Would Hobby Lobby Stores, Inc. Have A Stronger Case As A Flexible Purpose Corporation?

Steve Hazen alerted me to the fact that California Attorney General Kamala D. Harris has filed an amicus brief in Sebelius v. Hobby Lobby Stores, Inc., U.S. Supreme Court Docket No. 13-354.  The question presented in that case is:

The Religious Freedom Restoration Act of 1993 (RFRA), 42 U.S.C. 2000bb et seq., provides that the government “shall not substantially burden a person’s exercise of religion” unless that burden is the least restrictive means to further a compelling governmental interest. 42 U.S.C. 2000bb-1(a) and (b). The question presented is whether RFRA allows a for-profit corporation to deny its employees the health coverage of contraceptives to which the employees are otherwise entitled by federal law, based on the religious objections of the corporation’s owners.

Among other arguments, Attorney General Harris argues that the “the notion that a corporation may exercise religion would pose a number of challenges to federal and state governments and courts.”  This argument is plainly false because it assumes that corporations don’t already exercise religion.  In fact, California has a law that expressly authorizes the formation of corporations “primarily or exclusively for any religious purposes” – The Nonprofit Religious Corporation Law, Cal. Corp. Code § 9110 et seq.  This law has been on the books for over three decades.  It is clear, therefore, that California has no real problem with the idea that a corporation may have a religious purpose.

The Religious Corporation Law is one of California’s nonprofit laws.  Thus, a religious corporation must not be organized for the gain of any person.  Cal. Corp. Code § 9130(b).  The question presented is whether the RFRA allows for-profit corporations to deny coverage of contraceptives.  Here’s where California’s Corporate Flexibility Act of 2011, Cal. Corp. Code § 2500 et seq., might create an opportunity for some religiously motivated shareholders to pursue both a religious purpose (for the benefit of the community and society) and a profit.  It remains to be seen whether this can or will be done.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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