Gilardi v. United States Department of Health & Human Services

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 24, 2013 Decided November 1, 2013

No. 13-5069

FRANCIS A. GILARDI, ET AL.,

APPELLANTS

v.

UNITED STATES DEPARTMENT OF HEALTH AND HUMAN

SERVICES, ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:13-cv-00104)

Francis J. Manion, pro hac vice, argued the cause for

appellants. With him on the briefs were Colby M. May and

Carly F. Gammill.

Kimberlee Wood Colby was on the brief for amici curiae

Association of Gospel Rescue Missions, et al., in support of

appellants.

Deborah J. Dewart was on the brief for amicus curiae

Liberty, Life, and Law Foundation in support of appellants.

Dwight G. Duncan was on the brief for amici curiae 28

Catholic Theologians, et al. in support of appellants.

2

Lawrence J. Joseph was on the brief for amicus curiae

Eagle Forum Education & Legal Defense Fund in support of

appellants.

William Lee Saunders, Jr. was on the brief for amici

curiae American Association of Pro-Life Obstetricians and

Gynecologists, et al. in support of appellants.

Dorinda C. Bordlee was on the brief for amici curiae

Abortion Breast Cancer Coalition, et al. in support of

appellants.

Noel J. Francisco was on the brief for amicus curiae

Archdiocese of Cincinnati in support of appellants.

Michael Dewine, Attorney General, Office of the

Attorney General of the State of Ohio, and Jennifer L. Pratt,

Assistant Attorney General, were on the brief for amcius

curiae State of Ohio in support of appellants.

Michael F. Smith was on the brief for amicus curiae Life

Legal Defense Foundation in support of appellants.

Alisa B. Klein, Attorney, U.S. Department of Justice,

argued the cause for appellees. With her on the briefs were

Stuart F. Delery, Acting Assistant Attorney General, Ronald

C. Machen, Jr., U.S. Attorney, Beth S. Brinkmann, Deputy

Assistant Attorney General, and Mark B. Stern, Attorneys.

Lisa S. Blatt, Robert J. Katerberg, Andrew S. Macurdy,

and Julianna S. Gonen were on the brief for amici curiae

Center for Reproductive Rights, et al. in support of appellees.

3

Charles E. Davidow and Marcia D. Greenberger were on

the brief for amici curiae American Association of University

Women, et al. in support of appellees.

Ayesha N. Khan, Gregory M. Lipper, and Daniel Mach

were on the brief for amici curiae Americans United for

Separation of Church and State, et al. in support of appellees.

Michelle A. Kisloff was on the brief for amici curiae

Ovarian Cancer National Alliance, et al. in support of

appellees.

Martha Jane Perkins was on the brief for amici curiae

National Health Law Program, et al. in support of appellees.

Jennifer C. Pizer, Camilla B. Taylor, and Thomas W.

Ude, Jr. were on the brief for amicus curiae Lambda Legal

Defense and Education Fund, Inc. in support of appellees.

Bruce H. Schneider was on the brief for amici curiae

Physicians for Reproductive Health, et al. in support of

appellees.

Before: BROWN, Circuit Judge, and EDWARDS and

RANDOLPH, Senior Circuit Judges.

Opinion for the Court filed by Circuit Judge BROWN,

with whom Senior Circuit Judge EDWARDS joins except as to

parts VI, VII, and VIII, and with whom Senior Circuit Judge

RANDOLPH joins except as to parts III and IV.

Opinion concurring in part and concurring in the

judgment filed by Senior Circuit Judge RANDOLPH.

4

Opinion concurring in part and dissenting in part filed by

Senior Circuit Judge EDWARDS.

BROWN, Circuit Judge. Two years after our decision

Seven-Sky v. Holder, 661 F.3d 1 (D.C. Cir. 2011), we are

asked to revisit the behemoth known as the Affordable Care

Act. This time, however, we are not confronted with a

question of constitutional authority. Instead, we must

determine whether the contraceptive mandate imposed by the

Act trammels the right of free exercise—a right that lies at the

core of our constitutional liberties—as protected by the

Religious Freedom Restoration Act. We conclude it does.

I

Two brothers, Francis and Philip Gilardi, are equal

owners of Freshway Foods and Freshway Logistics—both

companies are closely-held corporations that have elected to

be taxed under Subchapter S of the Internal Revenue Code.

The two companies collectively employ about 400 employees

and operate a self-insured health plan through a third-party

administrator and stop-loss provider.

As adherents of the Catholic faith, the Gilardis oppose

contraception, sterilization, and abortion. Accordingly, the

two brothers—exercising their powers as owners and

company executives—excluded coverage of products and

services falling under these categories.

But along came the Affordable Care Act. Part of the Act

directs all group health plans and health insurance issuers to

provide, without cost-sharing requirements, preventive care as

determined by the Health Resources and Services

Administration. 42 U.S.C. § 300gg-13(a)(4). In turn, the

Administration issued guidelines requiring coverage for “all

5

Food and Drug Administration-approved contraceptive

methods, sterilization procedures, and patient education and

counseling for all women with reproductive capacity,” as

prescribed by a healthcare provider. Women’s Preventive

Services Guidelines, HEALTH RES. & SERVS. ADMIN.,

http://www.hrsa.gov/womensguidelines/; see Group Health

Plans and Health Insurance Issuers Relating to Coverage of

Preventive Services Under the Patient Protection Affordable

Care Act, 77 Fed. Reg. 8725, 8725–26 (Feb. 15, 2012) (citing

the online HRSA Guidelines); see also 29 C.F.R. § 2590.715-

2713(a)(1)(iv); 45 C.F.R. 147.131(c).1 There are

exceptions—some ephemeral, some permanent—for

grandfathered plans, religious organizations, and small

businesses. See 26 U.S.C. § 4980H(a); id. § 4980H(c)(2)(A);

42 U.S.C. § 18011; 45 C.F.R. §§ 147.130(a)(1)(iv)(A)–(B).

But the Freshway companies do not fall into any of these

categories. As a result, the Gilardis were faced with two

choices: adjust their companies’ plans to provide the

mandated contraceptive services in contravention of their

religious beliefs, or pay a penalty amounting to over $14

million per year.2

Finding themselves on the horns of an impossible

dilemma, the Gilardis and their companies filed suit in district

court, alleging the contraceptive mandate violated their rights

under the Religious Freedom Restoration Act (RFRA), 42

U.S.C. § 2000bb et seq., the Free Exercise Clause, the Free

Speech Clause, and the Administrative Procedure Act. The

plaintiffs moved for a preliminary injunction, but the district

1

For ease of reference, we will refer to this provision as “the

contraceptive mandate.”

2

The Gilardis could have dropped their healthcare coverage

altogether, but they regard this option as morally unthinkable. See

J.A. at 41 ¶ 10; J.A. at 52 ¶ 10.

6

court denied their request. With respect to the Freshway

companies, the court determined they could not “exercise”

religion and thus no substantial burden on religious exercise

was demonstrable under RFRA. As for the Gilardis, the court

found any burden on the Gilardis’ religious beliefs was

indirect.

The plaintiffs timely filed an interlocutory appeal and

moved for an injunction pending appeal. After having

initially denied their motion, we issued, sua sponte, an order

giving them a temporary reprieve from the mandate.

II

Our standard of review for a denial of a preliminary

injunction rests upon what aspect of the district court’s

decision we are examining. Insofar as our review concerns

the district court’s consideration of the preliminary-injunction

factors and the ultimate decision to grant or deny the

injunction, we review for an abuse of discretion. See In re

Navy Chaplaincy, 697 F.3d 1171, 1178 (D.C. Cir. 2012). But

we review the legal conclusions underlying the decision de

novo and review findings of fact for clear error. Id.;

Chaplaincy of Full Gospel Churches v. England, 454 F.3d

290, 297 (D.C. Cir. 2006).

“In ruling on a preliminary injunction a key issue—often

the dispositive one—is whether the movant has shown a

substantial likelihood of success on the merits.” Greater New

Orleans Fair Hous. Action Ctr. v. U.S. Dep’t of Hous. &

Urban Dev., 639 F.3d 1078, 1083 (D.C. Cir. 2011). To

determine this likelihood, we must answer whether the

contraceptive mandate of 45 C.F.R. § 147.130(a)(1)(iv), as

applied to the Appellants, violates their free-exercise rights as

protected by RFRA. As the parties have made eminently

7

clear, we must separately examine the claims by the Freshway

companies and their owners.

III

We begin with the Freshway companies. Before

addressing the merits of their RFRA claim, we must first ask

whether they may bring the challenge at all. The statute

allows “[a] person whose religious exercise has been

burdened” to seek judicial relief, but leaves us bereft of

guidance on who a “person” is. See 42 U.S.C. § 2000bb-1(c)

(emphasis added).

For at least one of our sister circuits (as well as the

Appellants), the Dictionary Act, 1 U.S.C. § 1, dispositively

answers the question. See Hobby Lobby Stores, Inc. v.

Sebelius, 723 F.3d 1114, 1129, 1132 (10th Cir. 2013) (en

banc). Under the Act, the definition of “person” extends to

“corporations, companies, associations, firms, partnerships,

societies, and joint stock companies”—in other words, it

encompasses the corporeal and the incorporeal. 1 U.S.C. § 1.

The Freshway companies largely depend on the Dictionary

Act’s elision of the differences in identity, hoping it applies to

their RFRA claim.

But the focus on personhood is too narrow; instead, we

must construe the term “person” together with the phrase

“exercise of religion.” See Rasul v. Myers, 512 F.3d 644, 668

(D.C. Cir. 2008) (“Because RFRA prohibits the Government

from ‘substantially burden[ing] a person’s exercise of

religion’ instead of simply the exercise of religion, 42 U.S.C.

§ 2000bb-1(a), we must construe ‘person’ as qualifying

‘exercise of religion.’” (emphasis in original)), vacated and

remanded on other grounds by 555 U.S. 1083 (2008); see also

42 U.S.C. § 2000bb-1(c) (“A person whose religious exercise

8

has been burdened in violation of this section may . . . obtain

appropriate relief against a government.” (emphasis added)).

And RFRA provides us with no helpful definition of “exercise

of religion”; all we can glean from the statute is that

“‘religious exercise’ includes any exercise of religion,

whether or not compelled by, or central to, a system of

religious belief.” 42 U.S.C. §§ 2000bb-2(4), 2000cc-5(7)(A).

We must therefore turn to the full body of our free-exercise

caselaw to discern whether the Freshway companies are

persons capable of religious exercise under the statute. See

Rasul, 512 F.3d at 671; see also Autocam Corp. v. Sebelius, --

- F.3d ----, 2013 WL 5182544, at *7 (6th Cir. Sept. 17, 2013);

Hobby Lobby, 723 F.3d at 1167 (Briscoe, C.J., concurring in

part and dissenting in part).

IV

The query is simple: do corporations enjoy the shelter of

the Free Exercise Clause? Or is the free-exercise right a

“purely personal” one, such that it is “unavailable to

corporations and other organizations because the ‘historic

function’ of the particular guarantee has been limited to the

protection of individuals”? First Nat’l Bank of Bos. v.

Bellotti, 435 U.S. 765, 778 n.14 (1978) (quoting United States

v. White, 322 U.S. 694, 698–701 (1944)). We turn to the

“nature, history, and purpose” of the Clause for our answer.

Id.

At the time of the Framing, a great debate raged on the

precise formulation of what we now know as the Free

Exercise Clause. See Michael W. McConnell, The Origins

and Historical Understanding of Free Exercise of Religion,

103 HARV. L. REV. 1409, 1480–85 (1990). The earliest drafts

from the House of Representatives focused on the protection

of conscience, rather than the “exercise of religion.” See id. at

9

1482; see also 1 ANNALS OF CONGRESS 729 (1789) (noting a

later amendment to change the Clause’s prototype to read:

“no religion shall be established by law, nor shall the equal

rights of conscience be infringed”). And as the debates went

on, strong concerns arose that the rights of religious sects

would not be “well secured under the . . . Constitution.” 1

ANNALS OF CONGRESS 730 (remarks of Daniel Carroll, Aug.

