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Sixth Circuit Finds Corporations Have No Free Exercise Rights, Furthers Circuit Split on Issue

Written by Admin on October 3, 2013 Category: Business Law & Transactions, Constitutional Law, Free Speech

The Sixth Circuit Court of Appeals has become the most recent court to issue a decision addressing a private business’s challenge to the contraceptive coverage mandate of the Affordable Care Act when it released its opinion in Autocam Corp. v. Sebelius, No. 12-2673 (6th Cir. Sept. 17, 2013).

Autocam is a for-profit, closely-held secular corporation owned and operated by members of a devoutly Catholic family. Under the Affordable Care Act (“ACA”), Autocam is required to cover certain contraceptive methods and sterilization methods for female employees that are enrolled in Autocam’s health plan. Autocam and the Kennedy family claim that complying with the mandate makes them morally responsible for the employees’ use of contraception; but if they refuse to comply, Autocam will be subjected to significant monetary penalties. The lawsuit was brought by Autocam as well as several Kennedy family members sued in their individual capacities, who sought injunctive relief to be exempt from the contraceptive coverage mandate.

The Sixth Circuit quickly dismissed the claims of the Kennedys, finding that the family members as individuals lack standing to assert claims that arise based on obligations of their closely-held corporation. The Kennedys argued that if Autocam were to comply with the mandate, it would be done at the direction of the family members which would in turn cause the family members to violate their religious beliefs. The Court rejected this argument, noting that “incorporation’s basic purpose is to create a distinct legal entity, with legal rights, obligations, powers, and privileges different from those of the natural individuals who created it, who own it, or whom it employs.” Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 163 (2001). Here, the Kennedys made a choice to form a separate legal entity through which to operate their business, and the decision to comply with the mandate falls on Autocam rather than the Kennedys individually.

As to the merits of Autocam’s request for injunctive relief, the Court noted that before it was an issue of first impression in the circuit: whether a private corporation can be considered a “person” capable of religious exercise under the Religious Freedom and Restoration Act (“RFRA”). The Sixth Circuit held that Autocam is not a person that is capable of religious exercise, explaining that Congress enacted RFRA in order to restore certain Free Exercise claims that were inherently personal, and it was not intended to expand the existing Supreme Court jurisprudence. In contrast, reading the term “person” to include corporations, as Autocam suggested, would significantly expand the scope of Supreme Court jurisprudence addressing Free Exercise rights.

The Court also distinguished the instant matter from Citizens United v. Federal Election Commission, 558 U.S. 310 (2010.) The Supreme Court’s finding in Citizens United, that certain First Amendment protections extend to corporations, relied entirely on cases addressing the Free Speech Clause. However, there is no such analogous body of law with respect to the Free Exercise Clause. Consequently, Autocam failed to demonstrate a likelihood of success on the merits, and in turn its motion for preliminary injunction was denied.

The Kennedys have already announced that they are preparing an appeal to the Supreme Court. The Autocam decision clearly adds to the circuit split on this issue, further suggesting that a Supreme Court decision on the matter can be expected soon. For more information on the ACA and the contraceptive coverage mandate cases, please read our previous blog entry.

The entire Autocam opinion is available here.

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