Original Intent

Can you stand one more post on Hobby Lobby?

Over at Forbes Magazine, Rick Unger has challenged the basis of the decision–and the fiction that Scalia, et al, are “originalists”– by pointing to the Founders’ original conceptions of corporate identity.

After the nation’s founding, corporations were, as they are today, the result of charters granted by the state. However, unlike today, they were limited in how long they were permitted to exist (typically 20 or 30 years), only permitted to deal in one commodity, not permitted to own shares in other corporations, and their property holdings were expressly limited to what they needed to accomplish their specific, corporate business goals.

Put another way, every single investment bank on Wall Street, as we know it today, would have been illegal in the days of our founding.

And here is the big one —in the early days of the nation, most states had rules on the books making any political contribution by a corporation a criminal offence.

Indeed, so restrictive was the corporate entity, many of early America’s greatest entities were set up to avoid the corporate restrictions. Andrew Carnegie formed his steel operation as a limited partnership and John D. Rockefeller set up Standard Oil as a trust in order to avoid the restrictions placed on corporations. Yet, it is now apparently too much to ask that those holding strong religious views, such as the Green family who hold the stock of Hobby Lobby, do the same.

Of course, Scalia’s version of originalism has always been exceptionally malleable–one to be invoked or ignored depending upon the need to twist the matter at hand into ideological conformance with his preferred beliefs.

With respect to this “matter at hand,” however, I am increasingly of the opinion that Hobby Lobby will come back to bite the authoritarian derrieres of the male members of this court.  As Tim Peacock recently wrote at Peacock Panache:

[S]everal law experts believe the Supreme Court may have dealt a devastating blow to the corporate veil. Alex Park at Mother Jones reported on the new gaping hole in the corporate veil today stating in part:

“Now, thanks to the Hobby Lobby case, it’s in question. By letting Hobby Lobby’s owners assert their personal religious rights over an entire corporation, the Supreme Court has poked a major hole in the veil. In other words, if a company is not truly separate from its owners, the owners could be made responsible for its debts and other burdens.

‘If religious shareholders can do it, why can’t creditors and government regulators pierce the corporate veil in the other direction?’ Burt Neuborne, a law professor at New York University, asked in an email. That’s a question raised by 44 other law professors, who filed a friends-of-the-court brief that implored the Court to reject Hobby Lobby’s argument and hold the veil in place.”

In the above-mentioned friend-of-the-court brief, those law professors stated in part:
“Allowing a corporation, through either shareholder vote or board resolution, to take on and assert the religious beliefs of its shareholders in order to avoid having to comply with a generally-applicable law with a secular purpose is fundamentally at odds with the entire concept of incorporation. Creating such an unprecedented and idiosyncratic tear in the corporate veil would also carry with it unintended consequences, many of which are not easily foreseen.”

If one Court can pierce the corporate veil in order to protect a (highly selective exercise of) religiosity, a different Court can pierce it to obtain justice for litigants who might otherwise go uncompensated.

That’s the problem with outcome oriented judicial reasoning.


9 thoughts on “Original Intent

  1. Oh what tangled webs we weave when first we practice to deceive. It looks like Scalia has backed himself into a corner that will be hard to escape.

  2. I am not at all expert on the nuances of law. I am cynical however about the investment of mass media marketing aimed at keeping the GOP relevant to American politics following the disastrous Bush administration.

    So hobby lobby to me is not about Constitutional or corporate law, but about collateral damage from the Republican PR effort to obscure the impact of our worst administration by dragging down its successor.

    Religion is being manipulated in service of portraying health care reform as a tragedy which is done to make sure nobody is asking about Bush policies that took us from the verge of paying off the national debt to a $17T hole. Or his holy wars and their consequences. Or the redistribution of wealth that he cheered on.

    Viewed that way, the damages from conservative government for the few, continues to drag down the many, as the fight for real freedom through real democracy rages on.

    Will it ever end?