15, 1789). To address these concerns and others, the House

continued to tinker and toil; once the dust had settled, it

eventually proposed a constitutional amendment barring

Congress from “prevent[ing] the free exercise” of religion and

“infring[ing] the rights of conscience.” 1 id. at 766. But the

Senate had different ideas, and in the end, it was the free

exercise of religion—standing alone—that was sent to the

states for ratification. See McConnell, supra, at 1488; see

also LOUIS FISHER, RELIGIOUS LIBERTY IN AMERICA:

POLITICAL SAFEGUARDS 56 (2002).

This history reveals two things about the Clause’s

purpose relevant to our inquiry today. First, the constitutional

guarantee “extended the broader freedom of action to all

believers,” allowing for the inclusion of “conduct as well as

belief.” McConnell, supra, at 1490. Second, the adopted

formulation encompassed both individual judgment, as well

as “the corporate or institutional aspects of religious belief.”

Id. Because the word religion “connotes a community of

believers,” the prohibition against the impingement on

religious free exercise must be understood to cover the

activities of both individuals and religious bodies. See id.

And these two groups have been the beneficiaries of the

Supreme Court’s free-exercise jurisprudence. To be sure, the

right has largely been understood as a personal one. Before

incorporation, the Court described the free-exercise right as

an individual one—“the indefeasible right to worship God

10

according to the dictates of conscience.” Cummings v.

Missouri, 71 U.S. 277, 304 (1866). Incorporation did nothing

to alter that sentiment; shortly after Cantwell v. Connecticut,

310 U.S. 296 (1940), the Court reaffirmed the personal nature

of the right as part of “the mind and spirit of man.” See Jones

v. City of Opelika, 316 U.S. 584, 594 (1942), overruled on

other grounds by 319 U.S. 103 (1943); see also Sch. Dist. of

Abington Twp. v. Schempp, 374 U.S. 203, 223 (1963) (“[The

purpose of the Free Exercise Clause] is to secure religious

liberty in the individual by prohibiting any invasions thereof

by civil authority.” (emphasis added)). And that

understanding still resonates with the modern Court. See

Zelman v. Simmons-Harris, 536 U.S. 639, 679 n.4 (2002)

(Thomas, J., concurring) (“In particular, these rights inhere in

the Free Exercise Clause, which unlike the Establishment

Clause protects individual liberties of religious worship.”).

That is not to say the Court views organizations as

constitutional outliers—indeed, its jurisprudence reflects the

foundational principle that religious bodies—representing a

communion of faith and a community of believers—are

entitled to the shield of the Free Exercise Clause. The Court

has heard free-exercise challenges from religious entities and

religious organizations. See Jimmy Swaggart Ministries v.

Bd. of Equalization of Cal., 493 U.S. 378, 381 (1990); Corp.

of the Presiding Bishop of the Church of Jesus Christ of

Latter-Day Saints v. Amos, 483 U.S. 327, 330 (1987); Tony &

Susan Alamo Found. v. Sec’y of Labor, 471 U.S. 290, 292

(1985); Kedroff v. St. Nicholas Cathedral of Russian

Orthodox Church in N. Am., 344 U.S. 94, 107–08 (1952). It

has listened to the grievances of religious sects and member

congregations. See Hosanna-Tabor Evangelical Lutheran

Church & Sch. v. EEOC, 132 S. Ct. 694, 699 (2012);

Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal,

546 U.S. 418, 425 (2006); Church of the Lukumi Babalu Aye,

11

Inc. v. City of Hialeah, 508 U.S. 520, 524 (1993). It has even

entertained claims by religious and educational institutions.

See Bob Jones Univ. v. United States, 461 U.S. 574, 579–80

(1983).

Beyond these cases involving religious organizations,

however, we glean nothing from the Court’s jurisprudence

that suggests other entities may raise a free-exercise

challenge. But that the Court has never seriously considered

such a claim by a secular corporation or other organizational

entity is not to say it never will. For the nonce, only one

aberrational case comes to mind. In Gallagher v. Crown

Kosher Super Market of Massachusetts, Inc., 366 U.S. 617

(1961), a corporation operated by members of the Orthodox

Jewish faith challenged the constitutionality of

Massachusetts’ Sunday closing laws. See id. at 618. The

Court summarily disposed of the corporation’s free-exercise

claim, tersely noting that Braunfeld v. Brown, 366 U.S. 599

(1961), obviated the need for further discussion. See Crown

Kosher, 366 U.S. at 631. Technically speaking, the Court did

rule on the merits of the case. But it remained dubitante

about standing—perhaps the novelty of a secular corporation

bringing a free-exercise challenge was too novel. See id.

(“Since the decision in [Braunfeld] rejects the contentions

presented by these appellees on the merits, we need not

decide whether appellees have standing to raise these

questions.”); cf. Hobby Lobby, 723 F.3d at 1150 (Hartz, J.,

concurring). Meanwhile, we need not base a right of free

exercise for nonreligious organizations on so thin a reed of

caselaw, especially as both we and the Supreme Court have

expressed strong doubts about that proposition. See, e.g.,

Harris v. McRae, 448 U.S. 297, 321 (1980) (explaining that a

free-exercise challenge is “one that ordinarily requires

individual participation”); Holy Land Found. for Relief &

Dev. v. Ashcroft, 333 F.3d 156, 167 (D.C. Cir. 2003) (noting

12

“the dubious proposition that a charitable corporation not

otherwise defined can exercise religion as protected in the

First Amendment”).

Citing Citizens United v. FEC, 558 U.S. 310 (2010), the

Freshway companies argue that corporations—religious or

otherwise—are entitled to the full array of First Amendment

protections, including the right to free exercise. They are not

the only proponents of this position. See Hobby Lobby, 723

F.3d at 1135 (majority opinion) (“Because Hobby Lobby and

Mardel express themselves for religious purposes, the First

Amendment logic of Citizens United, where the Supreme

Court has recognized a First Amendment right of for-profit

corporations to express themselves for political purposes,

applies as well.” (citation omitted)); see also Conestoga Wood

Specialties Corp. v. Sec’y of the U.S. Dep’t of Health &

Human Servs., 724 F.3d 377, 400 (3d Cir. 2013) (Jordan, J.,

dissenting) (citing Citizens United, 558 U.S. at 342). There is

an appeal to this simple reasoning; after all, the free-exercise

and free-speech rights are enshrined in the same constitutional

provision, separated only by a semicolon.

Perhaps Appellants’ constitutional arithmetic, Citizens

United plus the Free Exercise Clause equals a corporate free-

exercise right, will ultimately prevail. But we must be

mindful that Citizens United represents the culmination of

decades of Supreme Court jurisprudence recognizing that all

corporations speak. See Conestoga Wood, 724 F.3d at 384.

When it comes to the free exercise of religion, however, the

Court has only indicated that people and churches worship.

As for secular corporations, the Court has been all but silent.

Consider Bellotti—the progenitor of Citizens United.

When the Bellotti Court declared “political speech does not

lose First Amendment protection ‘simply because its source is

13

a corporation,’” Citizens United, 558 U.S. at 342 (quoting

Bellotti, 435 U.S. at 784), it reviewed many cases in which

the Court invalidated a state law because it “infringe[d on]

protected speech by corporate bodies.” Bellotti, 435 U.S. at

778 n.14. In other words, Bellotti crystallized a robust body

of caselaw giving rise to the constitutional right of corporate

political speech, which the Citizens United Court could rely

on as a firm foundation.

No such corpus juris exists to suggest a free-exercise

right for secular corporations. Thus, we read the “nature,

history, and purpose” of the Free Exercise Clause as

militating against the discernment of such a right. When it

comes to corporate entities, only religious organizations are

accorded the protections of the Clause. And we decline to

give credence to the notion that the for-profit/non-profit

distinction is dispositive, as that, too, is absent from the

Clause’s history. Fortunately, we need not opine here on

what a “religious organization” is, as the Freshway companies

have conceded they do not meet that criterion.

The Freshway companies alternatively assert they can

vindicate the free-exercise rights of their owners. They

reason that if “a company is owned and controlled by a few

like-minded individuals who share the same religious values

and run the company pursuant to those values,” the company

may serve as the owners’ surrogate. Appellants’ Br. at 50.

This pass-through theory of corporate standing is logically

and structurally appealing in light of the government’s shell

game. And EEOC v. Townley Engineering & Manufacturing

Co., 859 F.2d 610 (9th Cir. 1988) provides longstanding, if

illusory, support. In Townley, the Ninth Circuit concluded—

without much in the way of legal substantiation—that the

corporation was “merely the instrument through and by which

[the owners] express[ed] their religious beliefs.” Id. at 619.

14

Admittedly, there is a certain theological congruence to

Townley’s characterization. The Bible says “faith without

works is dead.” James 2:26 (King James). As amici point

out, not only are Catholic employers morally responsible for

the management of their companies, “instructing or

encouraging someone else to commit a wrongful act is itself a

grave moral wrong—i.e., ‘scandal’—under Catholic

doctrine.” Br. of Catholic Theologians at 3. Thus, amici

reason, “the Mandate thrusts Catholic employers into a

‘perfect storm’ of moral complicity in the forbidden actions.”

Br. of Catholic Theologians at 5; see also Br. of the

Archdiocese of Cincinnati at 16–17 nn. 6, 7. When even

attenuated participation may be construed as a sin, see, e.g.,

United States v. Lee, 455 U.S. 252, 261 n.12 (1982), it is not

for courts to decide that the corporate veil severs the owner’s

moral responsibility.

But dogma does not dictate justiciability. Though

Townley’s conclusion is theologically defensible, its standing

bona fides, supported only by a reference to a footnote in

Tony & Susan Alamo Foundation v. Secretary of Labor, 471

U.S. 290 (1985), are more dubious. The Alamo Foundation

Court relied on a theory of religious associational standing; in

other words, the organization could raise a free-exercise

defense on behalf of one of its executives because the

executive was an adherent to the group’s religious creed. See

id. at 303 n.26. How this supports standing for a secular

corporation to vindicate its owners’ free-exercise rights is

unclear.

Townley’s misconception of religious associational

standing has spread from one free-exercise case to another,

even creeping its way into the current contraceptive mandate

challenges. See Stormans, Inc. v. Selecky, 586 F.3d 1109,

15

1120 (9th Cir. 2009); see also Monaghan v. Sebelius, 931 F.

Supp. 2d 794, 800–02 (E.D. Mich. 2013); Geneva Coll. v.

Sebelius, 929 F. Supp. 2d 402, 428 (W.D. Pa. 2013). While

we decline the Freshway companies’ invitation to accept

Townley’s ipse dixit that closely held corporations can

vindicate the rights of their owners, we understand the

impulse. The free exercise protection—a core bulwark of

freedom—should not be expunged by a label. But for now,

we have no basis for concluding a secular organization can

exercise religion.

V

That leaves the Gilardis.3 Obviously, they have no

difficulty satisfying the threshold inquiry to which their

enterprises succumbed; they are, most assuredly, “persons”

under RFRA. See also Rasul v. Myers, 563 F.3d 527, 533

(D.C. Cir. 2009) (Brown, J., concurring) (“RFRA does not

define ‘person,’ so we must look to the word’s ordinary

meaning. There is little mystery that a ‘person’ is ‘an

individual human being . . . as distinguished from an animal

or a thing.’” (quoting WEBSTER’S NEW INTERNATIONAL

DICTIONARY 1606 (1981)). And there is no dispute that the

mandate, as directed to the Gilardis, is a palpable and

discernible infringement of free exercise. All that stands

between the Gilardis and the hope of vindication is the

3

We agree with Judge Edwards that the Gilardis’ Article III

standing is indisputable. See Op. of Edwards, J., at 6–7.

