Sixth Circuit Agrees: No Preliminary Injunction In ACA “Contraceptive Mandate” Case

by Varnum LLP

Corporations are not exempt from the so-called "Contraceptive Mandate" authorized pursuant to the Patient Protection and Affordable Care Act of 2012 (the "ACA" / popularly known as "Obamacare") according to the opinion of the Sixth Circuit Court of Appeals in Autocam Corporation v. Sebelius, No. 12-2673.

In a key ruling, the Sixth Circuit held that for-profit corporations are not "persons" capable of "religious exercise" under the federal Religious Freedom Restoration Act, 42 U.S.C. § 2000bb ("RFRA").  Other federal circuit courts, including the Third Circuit and Tenth Circuit remain split on this issue, making it more likely that the Supreme Court will grant certiorari in one or all of these cases.

The underlying lawsuit involves claims by Autocam (a closely-held, for-profit manufacturing corporation) and members of the Kennedy family (the owners of Autocam) that the Mandate violates their beliefs as Roman Catholics and, as a result, their federal rights under the RFRA.  Under the Mandate, Autocam's health plan is required to cover FDA-approved "contraceptive methods, sterilization procedures, and patient education and counseling" for female employees.

Early in the lawsuit, Autocam and the Kennedys sought a preliminary injunction to stop the Government from enforcing the Mandate against the company.  The ACLU, Michigan Attorney General, Life Legal Defense Foundation, and Bioethics Defense Fund all filed amicus briefs in connection with the motion.  The U.S. District Court for the Western District of Michigan (Jonker, J.) denied the preliminary injunction in a written opinion and order.   Autocam and the Kennedys appealed the ruling.

The Sixth Circuit affirmed Judge Jonker's denial of a preliminary injunction, agreeing that the claims did not have a strong likelihood of success on the merits.  The appeals court focused on the question of whether Autocam was a "'person' capable of 'religious exercise' in the sense RFRA intended."  Based on the text of the statute and its legislative history, the panel concluded that Congress did not intend to include for-profit companies, like Autocam, within the scope of the RFRA.  As a result, the Sixth Circuit held that Judge Jonker correctly denied Autocam's request for a preliminary injunction.

Additionally, the Sixth Circuit remanded the case to the District Court with instructions to dismiss the Kennedys' claims for lack of standing.  The Kennedys argued that they had standing based on their status as shareholders of a closely-held corporation—that they were ultimately responsible for the obligations of Autocam.  The Court disagreed, holding that "[g]enerally, shareholders of a corporation cannot bring claims intended to redress injuries to a corporation, even when the corporation is closely held."  While Autocam certainly met the requirements for Article III standing, the Kennedys did not share the same obligations.  The Court stated simply, "[t]he decision to comply with the mandate falls on Autocam, not the Kennedys."

The case remains pending before Judge Jonker in the U.S. District Court for the Western District of Michigan.

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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