  3. FINALLY someone asks the same question I’ve been asking since the decision was handed down. Having been on the receiving end of the corporate veil liability protection (company goes out of business, their insurance company goes into liquidation no legal recourse for me…) I was shocked to see a corporation attempt to pierce the veil in terms of religious beliefs. I want to see the litigation attempting to make the liability protection of the corporation vanish. If as the court repeatedly says “corporations are people” then subject them to the same legal requirements of “actual people”.

    Corporations want their favored status in terms of liability protection, tax rates, tax credits, etc. yet they also want to be able to extend the beliefs and opinions of the corporate officers through that same veil which gives them untold benifits which are not available to the actual, living, person/citizen.

    Corporations are a legal construct, an artificial person, created to allow the “corporation” to enter into legally binding contracts while protecting the assests of the owner(s), CEO, CFO, shareholders etc. Since when does an “artifical person” have beliefs or a soul?

    What’s next, corporations voting, holding political office; oh, that’s right they already somewhat do because of the influence of their money. Thanks citizens united.

  4. So if this Hobby Lobby decision works to destroy the corporate veil, it will probably be the most anti-business decision made in the last 100 years, right? What a mess that will be, thanks to the five “conservative” SCOTUS guys. Actually, sounds pretty revolutionary to me. I’ll bet folks are lining up right now to file those suits.

  5. There are a lot of misconceptions about the Hobby Lobby decision on this blog. Here’s a modest attempt at clarifying some of the larger points.

    1. The starting point of the analysis is that the federal government is imposing a mandate on private business, in this instance that certain employers must buy insurance plans that offer certain types of birth control to their employees. RFRA provides some layer of protection from federal mandates for sincerely-held religious beliefs, unless the government can demonstrate a compelling interest for the mandate that is imposed in the least restrictive manner possible. Another way of describing RFRA is that it requires government to accommodate closely-held religious beliefs. Accommodation in this context does not mean affirm the belief no matter what, in this instance it means making birth control modestly more expensive on the theory that affirming the religious belief has a value that offsets the increased expense.

    2. The government sunk its ship in terms of the compelling interest/least restrictive analysis because it chose to exempt certain non-profits. Here’s where the corporation analysis kicks in — the majority looked at the government’s dividing line and concluded, as far as RFRA is concerned, there is no meaningful distinction between a non-profit and a closely-held corporation. This is because although RFRA itself does not define “person”, the Dictionary Act defines “person” to include all different types of corporate entities — and the Dictionary Act is next place to shop when you can’t find a definition in the Act itself. Gary Welsh (sp?) explained this in a comment on another post in a straightforward and non-controversial manner. (As a side note, some commenters were respectful toward him and others tried to vilify him; shame on the latter.)

    3. The handwringing about the majority expanding the rights of closely-held corporations is overblown. The opinion largely turns on whether a closely-held corporation is a “person” within the meaning of RFRA.

    4. References to the First Amendment’s Free Exercise Clause and the constitutional method of interpretation known as originalism have no application here. The case turned on interpreting RFRA, and all the tools to conduct such an interpretation existed within RFRA itself and the Dictionary Act. The discussion in the Forbes article to the various ways corporations were restricted at the Founding is likewise irrelevant, as there’s no reason to poke around in the 18th century to discern an Act that was passed in the 1990s. And the pot-shot about Justice Scalia’s originalism is gratuitous–putting to the side the point above that originalism has no application to this case, he didn’t even write the opinion.

    5. The equitable state law concept known as piercing the corporate veil also has no application. The concept allows courts to disregard the corporate form and pave the way for personal liability if the form has been abused. That’s not what’s going on here; again, from a legal perspective the opinion is a modest and straightforward statutory interpretation issue.

    6. Reasonable minds can differ over the majority’s statutory interpretation methods, whether the government articulated a compelling government interest, and whether the government’s methods are least restrictive. But I’ve seen very little, if any, argument along those lines. Instead, the focus is on assuming bad faith and result-oriented decision-making. An embarrassing HuffPo article asked if there were too many Catholics on the Supreme Court.