16

uncertain4 barrier of the shareholder-standing rule and an

inchoate concern about prudential standing—a “jurisdictional

issue which cannot be waived or conceded” in this circuit.

Ass’n of Battery Recyclers, Inc. v. EPA, 716 F.3d 667, 674

(D.C. Cir. 2013).

The shareholder-standing rule gives us little pause; we

are satisfied that the Gilardis have been “injured in a way that

is separate and distinct from an injury to the corporation.”

See Crosby v. Beam, 548 N.E.2d 217, 219 (Ohio 1989); see

also Rawoof v. Texor Petroleum Co., 521 F.3d 750, 757 (7th

Cir. 2008) (employing the state-law derivative action rule to

address shareholder standing in a federal question case). If

the companies have no claim to enforce—and as nonreligious

corporations, they cannot engage in religious exercise—we

are left with the obvious conclusion: the right belongs to the

Gilardis, existing independently of any right of the Freshway

companies. Thus, the Gilardis’ injury—which arises

4

We assume, without deciding, that Congress did not intend to

abrogate the prudential-standing requirement in enacting RFRA.

We share Judge Edwards’ concerns about whether prudential-

standing principles apply to RFRA challenges and whether the

shareholder-standing rule is part of the prudential-standing

equation. See Op. of Edwards, J., at 9–12. But it would be

imprudent to decide these questions without the benefit of full

briefing on this issue, especially as the Gilardis can easily surmount

the shareholder-standing hurdle.

17

therefrom—is “separate and distinct,” providing us with an

exception to the shareholder-standing rule.5

VI

We now reach the heart of the Gilardis’ RFRA claim.

The Act requires the Gilardis to “allege[] a substantial burden

on [their] religious exercise.” Kaemmerling v. Lappin, 553

F.3d 669, 677 (D.C. Cir. 2008). Religious exercise is broadly

defined as “any exercise of religion, whether or not compelled

by, or central to, a system of religious belief.” 42 U.S.C. §

2000cc-5(7)(A); see also id. § 2000bb-2. A “substantial

burden” is “substantial pressure on an adherent to modify his

behavior and to violate his beliefs.” Kaemmerling, 553 F.3d

at 678 (quoting Thomas v. Review Bd. of Ind. Emp’t Sec. Div.,

450 U.S. 707, 718 (1981)).

We begin with the peculiar step of explaining what is not

at issue. This case is not about the sincerity of the Gilardis’

religious beliefs, nor does it concern the theology behind

Catholic precepts on contraception. The former is

unchallenged, while the latter is unchallengeable. See id. at

5

Our conclusion is buttressed by other considerations. First, Ohio

caselaw does not treat the derivative-action rule as an unyielding

one; to the contrary, some flexibility has been shown when it comes

to close corporations such as the Freshway companies. See, e.g.,

Yackel v. Kay, 642 N.E.2d 1107, 1109–10 (Ohio Ct. App. 1994).

Moreover, none of the principles underlying the shareholder-

standing rule is offended by allowing the Gilardis’ suit to

proceed—there is no danger of multiple lawsuits, and no creditor or

shareholder interests will be compromised as a result of their RFRA

challenge. See 12B W. FLETCHER CYCLOPEDIA OF THE LAW OF

CORPORATIONS § 5911.50 (2006). We recognize that shareholders

of large public corporations will be subject to different constraints

and will likely find the burden threshold insuperable.

18

716 (“Particularly in this sensitive area, it is not within the

judicial function and judicial competence to inquire whether

the petitioner or his fellow worker more correctly perceived

the commands of their common faith. Courts are not arbiters

of scriptural interpretation.”); see also United States v.

Ballard, 322 U.S. 78, 86 (1944) (“Men may believe what they

cannot prove. They may not be put to the proof of their

religious doctrines or beliefs.”). Equally uncontroverted is the

nature of the Gilardis’ religious exercise: they operate their

corporate enterprises in accordance with the tenets of their

Catholic faith. See Hobby Lobby, 723 F.3d at 1189

(Matheson, J., concurring in part and dissenting in part).

The only dispute touches on the characterization of the

burden. The burden is too remote and too attenuated, the

government says, as it arises only when an employee

purchases a contraceptive or uses contraceptive services. We

disagree with the government’s foundational premise. The

burden on religious exercise does not occur at the point of

contraceptive purchase; instead, it occurs when a company’s

owners fill the basket of goods and services that constitute a

healthcare plan. In other words, the Gilardis are burdened

when they are pressured to choose between violating their

religious beliefs in managing their selected plan or paying

onerous penalties. See Thomas, 450 U.S. at 717–18;

Wisconsin v. Yoder, 406 U.S. 205, 218 (1972) (“The impact

of the compulsory-attendance law on respondents’ practice of

the Amish religion is not only severe, but inescapable, for the

Wisconsin law affirmatively compels them, under threat of

criminal sanction, to perform acts undeniably at odds with

fundamental tenets of their religious beliefs.”); Kaemmerling,

553 F.3d at 678.

The Framers of the Constitution clearly embraced the

philosophical insight that government coercion of moral

19

agency is odious. Penalties are impertinent, according to

Locke, if they are used to compel men “to quit the light of

their own reason, and oppose the dictates of their own

consciences.” JOHN LOCKE, A LETTER CONCERNING

TOLERATION 13–14 (J. Brook ed., 1792) (1689). Madison

described conscience as “the most sacred of all property,”

James Madison, Property, NAT’L GAZETTE, Mar. 29, 1792, at

174, reprinted in JAMES MADISON’S “ADVICE TO MY

COUNTRY” 25, 83–84 (David B. Mattern ed., 1997), and

placed the freedom of conscience prior to and superior to all

other natural rights. Religion, he wrote, is “the duty which we

owe to our Creator . . . being under the direction of reason and

conviction only, not of violence or compulsion,” 1 MADISON

PAPERS 174 (1962), “precedent” to “the claims of Civil

Society,” JAMES MADISON, MEMORIAL AND REMONSTRANCE

AGAINST RELIGIOUS ASSESSMENTS (1785); see also United

States v. Macintosh, 283 U.S. 605, 633–34 (1931) (Hughes,

C.J., dissenting) (“[I]n the forum of conscience, duty to a

moral power higher than the state has always been

maintained. . . . The essence of religion is belief in a relation

to God involving duties superior to those arising from any

human relation.”).

From thence sprang the idea that the right to free exercise

necessarily prohibits the government from “compel[ling] a

man to furnish contributions of money for the propagation of

opinions which he disbelieves.” THOMAS JEFFERSON, THE

VIRGINIA ACT FOR ESTABLISHING RELIGIOUS FREEDOM

(1786). And that prohibition has plainly manifested itself

throughout the years as an integral component of the free-

exercise guarantee. Justice Brennan, writing for the Court in

Sherbert v. Verner, 374 U.S. 398 (1963), put it well:

“Government may neither compel affirmation of a repugnant

belief, nor penalize or discriminate against individuals

20

because they hold religious views abhorrent to the

authorities.” Id. at 402 (citations omitted).

The contraceptive mandate demands that owners like the

Gilardis meaningfully approve and endorse the inclusion of

contraceptive coverage in their companies’ employer-

provided plans, over whatever objections they may have.

Such an endorsement—procured exclusively by regulatory

ukase—is a “compel[led] affirmation of a repugnant belief.”

See id. That, standing alone, is a cognizable burden on free

exercise. And the burden becomes substantial because the

government commands compliance by giving the Gilardis a

Hobson’s choice. They can either abide by the sacred tenets

of their faith, pay a penalty of over $14 million, and cripple

the companies they have spent a lifetime building, or they

become complicit in a grave moral wrong. If that is not

“substantial pressure on an adherent to modify his behavior

and to violate his beliefs,” we fail to see how the standard

could be met. See Thomas, 450 U.S. at 718.

In suggesting that no substantial burden lies with the

Gilardis, the government invokes the principles undergirding

the bargain for the corporate veil. True, it is an elementary

principle of corporate law 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). And as part of that fiction,

shareholders forgo certain rights pertaining to the corporation.

See Grote v. Sebelius, 708 F.3d 850, 858 (7th Cir. 2013)

(Rovner, J., dissenting). But we cannot simply stop there.

Shareholders make such a sacrifice because the corporation

can generally exercise some analogue of the forgone right.

As a corporation is “capable of making and executing

21

contracts, possessing and owning real and personal property

in its own name, suing and being sued,” a shareholder cannot

expect to exercise the right to take these actions in his or her

personal capacity. See 1 W. FLETCHER CYCLOPEDIA OF THE

LAW OF CORPORATIONS § 25 (2006). This is no less true with

constitutional rights. See Franks v. Rankin, Nos. 11AP-934,

11AP-962, 2012 WL 1531031, at *10 (Ohio Ct. App. May 1,

2012) (rejecting a shareholder’s due process claim brought on

behalf of the corporation).

Mindful of these principles, consider the ramifications of

the government’s argument. It contends free exercise is an

individual right. If the Gilardis had run their businesses as

sole proprietorships, they would presumably have a viable

RFRA claim under the government’s theory. Cf. Braunfeld,

366 U.S. at 601 (describing individual merchants who

challenged a Sunday closing law under the Free Exercise

Clause). But the government, relying on what is perhaps an

incomplete understanding of corporate law, argues the

Gilardis lose the ability to make such a claim by taking

advantage of state incorporation law. And as a corollary to

the government’s expansive theory, the party being

regulated—the corporation—cannot make a free-exercise

claim, as it is not an individual capable of exercising religion.

So, in the government’s view, there is no corporate analogue,

and the individual right disappears into the ether.

This interpretation is perplexing and troubling. It is

perplexing because we do not believe Congress intended

important statutory rights to turn on the manner in which an

individual operates his businesses. The government’s logic is

also quite troubling because it would eventually reach First

Amendment free-exercise cases. The same language,

“exercise” “of religion,” appears both in the Constitution and

RFRA. Compare U.S. CONST. AMEND. I (“Congress shall

22

make no law respecting an establishment of religion, or

prohibiting the free exercise thereof . . . .”), with 42 U.S.C. §

2000bb-1(a) (“Government shall not burden a person’s

exercise of religion . . . .”). Thus, if the government is

correct, the price of incorporation is not only the loss of

RFRA’s statutory free-exercise right, but the constitutional

one as well. And that would create a risk of an

unconstitutional condition in future cases. See Perry v.

Sindermann, 408 U.S. 593, 597 (1972) (“[T]his Court has

made clear that even though a person has no ‘right’ to a

valuable governmental benefit and even though the

government may deny him the benefit for any number of

reasons, there are some reasons upon which the government

may not rely. It may not deny a benefit to a person on the

basis that infringes on his constitutionally protected interests .

. . .” (emphasis added)).

A parade of horribles will descend upon us, the

government exclaims, if religious beliefs could serve as a

private veto for the contraceptive mandate. Hyperbole aside,

we note it was Congress, and not the courts, that allowed for

an individual’s religious conscience to prevail over

substantially burdensome federal regulation. In Gonzales v. O

Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418

(2006), the Supreme Court provided an apt response:

The Government’s argument echoes the classic rejoinder

of bureaucrats throughout history: If I make an exception

for you, I’ll have to make one for everybody, so no

exceptions. But RFRA operates by mandating

consideration, under the compelling interest test, of

exceptions to “rule[s] of general applicability.” 42

U.S.C. § 2000bb-1(a). Congress determined that the

legislated test [of RFRA] “is a workable test for striking

23

sensible balances between religious liberty and

competing governmental interests.” § 2000bb(a)(5).

Id. at 436 (alteration in original).

