In August of 2011, Governor Romney got a lot of flak from the Left over his statement that “corporations are people.” President Obama and his campaign haven’t forgotten it.

On March 1, 2012, House Minority Leader Nancy Pelosi (D-CA) issued a statement lauding the Senate for rejecting the Blunt Amendment that would have granted broad provisions to our citizens respecting their the rights of conscience. She dismissed employers’ “vague moral conviction[s].”

Just a couple of weeks ago, in a TV interview on July 9, President Obama implied that corporations aren’t people when he discussed his Contraception Mandate issued under Obamacare. Corporations cannot have the rights of conscience of people. He stated that it was not “fair” for religious institutions, many of which are non-profit corporations, to assert rights of conscience in the face of their female employees’ need for contraception (and abortion and sterilization). 

A federal court in Colorado ruled Friday, July 27, that Obama and his Administration and Leader Pelosi may be wrong. Four siblings of the Newland family, who are owners and managers of a closely-held, 265-employee, corporation, Hercules Industries, sued the Federal Government arguing that the Contraception Mandate violated their rights under the federal Religious Freedom Restoration Act, the First and Fifth Amendments to the U.S. Constitution, and the federal Administrative Procedure Act.

The Newlands operate a self-insured group health plan that does not include contraception coverage. The Department of Justice argued in its brief  that for-profit, secular employers do not, “by definition,” engage in the exercise of religion. (page 16) The Department asserted that Hercules Industries is a separate legal entity from the individual owners and managers (page 20) and that a company cannot possess “sincerely held religious beliefs.” (page 17) The Department also argued that the plaintiffs could not conscientiously object to Obamacare’s Contraception Mandate since the company had been contributing to Medicaid – which provides contraception. (pages 21-22) These arguments were regarded by the court as issues of first impression, requiring full-blown litigation and, in the meantime, worthy of a preliminary injunction that would preserve the status quo. The full, but short, order is here. The court stated:

      These arguments [by the parties] pose difficult questions of first impression. Can a corporation exercise religion? Should a closely-held subchapter-s corporation owned and operated by a small group of individuals professing adherence to uniform religious beliefs be treated differently than a publicly held corporation owned and operated by a group of stakeholders with diverse religious beliefs? Is it possible to “pierce the veil” and disregard the corporate form in this context? What is the significance of the pass-through taxation applicable to subchapter-s corporations as it pertains to this analysis? These questions merit more deliberative investigation. (page 12)

In issuing a preliminary injunction against the enforcement of the Contraception Mandate with respect to the plaintiffs, the court relied on the plaintiffs’ rights and the government’s obligations under  the Religious Freedom Restoration Act and never had to reach the issues of the Constitution and the Administrative Procedure Act. (Let me add that the court did not address the plaintiffs’ argument that the Contraception Mandate does not promote public health. But this author did – at length -- on these pages on June 13. )

 In other contexts Obama and Pelosi and other Democrats highlight the moral obligations of companies. They would not so lightly dismiss the moral convictions of companies who refuse to bribe foreign officials to obtain business, or who do the utmost to protect consumers of drugs, food or toys from harm, or who religiously adhere to campaign finance regulations, or who protect the environment from their waste, and on and on. I do not hear Democrats, for example, objecting to the recent imposition of a penalty by the NCAA on Pennsylvania State University for its corporate moral and legal failures. And the Democrats do not ignore the lack of moral convictions of companies which manufactured Zyklon-B or transported Jews to the concentration camps or benefited from South African apartheid. The Democrats do not criticize the series of war crimes trials after World War II against IG Farben, Flick and Krupp.

Why do the Democrats insist that companies act ethically if companies as such are incapable of acting ethically or unethically because only people can? 

Spero columnist James Thunder is an attorney based in Washington DC. 




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