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The Next Big Test of Corporate Personhood

July 30, 2013

One of the biggest stories of the Supreme Court’s 2012 Term was the success of Big Business.  In a host of 5-4 rulings, the conservative Justices, time and again, moved the law to favor the claims of corporations over workers, consumers, mom and pop shops, and other individual Americans asserting their rights in federal court.  The Court already has lined up a host of business cases on the docket for its October 2013 Term.  But even bigger cases are on the horizon.  Legal challenges by business corporations to the Affordable Care Act’s mandate that employers’ group-based health insurance plans cover FDA-approved contraceptives for women are inching closer to the Supreme Court, teeing up the fundamental question whether business corporations can invoke protections for the free exercise of religion to justify refusing to provide the federally-mandated contraceptive coverage.

Last Friday, in Conestoga Wood Specialities Corp. v. Secretary of the U.S. Dep’t of Health and Human Services, the Third Circuit rejected a challenge to the ACA’s contraceptive coverage requirement brought by Conestoga Wood, a Pennsylvania wood manufacturer opposed to providing health insurance coverage for certain contraceptives to its female employees.  In a 2-1 opinion authored by Judge Robert Cowen, a conservative jurist appointed by President Ronald Reagan, the court held that business corporations “cannot engage in religious exercise” and thus cannot invoke the protections of the Free Exercise Clause of the First Amendment or the Religious Freedom Restoration Act, a federal statute that provides  protections against neutral laws that nonetheless impose a substantial burden on a person’s religious exercise.  The Third Circuit’s opinion disagreed with the Tenth Circuit’s en banc ruling in Hobby Lobby Stores. Inc., v. Sebelius, issued earlier this summer, which held, by a 5-3 vote, that business corporations are persons entitled to the constitutional guarantee of the free exercise of religion, and that Hobby Lobby was likely to succeed in its challenge to the ACA’s contraceptive coverage provision.  This brewing split in the circuits makes Supreme Court review a virtual certainty, which would set up a huge sequel to Citizens United v. FEC on the question of corporate personhood and the rights of corporations.  

It has long been the case that corporations can assert some – but not all – of the constitutional rights that individuals have.  As we explained in our text and history narrative on corporate personhood, A Capitalist Joker, corporations are “mere creatures of law;” they are not a part of “We the People” by whom and for whom the Constitution was written.  The Constitution never mentions corporations, and the Court’s cases recognize a basic, common-sense difference between living, breathing, individuals – who think, possess a conscience, and a claim to human dignity – and artificial entities, which are created by the law for a specific purpose, such as to make running a business more efficient and lucrative.  Even Justice Kennedy, the author of Citizens United, has recognized that corporations may not invoke the Self-Incrimination Clause because the Fifth Amendment right “is an explicit natural right of a person, protecting the realm of human thought and expression.”   For some purposes, corporations lack the same rights as individuals.  

Constitutional text and history strongly support the Third Circuit’s approach.  Business corporations – apart from the individual actions of their owners or employees – cannot pray, express devotion to a god, and do not have a conscience.  As the Third Circuit put it, “[w]e do not see how a for-profit ‘artificial being, invisible, intangible, and existing only in contemplation of law’ that was created to make money could exercise such an inherently ‘human’ right.”   As the Third Circuit recognized, it is nonsensical to treat a business corporation as an actor imbued with the same rights of religious freedom as living persons.  No decision of the Supreme Court has ever recognized such an absurd claim.  Even Citizens United, which gave extensive protections to corporations under the Free Speech Clause, emphasized that electoral advocacy by corporations was protected, not because business corporations were capable of the human aspects of thought and expression, but to provide a robust debate for individual listeners.              

Some conservative commentators have tried to cast doubt on the Third Circuit’s ruling by observing that some corporations – such as churches and others institutions specifically incorporated as religious corporations – are recognized as having rights protected under the Free Exercise Clause.  But that does not justify giving business corporations such rights.   There is a basic constitutional difference between the Episcopal Church Corporation and Exxon.  As John Marshall explained in the 1819 Dartmouth College case, the rights of a corporation depend on “the object for which it was created.”   All the way back to the Founding, corporations “[we]re , from the particular purposes to which they are devoted, denominated spiritual, and some lay . . . .”  As the dissent in Hobby Lobby explained, “only those ‘spiritual’ corporations . . . had been recognized as having the ability to ‘exercise religion.’”  The essentially human rights of religious exercise do not extend to corporations formed to run a business and turn a profit. 

For most of our nation’s history, the constitutional rights of business corporations were to sue and be sued, to own, possess, and use property consistent with guarantees of due process and equal protection, and to be free of state incursions on the free flow of interstate commerce.  In a line of cases culminating in Citizens United, the Court dramatically expanded the constitutional rights of corporations.  Corporations cannot vote or run for office, but the Court nevertheless held that business corporations can spend – without limit – money to influence the outcome of elections.  But the Supreme Court has never invested business corporations with basic rights of human dignity and conscience.  To do so would be – in the words of Felix Cohen – “transcendental nonsense.”