VII

As the Gilardis have demonstrated the substantial nature

of their burden, we now turn to strict scrutiny, a “searching

examination” where the onus is borne exclusively by the

government. Fisher v. Univ. of Tex., 133 S. Ct. 2411, 2419

(2013); see also 42 U.S.C. § 2000bb-1(b). “[U]nless the

government demonstrates a compelling governmental interest,

and uses the least restrictive means of furthering that interest,”

the mandate must be set aside. See Holy Land, 333 F.3d at

166 (internal quotation marks omitted); see also 42 U.S.C. §

2000bb. While “strict scrutiny must not be strict in theory,

but fatal in fact,” neither should it be “strict in theory but

feeble in fact.” Fisher, 133 S. Ct. at 2421 (internal quotation

marks omitted).

A

It is difficult to divine precisely what makes an interest

“compelling,” but a few reliable metrics exist. The interest

cannot be “broadly formulated”—the test demands

particularity. See O Centro, 546 U.S. at 431 (citing Yoder,

406 U.S. at 213, 221). The “compelling” nature of the

interest is contingent on its context. See id. (citing Grutter v.

Bollinger, 539 U.S. 306, 327 (2003); Adarand Constructors,

Inc. v. Pena, 515 U.S. 200, 228 (1995)). And the interest

must be “of the highest order,” Yoder, 406 U.S. at 215,

meaning it cannot leave “appreciable damage to [a]

supposedly vital interest unprohibited,” Lukumi, 508 U.S. at

547 (quoting Florida Star v. B.J.F., 491 U.S. 524, 541–42

24

(1989) (Scalia, J., concurring in part and concurring in the

judgment)).6

The government cites several concerns to bolster its

claim that the contraceptive mandate serves a compelling

interest (or interests), but its recitation is sketchy and highly

abstract. Perhaps the government thought it best to focus on

justiciability, hoping its ipse dixit would be sufficient to

survive strict scrutiny. After all, if no one has standing to

object, the state avoids the searching inquiry into its means.

Here, the articulated concerns range from “safeguarding the

public health” to “protecting a woman’s compelling interest in

autonomy” and promoting gender equality. But the

government does little to demonstrate a nexus between this

array of issues and the mandate.

For example, as a standalone principle, “safeguarding the

public health” seems too broadly formulated to satisfy the

compelling interest test. It has been used to justify all manner

of government regulations in other contexts. See Roe v.

Wade, 410 U.S. 113, 154 (1973) (abortion laws); Loxley v.

Chesapeake Hosp. Auth., No. 97-2539, 1998 WL 827285, at

*4 (4th Cir. Dec. 1, 1998) (competence of medical personnel);

Dunagin v. City of Oxford, 718 F.2d 738, 747 (5th Cir. 1983)

(en banc) (liquor advertisement rules). And here, the

government relies on the broad sweep of that interest once

more, citing Mead v. Holder, 766 F. Supp. 2d 16, 43 (D.D.C.

2011), an individual-mandate case in which a district court

found the public health interest sufficient. But the invocation

of the interest in Mead seems empty, reflexive, and

6

Much ink has already been spilled on how the government’s

interests leave “appreciable damage” unprohibited. See Conestoga

Wood, 724 F.3d at 413–14 (Jordan J., dissenting); Hobby Lobby,

723 F.3d at 1143–44. We share these concerns, but need not repeat

them here.

25

talismanic. The government cites Mead as if to say, “once a

compelling interest, always a compelling interest.” It fails to

recognize that “safeguarding the public health” is such a

capacious formula that it requires close scrutiny of the

asserted harm. See O Centro, 546 U.S. at 431. We cannot be

satisfied with the government’s representation as to the

compelling nature of the interest simply because other courts

have reached that conclusion in the generality of cases. See

Yoder, 406 U.S. at 221.

The nebulousness of the government’s interest, however,

prevents us from engaging in the type of exacting scrutiny

warranted here. What exactly is the government trying to

ameliorate? Is it the integrity of “the health and insurance

markets”? Surely, that cannot be the answer; the

comprehensive sweep of the Affordable Care Act will remain

intact with or without the mandate. Or is it a need to provide

greater access to contraceptive care? If so, as we note below,

the reasons underpinning that need are tenuous at best. If we

are to assess whether an exemption for the Gilardis would

pose an “impediment to [a governmental] objective[],” we

must first be able to discern what that objective is. See id. at

221, 236. Simply reciting Mead is not enough.

The government’s invocation of a “woman’s compelling

interest in autonomy” is even less robust. The wording is

telling. It implies autonomy is not the state’s interest to

assert. Nevertheless, the government, quoting Eisenstadt v.

Baird, 405 U.S. 438 (1972), claims the mandate protects a

woman’s ability to decide “whether to bear or beget a child.”

See id. at 453.

Our difficulty in accepting the government’s rationale

stems from looking at the Eisenstadt quote in its entirety: “If

the right of privacy means anything, it is the right of the

26

individual, married or single, to be free from unwarranted

governmental intrusion into matter so fundamentally affecting

a person as the decision to bear or beget a child.” Id.

(emphasis added). Regardless of what this observation means

for us today,7 it is clear the government has failed to

demonstrate how such a right—whether described as

noninterference, privacy, or autonomy—can extend to the

compelled subsidization of a woman’s procreative practices.

Again, our searching examination is impossible unless the

government describes its purposes with precision. As with

Mead, simply invoking Eisenstadt is not enough.

Equally unconvincing is the government’s assertion that

the mandate averts “negative health consequences for both the

woman and the developing fetus.” From the outset, we note

the science is debatable and may actually undermine the

government’s cause. For the potential mother, as one amicus

notes, the World Health Organization classifies certain oral

contraceptives as carcinogens, marked by an increased risk

for breast, cervical, and liver cancers. Br. of the Breast

Cancer Prevention Institute, at 8–9. On the other hand, the

contraceptives at issue have been approved by the Food and

Drug Administration, supported by research touting their

benefits. See Op. of Edwards, J., at 30. This tug-of-war gives

us pause because the government has neither acknowledged

nor resolved these contradictory claims.

Even giving the government the benefit of the doubt, the

health concerns underpinning the mandate can be variously

described as legitimate, substantial, perhaps even important,

7

See A. Raymond Randolph, Before Roe v. Wade: Judge

Friendly’s Draft Abortion Opinion, 29 HARV. J.L. & PUB. POL’Y

1035, 1048 (2006) (describing the transformation of the right

described in Griswold and Roe).

27

but it does not rank as compelling, and that makes all the

difference. Cf. Hutchins v. District of Columbia, 188 F.3d

531, 541 (D.C. Cir. 1999) (en banc). Caselaw concerning the

analogous context of abortion is particularly illuminating in

this regard. Time and again, the government’s interest in such

cases has been deemed legitimate and substantial. See

Planned Parenthood of Se. Pa. v. Casey, 505 U.S. 833, 846

(1992); see also Gonzales v. Carhart, 550 U.S. 124, 145

(2007). But it has never been compelling. See Casey, 505

U.S. at 932 (Blackmun, J., concurring in part and dissenting

in part) (“[W]hile a State has ‘legitimate interests from the

outset of the pregnancy in protecting the health of the woman

and the life of the fetus that may become a child,’ legitimate

interests are not enough. To overcome the burden of strict

scrutiny, the interests must be compelling.”). And we have no

reason to believe otherwise here. While we do not exclude

the possibility that the state’s interest in safeguarding

maternal or fetal health sometimes may be compelling, we

cannot draw such a conclusion in this particular context. See

O Centro, 546 U.S. at 431.

Finally, we note “gender equality” is a bit of a misnomer;

perhaps the government labeled it as such for the veneer of

constitutional importance attached to the term. More

accurately described, the interest at issue is resource parity—

which, in the analogous abortion context, the Supreme Court

has rejected as both a fundamental right and as an equal-

protection issue. See Harris, 448 U.S. at 317–18 (“Although

the liberty protected by the Due Process Clause affords

protection against unwarranted government interference with

freedom of choice in the context of certain personal decisions,

it does not confer an entitlement to such funds as may be

necessary to realize all the advantages of that freedom.”);

Maher v. Roe, 432 U.S. 464, 471 (1977) (“But this Court has

28

never held that financial need alone identifies a suspect class

for purposes of equal protection analysis.”).

The government cites Roberts v. U.S. Jaycees, 468 U.S.

609 (1984), to advance its “gender equality” interest. There,

the Court observed that “[a]ssuring women equal access to

such goods, privileges, and advantages clearly furthers

compelling state interests.” Id. at 626. But when that

observation is put into context, it fails to support the

government’s case. U.S. Jaycees concerned an organization

that had shut women out entirely from a superior class of

membership; it did not involve disparate membership fees or

any resource-parity issue that may sustain the government’s

argument. See id. at 613, 628. This case is quite different.

Beyond the question of access, it is difficult for the

government to suggest the interests of women are monolithic,

and unlike U.S. Jaycees, the government’s proposed solution

clearly impinges on other core prerogatives.

B

Let us assume, however, the government has a

compelling interest. Even then, we cannot see how the

mandate is “the least restrictive means of furthering that . . .

interest.” See 42 U.S.C. § 2000bb-1. It suffers from two

flaws that cannot be overcome. First, there are viable

alternatives—presented by the Gilardis and others—that

would achieve the substantive goals of the mandate while

being sufficiently accommodative of religious exercise. See

Appellants’ Br. at 61; see also Conestoga Wood, 724 F.3d at

414–15 (Jordan, J., dissenting). The government could defeat

these alternatives by proving they would “present an

administrative problem of such magnitude, or . . . afford the

exempted class so great a competitive advantage, that such a

requirement would . . . render[] the entire statutory scheme

29

unworkable.” Sherbert, 374 U.S. at 408–09. But it has made

no such case; for all we know, a broader religious exemption

would have so little impact on so small a group of employees

that the argument cannot be made.

Moreover, the mandate is self-defeating. When a

government regulation “fail[s] to prohibit nonreligious

conduct that endangers [its asserted] interests in a similar or

greater degree” than the regulated conduct, it is

underinclusive by design.8 See Lukumi, 508 U.S. at 543. And

that underinclusiveness can suggest an inability to meet the

narrow-tailoring requirement, as it raises serious questions

about the efficacy and asserted interests served by the

regulation. In this case, small businesses, businesses with

grandfathered plans (albeit temporarily), and an array of other

employers are exempt either from the mandate itself or from

the entire scheme of the Affordable Care Act. Therefore, the

mandate is unquestionably underinclusive. See Hobby Lobby,

723 F.3d at 1143; see also Conestoga Wood, 724 F.3d at 414

(Jordan, J., dissenting) (“It cannot legitimately be said to

vindicate a compelling governmental interest because the

government has already exempted from its reach

grandfathered plans, employers with under 50 employees, and

what it defines as ‘religious employers’, thus voluntarily

8

Underinclusiveness is generally a relevant consideration of the

narrow-tailoring inquiry. See Lukumi, 508 U.S. at 546 (“First, even

were the governmental interests compelling, the ordinances are not

drawn in narrow terms to accomplish those interests. As we have

discussed, all four ordinances are overbroad or underinclusive in

substantial respects.” (emphasis added)). We recognize the

considerable overlap between narrow-tailoring underinclusiveness

and the “appreciable damage” component of the compelling-

interest prong. Nevertheless, we need not reconcile the distinctions

between the two—under both formulations, the government falls

short. See supra at 24 n.6.

30

allowing millions upon millions of people—by some

estimates 190 million—to be covered by insurance plans that

do not satisfy the supposedly vital interest of providing the

public with free contraceptives.” (internal citations omitted)).

A word on Lee. We would be remiss if we omitted this

observation by the Court:

When followers of a particular sect enter into commercial

activity as a matter of choice, the limits they accept on

their own conduct as a matter of conscience and faith are

not to be superimposed on the statutory schemes which

are binding on others in that activity.

455 U.S. at 261. The government understands this quote to

foreclose free-exercise claims by employers like the Gilardis.

