File Under “Be Careful What You Wish For”

All eyes are on the lawsuit Hobby Lobby has pending in the U.S. Supreme Court, and most of the commentary revolves around the question of a corporation’s right to disregard a law of general application if that law offends its “sincerely held” religious sensibilities.

The threshold issue is whether a corporation can have religious sensibilities, sincere or otherwise. And hidden in plain sight in that question is an enormous threat to American business. In short, if Hobby Lobby prevails, it is likely to be at the expense of limited liability–which is the whole purpose of incorporation.

As one amicus brief noted,

The essence of a corporation is its “separateness” from its shareholders. It is a distinct legal entity, with its own rights and obligations, different from the rights and obligations of its shareholders. This Court has repeatedly recognized this separateness.

Shareholders rely on the corporation’s separate existence to shield them from personal liability. When they voluntarily choose to incorporate a business, shareholders cannot then decide to ignore, either directly or indirectly, the distinct legal existence of the corporation when it serves their personal interests.

The brief goes on to point out that it is this very “separateness” between shareholders and the corporation that they own that promotes investment, innovation, job generation, and the orderly conduct of business.

Think about it. How likely would you be to buy stock in a company if you thereby ran the risk of being found personally liable for improper or negligent corporate behavior?

Several commentators have noted that Hobby Lobby is effectively asking for the best of both worlds.  Its owners want to benefit from the protection against personal liability, but they don’t want to recognize that the corporation is an artificial entity not entitled to personal individual rights.

Hobby Lobby and Conestoga argue that they should be exempt from federal law because of the religious values of their controlling shareholders, while seeking to maintain the benefits of corporate separateness for all other purposes. These corporations have benefited from their separateness in countless ways and their shareholders have been insulated from actual and potential corporate liabilities since inception. Yet now they ask this Court to disregard that separateness in connection with a government regulation applicable solely to the corporate entity.

If the Court rules in favor of Hobby Lobby–if it finds that a corporation can assert a religious right to discriminate–it will be the beginning of the end of limited liability and corporate immunity for shareholders.

It’s tempting to say “it would serve them right,” but the truth is, such a result would be a body blow to business and the American economy.

There’s a reason the business community has stayed out of this litigation.


  1. If Hobby Lobby wins this law suit, their corporate members will be given control over employees health care options and control over the options that health care providers are allowed to offer. Because birth contol is the heart of this suit, they would also in essence be allowed to control the sex lives of employees…something the GOP is highly in favor of on many fronts. These controls are aimed at female employees primarily but are sugical options – for men as well as women – regarding birth contol part of their “religious” convictions? Will they allow maternity and pediatric coverage for the resulting babies due to no availability of birth control? These two issues are far more costly than birth control. This is a far-ranging situation, covering more than we have been made aware of by the media. Only Hobby Lobby’s santimonious, pseudo religious demands.

  2. The primary concern of Hobby Lobby is that the particular methods of birth control they do not want to provide are abortifacient. Their reasoning seems simple enough; “abortion is against our religion.” The question is, if they do not want to contribute to an “abortion” by virtue of providing medical coverage for specific forms of birth control, how can they justify purchasing anything from a supplier/wholesaler/manufacturer who does? Doesn’t patronizing a corporation that provides abortifacient contraception create the same moral conflict for Hobby Lobby that they are seeking to avoid by denying certain contraception coverage for their employees?

  3. From Scott- Doesn’t patronizing a corporation that provides abortifacient contraception create the same moral conflict for Hobby Lobby that they are seeking to avoid by denying certain contraception coverage for their employees?

    I gather the answer is no since from what I understand the bulk of their products are made in China. China has had for years Mandatory Birth Control, i.e., One Child Policy. Profits maybe more important than “strongly held religious beliefs.”

  4. There seems to be no moral conflict for any business where making money is concerned. If they can manufacture for pennies in other countries or buy merchandise on the cheap; that is their goal. No one would pay attention if they tried to contol other countries medical care; they have jumped on the GOP “Christian” bandwagon to control women. I have yet to see them speak against men practicing birth control; does Hobby Lobby employ men who use condoms? That is probably considered a man’s “personal business”. This is a country that doesn’t want to provide access to birth control or abortion for women but male Medicare recipients are covered for erectile dysfunction supplies. Hearing, vision and dental care is not covered by Medicare but they provide assistance to keep men humpin’. Male dominated priorities rule! Also; as with every other issue in the media today – follow the money.

  5. OK; devil’s advocate. My understanding is that Hobby Lobby is a subchapter S corporation, meaning that its legal arrangement is a company owned by a group of shareholders. I am a principal shareholder in an S corporation, and I impose my ethical principals on the policies of the corporation I own. I choose employees based on how well they fit with my personal values and beliefs. If I pay 100% of employee health insurance costs, I agree with Hobby Lobby that I should have the right to choose what is covered. For example, no Viagra, Cialis, testosterone armpit goop, etc., should be available if any other corporation anywhere is still refusing to include birth control pills or IUDs in its health insurance coverage. Don’t like that? Don’t work for me. Don’t do business with me. That’s how I regard Hobby Lobby, and the Salvation Army before them. (There is, by the way, almost no real protection afforded me personally for the S-corp status. As soon as that was enacted, all state, federal, and private legal forms were changed to require double signatures, as both shareholder and personally liable guarantor.)

  6. Hobby Lobby’s merchandise is nearly 90% imported and made by low paid child labor countries. They want the best of both worlds and are a false front corporation. I hope they loose bigtime.

  7. to EFK:
    ” If I pay 100% of employee health insurance costs,”…..
    virtually no US businesses do that, nearly all of them require the employee to contribute toward the premium.
    ” I should have the right to choose what is covered.” You’re right, you would. But you do not get the right to claim the federal tax credit if what you provide does not qualify as a comprehensive plan under federal rules. In fact, the “mandate” is not truly a mandate at all. Hobby Lobby could indeed offer a more restrictive plan, and forfeit the tax credit.

  8. Allow me to clarify my remarks/questions. I am no student of the law, but it seems to me that a valid test of the sincerity of Hobby Lobby’s religious convictions is whether they consistently apply those convictions to every aspect of their business dealings. If Hobby Lobby has a business relationship with ANY other corporation that provides the contraceptives that they are refusing to provide their employees, doesn’t that demonstrate a lack of sincerity regarding their “sincerely held religious beliefs.” If Hobby Lobby fails to consistently apply those religious beliefs to absolutely every aspect of their business dealings, how can their lawsuit have ANY merit at all?

  9. How is birth control a form of abortion? You have to have a sperm to enter an egg w/o either the egg or the sperm there is no person, no viable baby, no soul….I am having trouble wrapping my head around how they consider birth control a form of abortion.

    So every time a man masterbates, do they consider that a form of abortion; therefore no spermacide.???

    Call me confused; but then again I have an understanding of anatomy too.

  10. The religious right has been adamantly opposed to Barack Obama’s agenda since he took office. They see him as a secularist, one who has no use for religious concerns when it comes to public governance. The action of Hobby Lobby, demanding to be exempted from federal law because it conflicts with their “sincerely held religious sensibilities”, is just one example of pushback from the religious establishment. During Obama’s administration they have seen their power in the government seriously marginalized, and they don’t like it. Unconstitutional state laws restricting abortion and denial of same-sex marriage rights are other manifestations of a religious establishment which is seeing its age-old influence eroding. The Supreme Court may rule in favor of Hobby Lobby, but it will be a small win in a war which the religious right will ultimately lose.

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