    7. The bottom line is Congress chose to accommodate sincerely held religious beliefs absent the government clearing a rather substantial hurdle. If you don’t think there should be accommodations for sincerely-held religious beliefs (again, this is RFRA in a nutshell), complaining about the majority’s decision means you’re barking at the wrong branch of government.

  6. The government is NOT mandating employers buy insurance that covers or denies specific types of birth control; they are mandating employers provide insurance options for employees. SCOTUS is allowing employers to write their own insurance coverage based on their personal religious beliefs…however pseudo or bogus they are. We are all being raped by them with their misconceptions regarding the Constitution and the Amendments as they trample on and remove our civil and human rights. Not one health insurance company ORDERS anyone to avail themself of all coverage and benefits offered. They are there to be used as needed and/or preferred by the insured, NOT decided by their bosses or the government. You are not expected to buy one of everything in any store you enter; you pick and choose what you need or want. I do NOT avail myself of erectile dysfunction supplies offered by my Medicare coverage but certainly wish they covered vision, hearing and dental coverage – with co-pay.

    I fully support birth control being available to those who need or want it; I do NOT believe it should be provided free to everyone – I pay for my medications, always have and will continue to be expected to do so. The ACA is not a perfect solution to all health care problems but it is a great beginning; the GOP couldn’t or didn’t come up with anything to replace it. They did help vote it into law then began their never-ending battle to repeal or defund it. Their primary objective since January 20, 2009, has only been to obstruct any and every action suggested or attempted by President Obama. They continue cutting off their own noses to spite their face; believing they are showing that guy in the White House what they think of him. It is my hope and fervent prayer that Republican voters who are also affected by these obstructionist tactics remember all of the negative actions and non-actions by the GOP and SCOTUS in November of this year and especially November 2016.

  7. One has to ask what was different within the four great minds in the minority opinion and the five great minds that formed the majority. I doubt if it was understanding of applicable law.

  8. In response to Brent’s number 5 argument I can speek from PERSONAL EXPERIENCE with the legal system in Indiana and the inability of pierceing the corporate veil in terms of personal of corporate officers.

    It can’t be done! Even when it is a clear case of of a company employee being at fault when the corporation ceases to exist the corporate officers lose any liability from company actions as long as they have “insurance” even when the insurance is the cheepest obtainable and the “insurance company” is facing liquidation in the state which it operates from. When said insurance compasny (Reliance Insurance in Penn.; just google it) goes under state forced liquidation the person who suffered the loss gets pennies on the dollar for any claim. The corporate officers walk away; in the case of Reliance they paid a paultry fine and were barred from being in the insurance industry for a set number of years. The liquidation is still in process even after 13 years being in the actual liquidation process; they were previously being monitored by the state and under the threat of liquidation procedures in accordance with the laws of Pennslyvania.

    The corporate veil of liability protection held firm and those with claims were given a “prrof of claim form” and are still waiting on “being made whole”. This not only includes actual living and breathing people but other corporate entities as well.

    A corporation is a legal construct that enjoys certain benifits of being such; one of the primary being liability protection. It neither eats nor sleeps; does not have a limited lifespan and may go on for multiple generations of us lesser living beings. It exists for the benifit of the corporate officers and shareholders. Corporations can write off losses such as this on their CORPORATE TAXES; they can move profits around to shadow corporations which exist only for the benifit of the parent corporation; they can pick and choose where they incorporate to gain the maximum benifit for the corporation. In short they benifit from numerous legal constructs which “living breathing people” do not. Now the corporate officers can inject their “religious beliefs” through that corporate veil.

    It is time we take a close look at the legal definition of a “corporation” which would go a long way towards outlining the difference between them and actual ” living breathing” people. As it stands now I can see a country where Corporations can discriminate based upon the corporate officer’s sincerely held beliefs; where their “rights” trump my rights.

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