But once again, context matters. We mention Lee in our

narrow-tailoring discussion because that is where it belongs.9

The Court made the statement quoted above while evaluating

whether the “limitation on religious liberty . . . [was] essential

to accomplish an overriding governmental interest.” Id. at

257. In engaging in that inquiry, the Court examined

“whether accommodating the Amish belief [would] unduly

interfere with fulfillment of the governmental interest [of

assuring contribution to the Social Security scheme].” Id. at

259.

9

Lee also reinforces our doubts about whether the government’s

asserted interests are sufficiently compelling. The proper

functioning of the tax system was perceived as an interest of “a

high order,” see 455 U.S. at 260, akin to interests of “public safety,

peace, or order” that justified government intrusions on religious

exercise in the past, see Sherbert, 374 U.S. at 403. Given our many

doubts about the interests posited, we are skeptical about whether

the mandate is designed to address “the gravest abuses, endangering

paramount interest.” See Sherbert, 374 U.S. at 406.

31

Lee was a rare case in which the government fended off a

strict-scrutiny challenge by proving exemptions would

“present an administrative problem of such magnitude . . . that

such a requirement would have rendered the entire statutory

scheme unworkable.” Sherbert, 374 U.S. at 408–09; see Lee,

455 U.S. at 158 (“Moreover, a comprehensive national social

security system providing for voluntary participation would

be almost a contradiction in terms and difficult, if not

impossible, to administer.”). Proving the incompatibility of

the requested religious exemption was necessary to prove that

the government had employed the least-restrictive means. See

Lee, 455 U.S. at 259–60 (“Unlike the situation presented in

[Yoder], it would be difficult to accommodate the

comprehensive social security system with myriad exceptions

flowing from a wide variety of religious beliefs.”). Congress

had carefully determined the breaking point of Social

Security—any uncontemplated exemptions could render the

statutory scheme unworkable. See id. at 258.

In contrast, the government has not proven—nay, even

asserted—statutory unworkability here. Its “private veto”

concern is somewhat on point, but without substance or

substantiation, is nowhere near enough. If we found narrow

tailoring satisfied by mere ipse dixit, the strict-scrutiny

inquiry would become feeble indeed. And unlike Lee, where

the government successfully asserted the Social Security

system required every contribution that Congress did not

otherwise exempt, there is nothing to suggest the preventive-

care statute would become unworkable if employers objecting

on religious grounds could opt out of one part of a

comprehensive coverage requirement. The Gilardis’

employees will still receive an array of services such as well-

woman visits, gestational-diabetes screenings, HPV testing,

counseling for sexually-transmitted infections, support for

32

breastfeeding, and counseling for interpersonal and domestic

violence. See Women’s Preventive Services Guidelines,

HEALTH RES. & SERVS. ADMIN.,

http://www.hrsa.gov/womensguidelines/. The provision of

these services—even without the contraceptive mandate—by

and large fulfills the statutory command for insurers to

provide gender-specific preventive care. At the very least, the

statutory scheme will not go to pieces.

VIII

We conclude the district court erred in denying a

preliminary injunction for the Gilardis on the grounds that

their case was unlikely to succeed on the merits; therefore, we

reverse the district court’s denial of a preliminary injunction

for the individual owners. Because the court premised its

decision entirely on a question of law, we must remand for

consideration of the other preliminary-injunction factors. See

Chaplaincy of Full Gospel Churches, 454 F.3d at 304. We

affirm the district court’s denial of a preliminary injunction

with respect to the Freshway companies.

So ordered.

RANDOLPH, Senior Circuit Judge, concurring in part and

concurring in the judgment:

I do not join parts III and IV of Judge Brown’s opinion

because I do not believe we need to reach the potentially far-

reaching corporate free-exercise question. Other courts in

contraceptive-mandate cases have “decline[d] to address the

unresolved question of whether for-profit corporations can

exercise religion.” Tyndale House Publishers, Inc. v. Sebelius,

904 F. Supp. 2d 106, 114 (D.D.C. 2012); see Legatus v.

Sebelius, 901 F. Supp. 2d 980, 988 (E.D. Mich. 2012); cf. Hobby

Lobby Stores, Inc. v. Sebelius, 723 F.3d 1114 (10th Cir. 2013)

(en banc) (majority opinion) (addressing only claims by

corporate, but not individual, plaintiffs). The same approach

may be used without deciding the rights of the Freshway

Corporations because the government could enforce the mandate

against the corporations only by compelling the Gilardis to act.

Since “it is not necessary to decide more, it is necessary not to

decide more.” PDK Labs. Inc. v. U.S. Drug Enforcement

Admin., 362 F.3d 786, 799 (D.C. Cir. 2004) (Roberts, J.,

concurring in part and concurring in the judgment).

We should be particularly hesitant to pass unnecessarily on

such a complex issue. If secular for-profit corporations can

never exercise religion, what of profitable activities of organized

religions? See Hernandez v. Comm’r, 490 U.S. 680, 709 (1989)

(O’Connor, J., dissenting). If only religious for-profit

organizations have a free-exercise right, how does one

distinguish between religious and non-religious organizations?

See Hobby Lobby Stores, 723 F.3d at 1136-37 & n.12; id. at

1170-75 (Briscoe, C.J., concurring in part and dissenting in

part). Why limit the free-exercise right to religious organizations

when many business corporations adhere to religious dogma?

See Mark L. Rienzi, God and the Profits: Is There Religious

Liberty for Money-Makers?, 21 GEO. MASON L. REV.

(manuscript at 11-24) (forthcoming fall 2013). If non-religious

organizations do not have free-exercise rights, why do non-

2

religious natural persons (athiests, for example) possess them?

Torcaso v. Watkins, 367 U.S. 488, 495-96 & n.11 (1961). If a

corporate free-exercise right is recognized, in any form, there

are equally challenging secondary questions. How should the

beliefs of a religious corporation be determined? Can publicly

traded corporations be religious? If so, do they take on the

religions of their shareholders as a matter of course? If a

religious corporation is sold, does it retain its religious identity?

These questions, challenging in themselves, would confront us

in different permutations across the diverse entity forms and

organizational structures of the American business landscape.

I also write separately to emphasize the importance of the

Freshway Corporations’ election to be taxed under subchapter

S of the Internal Revenue Code. I.R.C. §§ 1361–1379. As a

result, the Freshway Corporations do not pay corporate income

taxes. See I.R.C. § 1363(a). Instead, the income of the Freshway

Corporations passes through, pro rata, to their shareholders, the

Gilardis. See I.R.C. § 1366(a)(1). Subchapter S disregards the

corporate form for purposes of the corporate income tax. We

must ask why Congress would have disregarded the corporate

form for subchapter S corporations but then wanted it imposed

to prevent their owners from asserting free-exercise rights under

RFRA. There is no good answer, or at least we have received

none. It would be incongruous to emphasize the corporate veil

in rigid form for RFRA purposes while disregarding it for tax

purposes under subchapter S. This inference is particularly

compelling because both subchapter S and the “tax” that

enforces the contraceptive mandate are part of the Internal

Revenue Code. I.R.C. § 4980D.

The pass-through provisions of subchapter S matter for an

additional reason. If the Gilardis do not order the Freshway

Corporations to comply with the mandate, then their individual

tax returns will be directly affected. As shareholders of an S

3

Corporation (technically, they are treated as one shareholder

under I.R.C. § 1361(c)(1)(A)(ii)), they would “take[] into

account” their “pro rata share of the corporation’s . . . income”

in determining their income tax liabilities. I.R.C. § 1366(a)(1).

In other words, as a direct result of the mandate’s operation the

Gilardis themselves will have less income in each taxable year.

This underscores the “pressure on [the Gilardis] to modify

[their] behavior and to violate [their] beliefs.” Thomas v. Review

Bd. of Ind. Emp’t Sec. Div., 450 U.S. 707, 718 (1981).

EDWARDS, Senior Circuit Judge, concurring in part and

dissenting in part:

TABLE OF CONTENTS

I. STANDING

A. The Companies Have No Standing to Pursue a Cause

of Action Under RFRA

B. The Owners of the Companies Have Standing in This

Case to Pursue a Cause of Action Under RFRA

II. FREE EXERCISE JURISPRUDENCE

A. First Principles: The Limited Reach of the Free

Exercise Clause

B. The Evolution of the Substantial Burden/Compelling

Governmental Interest Test During the Twenty-seven

Years from Sherbert to Smith

C. Congress’ Enactment of RFRA in Reaction to Smith:

Restoration of the Substantial Burden/Compelling

Governmental Interest Test

III. THE MANDATE DOES NOT SUBSTANTIALLY BURDEN

APPELLANTS’ RELIGIOUS OBJECTIONS TO THE USE OF

CONTRACEPTIVE PRODUCTS

IV. COMPELLING GOVERNMENTAL INTERESTS JUSTIFY THE

MANDATE

****

I agree that Appellants Francis and Phil Gilardi have

standing to pursue a cause of action under the Religious

Freedom Restoration Act (“RFRA”), 42 U.S.C. §§ 2000bb–

2000bb-4. I also agree with Judge Brown that the corporate

2

entities that are solely owned by the Gilardis, Freshway

Logistics, Inc. and Fresh Unlimited, Inc., d/b/a Freshway

Foods (collectively “Freshway”), do not have standing to seek

relief under RFRA.

However, I strongly disagree with the majority’s holding

on the merits. Under the Patient Protection and Affordable

Care Act of 2010 (“Affordable Care Act”), 42 U.S.C. §

300gg-13(a)(4), Freshway is required to include in its health

care plan “[a]ll Food and Drug Administration approved

contraceptive methods, sterilization procedures, and patient

education and counseling for all women with reproductive

capacity.” See Group Health Plans and Health Insurance

Issuers Relating to Coverage of Preventative Services Under

the Patient Protection and Affordable Care Act, 77 Fed. Reg.

8725, 8725 (Feb. 15, 2012); see id. at 8725 n.1 (providing

hyperlink to the applicable Health Resources and Services

Administration guidelines). The Gilardis contend that

compliance with this directive—also known as “the

Mandate”—will force them to violate “their Catholic religious

beliefs” against contraception. Br. of Appellants at 14.

No one doubts the sincerity of the Gilardis’ religious

beliefs against contraception. Their legal claim, however, is

seriously wanting. The Gilardis complain that the Mandate

imposes a “substantial burden” on their “exercise of religion”

under RFRA, 42 U.S.C. § 2000bb-1(a), because their

companies are required to provide health insurance that

includes contraceptive services. This is a specious claim.

It has been well understood since the founding of our

nation that legislative restrictions may trump religious

exercise. Braunfeld v. Brown, 366 U.S. 599, 603 (1961). Were

it otherwise, “professed doctrines of religious belief [would

be] superior to the law of the land, and in effect . . . permit

3

every citizen to become a law unto himself. Government

could exist only in name under such circumstances.” Reynolds

v. United States, 98 U.S. 145, 167 (1878). As the Court noted

in Lyng v. Northwest Indian Cemetery Protective Association,

485 U.S. 439 (1988):

The First Amendment must apply to all citizens alike,

and it can give to none of them a veto over public

programs that do not prohibit the free exercise of

religion. The Constitution does not, and courts cannot,

offer to reconcile the various competing demands on

government, many of them rooted in sincere religious

belief, that inevitably arise in so diverse a society as ours.

That task, to the extent that it is feasible, is for the

legislatures and other institutions.

Id. at 452.

The Gilardis’ claim in this case finds no support in the

law. They are not required to use or endorse contraception,

and they remain free to openly oppose contraception. The

Mandate requires nothing more than that the companies, not

the Gilardis, offer medical insurance that includes coverage

of contraceptive services for those employees who want it.

The Supreme Court has never applied the Free Exercise

Clause to find a substantial burden on a plaintiff’s religious

exercise where the plaintiff is not himself required to take or

forgo action that violates his religious beliefs, but is merely

required to take action that might enable other people to do

things that are at odds with the plaintiff’s religious beliefs.

