Supreme Court’s face during a State of the Union address, the decision has been a touchstone for those who would brand the Roberts court as activist and pro- corporation.

The Hobby Lobby case requires the justices to decide if the rule they announced for the free speech clause of the First Amendment applies to the free exercise part of the same amendment. For some liberals, this means an opportunity to reargue Citizens United. For conservatives, it’s an opportunity to depict the rights of corporations in a far more attractive light than corporate political speech. Many sincerely see no difference between a company’s owners and the company itself. Liability should be limited, they believe, but not fundamental free exercise rights.

Keeping these four issues distinct will be a challenge for the justices — and that’s just at oral argument. When it comes to the decision, all bets are off.

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