Therefore, the Gilardis cannot claim to be substantially

burdened by the Affordable Care Act—a neutral statute of

general applicability that regulates public health and welfare

and in no way limits their exercise of religion.

4

If I were to indulge the implausible suggestion that the

Mandate imposes a substantial burden on Appellants’ exercise

of religion, I would disagree with the majority’s conclusion

that the Government has failed to establish that the Mandate is

the least restrictive means of furthering a compelling interest.

When the record in this case is viewed through the lens of

well-established precedent, the Mandate easily satisfies the

requirements of the compelling governmental interest test.

As the Supreme Court made clear in United States v. Lee,

455 U.S. 252 (1982), a decision that has been repeatedly cited

and never questioned:

Congress and the courts have been sensitive to the needs

flowing from the Free Exercise Clause, but every person

cannot be shielded from all the burdens incident to

exercising every aspect of the right to practice religious

beliefs. When followers of a particular sect enter into

commercial activity as a matter of choice, the limits they

accept on their own conduct as a matter of conscience

and faith are not to be superimposed on the statutory

schemes which are binding on others in that activity.

Id. at 261 (emphasis added). Freshway and the Gilardis get no

pass on this rule merely because the companies are solely

owned by the Gilardis. Lee and other like authorities show

that Appellants’ claim on the merits is spurious.

5

I. STANDING

A. The Companies Have No Standing to Pursue a Cause

of Action Under RFRA

Although the Supreme Court has long recognized Free

Exercise protection for individuals and religious

organizations, “the nature, history, and purpose” of the Clause

counsel against extending the right to nonreligious corporate

entities. See First Nat’l Bank of Boston v. Bellotti, 435 U.S.

765, 778 n.14 (1978); Grote v. Sebelius, 708 F.3d 850, 857

(7th Cir. 2013) (Rovner, J., dissenting) (“General business

corporations do not, separate and apart from the actions or

belief systems of their individual owners or employees,

exercise religion.” (quoting Hobby Lobby Stores, Inc. v.

Sebelius, 870 F. Supp. 2d 1278, 1291 (W.D. Okla. 2012)));

see also Conestoga Wood Specialties Corp. v. Sec’y of U.S.

Dep’t of Health & Human Servs., 724 F.3d 377, 384 (3d Cir.

2013) (“Citizens United [v. FEC, 558 U.S. 310 (2010),] is . . .

grounded in the notion that the Court has a long history of

protecting corporations’ rights to free speech. . . . [T]here is

[not] a similar history of courts providing free exercise

protection to corporations.”).

The dispositive point here is that while general business

corporations may engage in expression related to their

business interests, independent of their owners’ interests,

general business corporations “do not pray, worship, observe

sacraments or take other religiously-motivated actions

separate and apart from the intention and direction of their

individual actors.” Grote, 708 F.3d at 857 (Rovner, J.,

dissenting) (quoting Hobby Lobby, 870 F. Supp. 2d at 1291).

Therefore, “[r]eligious exercise is, by its nature, one of those

‘purely personal’ matters referenced in [Bellotti, 435 U.S. at

778 n.14] which is not the province of a general business

6

corporation.” Id. Freshway has conceded that it is not a

religious organization for purposes of the Free Exercise

Clause; therefore, the companies have no standing to pursue a

claim under RFRA.

B. The Owners of the Companies Have Standing in This

Case to Pursue a Cause of Action Under RFRA

Unlike Freshway, the Gilardis satisfy the requirements of

Article III and are not barred for want of standing from

pursuing a cause of action under RFRA.

The Government argues that

Plaintiffs cannot circumvent the distinction between

religious organizations and secular companies by

attempting to shift the focus of the RFRA inquiry from

Freshway Foods to the Gilardis, who are the

corporations’ controlling shareholders. . . . The[]

obligations [of the Affordable Care Act] lie with the

corporations themselves. The Gilardis cannot even

establish standing to challenge the contraceptive-

coverage requirement, much less demonstrate that the

requirement may be regarded as a substantial burden on

their personal exercise of religion.

Br. for the Appellees at 24 (emphasis added). It appears that

the Government has conflated the requirements of Article III

standing with the merits of the Gilardis’ claim under RFRA.

Indeed, apart from the foregoing passing reference to

“standing,” the Government never bothers to address the

requirements of Article III. Rather, it rests principally on its

claim that an action to redress injuries to a corporation cannot

be maintained by a stockholder in his own name. Id. at 25.

7

To satisfy Article III’s standing requirements, a plaintiff

must show that (1) he or she has suffered an “injury in fact”

that is (a) concrete and particularized and (b) actual or

imminent, not conjectural or hypothetical; (2) the injury is

fairly traceable to the challenged action of the defendant; and

(3) it is likely, as opposed to merely speculative, that the

injury will be redressed by a favorable decision. Friends of

the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S.

167, 180-81 (2000) (citing Lujan v. Defenders of Wildlife, 504

U.S. 555, 560-61 (1992)). The Gilardis easily satisfy these

requirements.

As the sole owners of the companies, the Gilardis are

inextricably tied to Freshway. They therefore suffer injury in

fact because they cannot operate their businesses according to

their faith. Br. of Appellants at 16-17. Furthermore, the

Gilardis injury is imminent and concrete, it is caused by the

Mandate, and it will be redressed by a favorable judicial

decision. Therefore, the Gilardis have Article III standing to

pursue a cause of action under RFRA.

It is true that when a plaintiff’s asserted injury is based on

governmental regulation of a third party, proof of standing

may be problematic. See, e.g., Allen v. Wright, 468 U.S. 737,

758-59 (1984); Simon v. E. Ky. Welfare Rights Org., 426 U.S.

26, 41-46 (1976); Nat’l Wrestling Coaches Ass’n v. Dep’t of

Educ., 366 F.3d 930, 938-39 (D.C. Cir. 2004). This is because

the necessary elements of causation and redressability in such

a case rest on the independent choices of the regulated third

party. As such, “it becomes the burden of the plaintiff to

adduce facts showing that those choices have been or will be

made in such manner as to produce causation and permit

redressability of injury.” Defenders of Wildlife, 504 U.S. at

562. There is no such third-party standing problem with

respect to the Gilardis’ claim.

8

This case presents a situation in which a for-profit

corporation is fully owned by two related shareholders.

Freshway and the shareholder-owners are separate legal

entities, but are otherwise inextricably connected. The

Gilardis control the corporations and feel a concomitant

responsibility to manage the companies’ business activities

consistent with their Catholic faith. This connection between

the Government Mandate and Freshway’s conduct leaves

little doubt regarding the requirements of causation and

redressability under Article III. We have upheld standing in

cases involving Government regulation of third parties where

the connection between the Government action and the third-

party conduct was less clear than it is in this case. See, e.g.,

Tozzi v. U.S. Dep’t of Health & Human Servs., 271 F.3d 301,

309-10 (D.C. Cir. 2001) (holding that the Government’s

addition of dioxin to the list of known carcinogens caused

municipalities and companies to reduce or end their use of

PVC plastic produced by the plaintiff-manufacturer, and that

a decision setting aside the Government’s action likely would

give redress to the manufacturer). There is no question here

that the Mandate compels Freshway to take action that the

Gilardis challenge under RFRA. Therefore, causation and

redressability are satisfied.

Finally, because RFRA provides that “[s]tanding to assert

a claim or defense under [the Act] shall be governed by the

general rules of standing under article III of the Constitution,”

42 U.S.C. § 2000bb-1(c), the Gilardis clearly have met the

only requirements for standing that are set forth in RFRA.

The Government ignores the requirements of Article III

standing and, instead, rests its argument on “the bedrock

principle that a corporation is ‘a distinct legal entity, with

legal rights, obligations, powers, and privileges different from

9

those of the natural individuals who created it, who own it, or

whom it employs.’” Br. for the Appellees at 26 (citing Cedric

Kushner Promotions, Ltd. v. King, 533 U.S. 158, 163 (2001)).

Apparently, the Government means to suggest that this

“bedrock principle” effectively forecloses the Gilardis’

standing to pursue a claim under RFRA. Or, to put it another

way, the Government seems to contend that the cited principle

is the foundation for a prudential rule that limits a claimant’s

right to pursue a cause of action under RFRA even when the

claimant has satisfied the requirements of Article III. The

Government cites no Supreme Court authority to support this

proposition, and I can find none.

First, contrary to the Government’s argument, the general

rule relating to shareholder suits is not inviolate. As the

Supreme Court noted in Franchise Tax Board of California v.

Alcan Aluminium Limited, there is “an exception to this rule

allowing a shareholder with a direct, personal interest in a

cause of action to bring suit even if the corporation’s rights

are also implicated.” 493 U.S. 331, 336 (1990). The Gilardis’

claim under RFRA asserts a cause of action in their own right

for an alleged denial of their exercise of religion. This does

not offend the shareholder standing rule.

Second, although the Government does not explicitly

assert that the shareholder standing rule is a prudential

standing requirement, the Sixth Circuit reached this

conclusion in Autocam Corporation v. Sebelius, No. 12-2673,

2013 WL 5182544 (6th Cir. Sept. 17, 2013). While

recognizing that RFRA provides only that the Article III

requirements must be met for standing, the Sixth Circuit

nonetheless concluded that prudential requirements must also

be satisfied. The Autocam decision first points out that

“‘Congress legislates against the background of [the Supreme

Court’s] prudential standing doctrine, which applies unless it

10

is expressly negated.’” Id. at *4 (quoting Bennett v. Spear,

520 U.S. 154, 163 (1997)). The decision then goes on to say

that, because “RFRA makes no mention of prudential

standing” nor states “that Article III constitutes the exclusive

set of requirements for standing,” prudential standing

requirements must apply in RFRA cases in addition to Article

III requirements. Id. Finally, the decision holds that the

shareholder standing rule is an established component of

prudential standing doctrine. Id. I respectfully disagree.

Autocam cites Franchise Tax in support of the

proposition that the shareholder standing rule is a component

of prudential standing doctrine. But Franchise Tax merely

stated that “we think” the “shareholder standing” rule is

“related to” the principle of prudential standing that requires a

plaintiff to assert his own legal interests. 493 U.S. at 336.

Franchise Tax did not actually rely on the shareholder

standing rule to conclude that the plaintiff lacked standing. Id.

at 338. We can find no Supreme Court decision applying the

shareholder standing rule to uphold the dismissal of a party’s

law suit for want of “prudential standing,” nor can we find a

decision citing Franchise Tax for this general idea.

Autocam’s reliance on Bennett v. Spear also seems

misplaced. In Bennett, the prudential standing doctrine to

which the Court was referring was the “zone of interest” test,

not the shareholder standing rule. 520 U.S. 162-63. In many

cases involving challenges to administrative agency actions,

in addition to determining whether a petitioner has Article III

standing, a court must also determine “whether the interest

sought to be protected by the complainant is arguably within

the zone of interests to be protected or regulated by the statute

or constitutional guarantee in question.” Ass’n of Data

Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 153

(1970). The zone of interest inquiry, which is “basically one

11

of interpreting congressional intent,” Clarke v. Sec. Indus.

Ass’n, 479 U.S. 388, 394 (1987), is a prudential requirement

that applies unless expressly negated by Congress. See

Bennett, 520 U.S. at 163. There is not the slightest doubt in

this case that the Gilardis’ cause of action is within the zone

of interests protected by RFRA.

As already noted, the Autocam decision rests in part on

the assumption that “Congress did not remove [the] prudential

[shareholder] standing limitations when it enacted RFRA.”

2013 WL 5182544, at *4. This reasoning is fallacious because

neither the Government nor the Sixth Circuit cites any

authority holding that the shareholder standing rule was a

prudential limitation governing Free Exercise claims before

the enactment of RFRA. Since the Supreme Court has never

held that such a prudential standing requirement limits who

may pursue Free Exercise claims, it is a non sequitur to say

that “Congress legislates against the background of [the

Supreme Court’s] prudential standing doctrine.” Id.

(alterations in original).

Third, Bennett makes clear that prudential standing can

be negated by Congress. If there were any prudential standing

requirements applicable to Free Exercise claims before the

enactment of RFRA, Congress eliminated them when RFRA

was passed. In Bennett, the Court held that a statutory

provision stating that “any person may commence a civil suit”

was sufficient to make it clear that any party who satisfied the

requirements of Article III could bring suit to challenge an

agency action under the statute. 520 U.S. at 164. The holding

in Bennett controls the disposition in this case with respect to

prudential standing. RFRA tellingly states that “[s]tanding to

assert a claim or defense . . . shall be governed by the general

rules of standing under article III of the Constitution.” 42

U.S.C. § 2000bb–1(c). The phrase “shall be governed by”

12

makes it plain that Article III, and nothing more, controls with

respect to claims under RFRA.

In sum, I agree with the majority that the Gilardis have

standing to pursue a claim under RFRA. It is important to

note, however, that the Gilardis’ standing rests on their

inextricable ties to Freshway. The companies are operated as

an extension of the two owners’ religious beliefs; there are no

minority shareholders with different views. Thus, the

cognizable constitutional injury—an alleged encroachment on

personal religious exercise—only exists in this case because

the Gilardis’ fully-owned companies are a vehicle by which

they express their personal religious views, e.g., they direct

delivery trucks to display bumper stickers conveying “their

religious views regarding the sanctity of human life to the

public.” Br. of Appellants at 11-12.

The Mandate applying to their companies touches the

Gilardis’ religious exercise rights under RFRA. The touching

is not substantial, but it is sufficient to satisfy the

requirements of Article III. The merits of the Gilardis’ claim

under RFRA is quite another matter, however.

II. FREE EXERCISE JURISPRUDENCE

A. First Principles: The Limited Reach of the Free

Exercise Clause

Through the entire history of Free Exercise

jurisprudence, the Supreme Court has remained true to the

principle that the Free Exercise Clause does not ensure

freedom from any regulation to which a party holds a

religious objection. Indeed, the Court has consistently

recognized that any such rule would be problematic because it

“would place beyond the law any act done under claim of

13

religious sanction.” Cleveland v. United States, 329 U.S. 14,

20 (1946); accord Reynolds, 98 U.S. at 167 (“To permit this

would . . . in effect . . . permit every citizen to become a law

unto himself. Government could exist only in name under

such circumstances.”).

In early cases, the Supreme Court routinely held that

religious activities must be subordinate to general public

welfare legislation. Mormons were thus not exempt for the

sake of religious exercise from laws criminalizing polygamy.

Reynolds, 98 U.S. at 145; Cleveland, 329 U.S. at 20. A child

who wished to distribute religious literature with her family

was not exempt from child labor laws. Prince v.

Massachusetts, 321 U.S. 158, 167 (1944) (“[T]he state has a

wide range of power for limiting parental freedom and

authority in things affecting the child’s welfare; and that

includes, to some extent, matters of conscience and religious

conviction.”). And in Braunfeld v. Brown, the Court upheld

the application of a Sunday closing law to Jewish merchants

who observed the Sabbath on Saturday, even though the law

“ma[de] the practice of their religious beliefs more expensive”

by forcing them to close two days a week. 366 U.S. at 605;

accord McGowan v. Maryland, 366 U.S. 420 (1961). The

Sunday closing law was intended to establish a “day of

community tranquility, respite and recreation” for the general

well-being of citizens, Braunfeld, 366 U.S. at 602, and “[t]o

strike down . . . legislation which imposes only an indirect

burden on the exercise of religion . . . would radically restrict

the operating latitude of the legislature.” Id. at 606.

When one studies the history of Free Exercise

jurisprudence in the United States, it is inescapable that the

Free Exercise Clause of the First Amendment has been

narrowly defined for good reasons. This point was amplified

by Justice O’Connor in Lyng:

14

However much we might wish that it were otherwise,

government simply could not operate if it were required to

satisfy every citizen’s religious needs and desires. A broad

range of government activities—from social welfare

programs to foreign aid to conservation projects—will

always be considered essential to the spiritual well-being

of some citizens, often on the basis of sincerely held

religious beliefs. Others will find the very same activities

deeply offensive, and perhaps incompatible with their own

search for spiritual fulfillment and with the tenets of their

religion. The First Amendment must apply to all citizens

alike, and it can give to none of them a veto over public

programs that do not prohibit the free exercise of religion.

The Constitution does not, and courts cannot, offer to

reconcile the various competing demands on government,

many of them rooted in sincere religious belief, that

inevitably arise in so diverse a society as ours. That task,

to the extent that it is feasible, is for the legislatures and

other institutions.

485 U.S. at 452.

B. The Evolution of the Substantial Burden/Compelling

Governmental Interest Test During the Twenty-seven

Years from Sherbert to Smith

RFRA states in relevant part:

(a) In general

Government shall not substantially burden a person’s exercise

of religion even if the burden results from a rule of general

applicability, except as provided in subsection (b) of this

section.

15

(b) Exception

Government may substantially burden a person’s exercise of

religion only if it demonstrates that application of the burden

to the person –

(1) is in furtherance of a compelling governmental

interest; and

(2) is the least restrictive means of furthering that

compelling governmental interest.

42 U.S.C. § 2000bb-1.

RFRA was enacted to overturn the Supreme Court’s

decision in Employment Division, Department of Human

Resources of Oregon v. Smith, 494 U.S. 872 (1990), which

had vitiated the substantial burden/compelling governmental

interest test enunciated in Sherbert, 374 U.S. 398. See 42

U.S.C. § 2000bb(b)(1) (stating that a purpose of the statute is

“to restore the compelling interest test as set forth in”

Sherbert). It is also undisputed that, in passing RFRA,

Congress meant to restore the entire body of Free Exercise

jurisprudence that developed during the twenty-seven years

following the Court’s decision in Sherbert up until the Court’s

decision in Smith. See, e.g., S. REP. NO. 103-111, at 8-9

(1993), reprinted in 1993 U.S.C.C.A.N. 1892, 1898; H.R.

REP. NO. 103-88, at 6-7 (1993). An examination of the

relevant case law during these twenty-seven years confirms

that, when it enacted RFRA, Congress never meant to

abandon the first principles that have historically limited the

reach of the Free Exercise Clause.

The compelling interest framework was first articulated

in Sherbert, where the Court held that South Carolina violated

the plaintiff’s Free Exercise rights when it denied her

16

unemployment benefits on the grounds that observing the

Sabbath did not constitute “good cause” for declining work on

Saturday. 374 U.S. at 400-01. The Court explained that the

state must show a compelling interest for refusing to

accommodate the plaintiff’s Sabbath observance. Sherbert

cited Braunfeld approvingly. Unlike Sherbert, Braunfeld

involved a situation in which there was “a strong state interest

in providing one uniform day of rest for all workers,” and

“[r]equiring exemptions for Sabbatarians . . . appeared to

present an administrative problem of such magnitude, or to

afford the exempted class so great a competitive advantage,

that such a requirement would have rendered the entire

statutory scheme unworkable.” Id. at 408-09. In Sherbert,

however, as the Court later explained, the Government acted

pursuant to a statutory scheme that created “a mechanism for

individualized exemptions.” Bowen v. Roy, 476 U.S. 693, 708

(1986). When a “state creates such a mechanism, its refusal to

extend an exemption to an instance of religious hardship . . .

tends to exhibit hostility, not neutrality, towards religion.” Id.

In the majority of the Free Exercise cases decided during

the twenty-seven years following Sherbert, the Court applied

this compelling interest framework to hold either (a) that there

was no substantial burden on religious exercise, or (b) that the

burden was justified by the Government’s interest in

administering a statutory scheme that, by its nature, required

uniform enforcement in order to be administrable. The Court

amplified these lines of analysis in Lee.

In Lee, the Court upheld the Government’s application of

Social Security taxes to an Amish employer who held a

religious objection to the Social Security system. Accepting

the plaintiff’s “contention that both payment and receipt of

social security benefits is forbidden by the Amish faith,” the

Court concluded that Social Security taxes imposed a

17

substantial burden on Lee’s Free Exercise. 455 U.S. at 257.

Nonetheless, the Court found the burden justified because in

Lee, as in Braunfeld, uniform application of the law was

necessary to make general public welfare regulations

administrable: “[M]andatory participation [by all covered

employers and employees] is indispensable to the fiscal

vitality of the . . . system,” id. at 258, and “[t]he tax system

could not function if denominations were allowed to

challenge [it] because tax payments were spent in a manner

that violates their religious belief.” Id. at 260.

In at least six more Free Exercise cases decided during

the twenty-seven years post-Sherbert, the Court applied the

substantial burden/compelling governmental interest

framework to hold that the disputed Government action or

regulation imposed no substantial burden, or that the burden

was justified under the reasoning in Lee and Braunfeld:

 Gillette v. United States, 401 U.S. 437, 461 (1971)

(the Military Selective Service Act, exempting persons

who oppose participating in war generally, but not

those who hold religious objections to a particular

war, does not violate Free Exercise) (“Our cases do

not at their farthest reach support the proposition that a

stance of conscientious opposition relieves an objector

from any colliding duty fixed by a democratic

government.”).

 Bob Jones Univ. v. United States, 461 U.S. 574, 603-

04 (1983) (denying tax-exempt status to a religious

school that practiced racial discrimination as part of a

religious belief against interracial dating and marriage

did not violate Free Exercise) (“Th[e] governmental

interest [in eradicating racial discrimination]

substantially outweighs whatever burden denial of tax

18

benefits places on petitioners’ exercise of their

religious beliefs.” (citing Lee, 455 U.S. at 259-60;

Prince, 321 U.S. at 170; Gillette, 401 U.S. 437; and

Reynolds, 98 U.S. 145)).

 Hernandez v. Comm’r, 490 U.S. 680, 698 (1989)

(denying tax deductible status to fees paid for training

sessions that were “the central practice of

Scientology” did not violate Free Exercise); id. at 699-

700 (“Lee establishes that even a substantial burden

would be justified by the ‘broad public interest in

maintaining a sound tax system,’ free of ‘myriad

exceptions flowing from a wide variety of religious

beliefs.’” (quoting Lee, 455 U.S. at 260)).

 Tony & Susan Alamo Found. v. Sec’y of Labor, 471

U.S. 290, 303 (1985) (the Fair Labor Standards Act

did not burden the religious exercise of a non-profit

religious organization or its “associates,” who

received food and shelter in exchange for work

carrying out the organization’s commercial

enterprises).

 Bowen, 476 U.S. at 706-07 (rejecting a claim that

using a social security number to administer

Government programs violated the Free Exercise of

Native Americans who believed the number would

impair their child’s spirit) (“[T]he nature of the burden

is relevant to the standard the government must meet

to justify the burden. . . . [A]dministration of complex

[benefits] programs requires certain conditions and

restrictions. Although in some situations, a mechanism

for individual consideration will be created, a policy

decision . . . to treat all applicants alike and . . . not . . .

to become involved in case-by-case inquiries into the

19

genuineness of each religious objection . . . is entitled

to substantial deference.” (citing Thomas v. Review

Bd. of Ind. Emp’t Sec. Div., 450 U.S. 707, 717-18

(1989); Sherbert, 374 U.S. at 404)).

 Lyng, 485 U.S. at 442 (no substantial burden on

religious exercise even though building a road across a

stretch of national forest that would “cause serious and

irreparable damage to the sacred areas which are an

integral and necessary part of the belief systems and

lifeway” of the Native American tribes); id. at 450-51

(“[Sherbert] does not and cannot imply that incidental

effects of government programs, which may make it

more difficult to practice certain religions but which

have no tendency to coerce individuals into acting

contrary to their religious beliefs, require government

to bring forward a compelling justification. . . .”).

During this same twenty-seven year period, the Court

found Free Exercise violations only when the disputed

governmental policy allowed for individualized or discrete

exemptions, and the state declined to grant exemptions or

exceptions to accommodate religious beliefs. Three of the

four successful Free Exercise cases, like Sherbert, presented a

discretionary decision as to whether the plaintiff had “good

cause” for refusing employment that conflicted with their

religious practice. Thomas, 450 U.S. 707 (claimant denied

unemployment benefits because he refused a job assembling

weapons on the grounds of a religious objection); Hobbie v.

Unemployment Appeals Comm’n of Fla., 480 U.S. 136 (1987)

(claimant was denied unemployment benefits because of

refusal to work on the Sabbath); Frazee v. Ill. Dep’t of Emp’t

Sec., 489 U.S. 829 (1989) (claimant denied unemployment

benefits because he refused to work on Sunday).

20

In the fourth case, Wisconsin v. Yoder, 406 U.S. 205

(1972), the Court held that the state lacked a compelling

interest in requiring Amish families to send their children to

school for the ninth and tenth grades. The Court reiterated that

“[i]t is true that activities of individuals, even when

religiously based, are often subject to regulation . . . to

promote the health, safety, and general welfare.” Id. at 220

(citing Gillette, 401 U.S. 437; Braunfeld, 366 U.S. 599;

Prince, 321 U.S. 158; Reynolds, 98 U.S. 145). But it

concluded that the state had not shown why its educational

objectives required Amish children to attend “an additional

one or two years of formal high school . . . in place of their

long-established program of informal vocational education.”

Id. at 222. In other words, there was no demonstrated need for

a uniform attendance rule. Indeed, the accommodation sought

by the Amish was not at odds with the state’s objective of

ensuring meaningful education for minors. Therefore, the

Court concluded that the Government simply had not shown

that the state’s educational objectives would be compromised

by granting a discrete exemption for Amish students.

In sum, a careful reading of the Supreme Court’s Free

Exercise decisions during the twenty-seven years post-

Sherbert shows that Free Exercise challenges to generally

applicable, neutral Government policies were rarely

successful. See Michael W. McConnell, The Origins and

Historical Understanding of Free Exercise of Religion, 103

HARV. L. REV. 1409, 1417 (1990) (“Since 1972, the Court has

rejected every claim for a free exercise exemption to come

before it, outside the narrow context of unemployment

benefits governed strictly by Sherbert.” (footnotes omitted)).

21

C. Congress’ Enactment of RFRA in Reaction to Smith:

Restoration of the Substantial Burden/Compelling

Governmental Interest Test

After twenty-seven years of consistently applying the

substantial burden/compelling governmental interest

framework to decide cases arising under the Free Exercise

Clause, the Supreme Court inexplicably discarded this

analytical framework in Smith, 494 U.S. 872. The reaction

from Congress was swift and clear.

In Smith, the Court held that criminalizing the use of

peyote did not violate the free exercise of Native American

sects that traditionally used the hallucinogen during religious

ceremonies. The Court did not require the state to provide a

compelling justification for denying an exemption, stating that

the Sherbert compelling interest test was “inapplicable” to “an

across-the-board criminal prohibition on a particular form of

conduct.” Id. at 884-85. While pre-Smith cases had often

applied the compelling interest framework to conclude that a

claimant’s religious exercise was not substantially burdened,

or that the Government’s compelling interest justified any

burden, Smith went a step further by eliminating this

framework entirely.

In response to Smith, Congress enacted RFRA. The

statute notes that “the Supreme Court virtually eliminated the

requirement that the government justify burdens on religious

exercise imposed by laws neutral toward religion.” 42 U.S.C.

§ 2000bb(a)(4). It then states that the purpose of RFRA is to

“restore the compelling interest test as set forth” in Sherbert

and Yoder and to “guarantee its application in all cases where

free exercise of religion is substantially burdened.” Id.

§ 2000bb(b)(1).

22

Reports from both houses make clear that Congress

sought to restore the entire body of Free Exercise

jurisprudence as it existed during the twenty-seven years post-

Sherbert. S. REP. NO. 103-111, at 9 (“Pre-Smith case law

makes it clear that only governmental actions that place a

substantial burden on the exercise of religion must meet the

compelling interest test. . . . The act thus would not require

such a justification for every government action that may

have some incidental effect on religious institutions. . . . [T]he

compelling interest test generally should not be construed

more stringently or more leniently than it was prior to

Smith.”); H.R. REP. NO. 103-88, at 7 (“This bill is not a

codification of any prior free exercise decision but rather the

restoration of the legal standard that was applied in those

decisions. . . . [T]he [compelling interest] test generally

should not be construed more stringently or more leniently

than it was prior to Smith.”); 139 CONG. REC. S26178 (daily

ed. Oct. 26, 1993) (statement of Sen. Kennedy) (“Not every

free exercise claim will prevail, just as not every claim

prevailed prior to the Smith decision.”). Indeed, RFRA itself

says that “the compelling interest test as set forth in prior

Federal court rulings is a workable test for striking sensible

balances between religious liberty and competing prior

governmental interests.” 42 U.S.C. § 2000bb(a)(5) (emphasis

added).

Senator Hatch, a sponsor of RFRA, explained that the bill

was amended to add the word “substantial” before “burden”

so as to be “consistent with the case law developed by the

Court prior to the Smith decision” that “does not require the

Government to justify every action that has some effect on

religious exercise.” 139 CONG. REC. S26180 (daily ed. Oct.

26, 1993) (statement of Sen. Hatch).

23

Since the passage of RFRA, the Supreme Court has

confirmed that, as Congress intended, RFRA reinstates the

full body of pre-Smith jurisprudence. In Gonzales v. O Centro

Espirita Beneficente Uniao do Vegetal, 546 U.S. 418 (2006),

the Court held that declining to permit a “Christian Spiritist”

sect’s sacramental use of hoasca, a hallucinogenic tea

prohibited by the Controlled Substances Act, violated Free

Exercise under RFRA. The Government conceded that

prohibiting the sect from using hoasca imposed a substantial

burden on the group’s religious exercise. Id. at 426. The Court

made clear that the principles of Braunfeld and Lee still apply

under RFRA, explaining that “the Government can

demonstrate a compelling interest in uniform application of a

particular program by offering evidence that granting the

requested religious accommodations would seriously

compromise its ability to administer the program.” Id. at 435.

Applying these principles, the Court concluded that the

Government failed to prove that the Controlled Substances

Act required uniform application in order to be administrable.

Critical to this conclusion was the fact that the Controlled

Substances Act authorized the Attorney General to “‘waive

the requirement for registration of certain manufacturers,

distributors, or dispensers if he finds it consistent with the

public health and safety.’” Id. at 432 (quoting 21 U.S.C.

§ 822(d)). Furthermore, the Act granted an exemption to all

members of Native American tribes for the sacramental use of

peyote. Id. at 433. “The well-established peyote exception

also fatally undermines the Government’s broader contention

that the Controlled Substances Act establishes a closed

regulatory system that admits of no exceptions under RFRA.”

Id. at 434. O Centro easily fits within the body of Free

Exercise cases decided during the twenty-seven years post-

Sherbert.

24

III. THE MANDATE DOES NOT SUBSTANTIALLY

BURDEN APPELLANTS’ RELIGIOUS OBJECTIONS

TO THE USE OF CONTRACEPTIVE PRODUCTS

Requiring Freshway’s health plan to cover contraceptive

products does not substantially burden the Gilardis’ personal

objection to using contraception. The Gilardis have standing

in this case only because of the alleged injuries that arise from

the Mandate’s application to their companies, not to them.

Their alleged injuries are sufficient to satisfy the requirements

of Article III, but they have failed to show that the Mandate

substantially burdens their personal religious activities.

There are three reasons why the Mandate does not

substantially burden the Gilardis’ “exercise of religion.” First,

the Mandate does not require the Gilardis to use or purchase

contraception themselves. Second, the Mandate does not

require the Gilardis to encourage Freshway’s employees to

use contraceptives any more directly than they do by

authorizing Freshway to pay wages. Finally, the Gilardis

remain free to express publicly their disapproval of

contraceptive products.

Because the Mandate does not require the Gilardis to

personally engage in conduct prohibited by their religious

beliefs, this case differs from every case in which the Court

has found a substantial burden on religious exercise. In

O Centro and Yoder, for instance, there was no dispute as to

whether the regulations substantially burdened the plaintiffs’

religious exercise. The disputed Government policies in those

cases very plainly prevented the plaintiffs, personally, from

engaging in their religious practices (using hoasca and home-

schooling one’s children), and the only question was whether

the burdens were justified.

25

In contrast, the Gilardis cannot claim that they are being

forced to use contraceptives, which would directly conflict

with their religious beliefs. Rather, they complain that

because their companies are required to purchase insurance

that includes coverage for contraception, they as owners are

enabling third parties to engage in conduct that they oppose.

This is a specious claim. The Gilardis can find no support for

their position in the controlling case precedents. No Free

Exercise decision issued by the Supreme Court has

recognized a substantial burden on a plaintiff’s religious

exercise where the plaintiff is not himself required to take or

forgo action that violates his religious beliefs, but is merely

required to take action that might enable other people to do

things that are at odds with the plaintiff’s religious beliefs.

Furthermore, the Mandate does not require the Gilardis to

directly facilitate employees’ use of contraception. The

Gilardis do not contend that their religious exercise is violated

when Freshway pays wages that employees might use to

purchase contraception, and the Mandate does not require the

Gilardis to facilitate the use of contraception any more

directly than they already do by authorizing Freshway to pay

wages. Amici supporting the Gilardis’ position attempt in

vain to distinguish between the Mandate and paying wages.

First, they argue that the Mandate requires the Gilardis to

become an “essential cause” of increasing the number of

employees who use contraception. Br. of 28 Catholic

Theologians and Ethicists at 22-23. But the Gilardis are no

more of an “essential cause” of increasing the use of

contraception when they authorize Freshway to pay for a

benefits plan that employees might use to get contraception

than they are when they authorize wages that an employee

might use to purchase contraception she would not otherwise

be able to afford.

26

Amici also attempt to distinguish between the Mandate

and paying wages by arguing that covering contraceptive

products is akin to the difference between giving an underage

person a “gift certificate” to buy beer, and giving him money

that he might spend on beer. Id. at 21-22. But this analogy

fails. Health coverage under the Mandate is not like giving a

gift certificate to buy beer specifically, but more like a gift

certificate to a supermarket where the recipient may purchase

whatever is available, including beer. Just as the Government

does not directly encourage religion when it provides

vouchers that recipients may choose to spend on religious

schools, the Gilardis do not directly encourage the use of

contraception when they provide insurance coverage that

recipients may choose to spend on contraceptives. Zelman v.

Simmons-Harris, 536 U.S. 639, 652 (2002) (“The incidental

advancement of a religious mission, or the perceived

endorsement of a religious message, is reasonably attributable

to the individual recipient, not to the [party granting the

benefits], whose role ends with the disbursement of

benefits.”).

Amici also contend that the difference between the

Mandate and paying wages is akin to the difference between a

person who opposes the death penalty being required to pay

taxes that fund executions, and being required to “purchase

the drugs for a lethal injection and personally deliver them to

the facility where the execution will take place.” Br. of

28 Catholic Theologians and Ethicists at 19. The problem

with this rather extraordinary example is that the Mandate

does not require the Gilardis to have nearly this degree of

personal involvement in providing contraceptives. The

Mandate does not require the Gilardis to transfer funds from

Freshway’s accounts directly to the manufacturers or retailers

of contraception. Nor are the companies required to deliver or

distribute contraception to employees. Under the Employee

27

Retirement Income Security Act, 29 U.S.C. § 1132(d)(1),

Freshway is a distinct legal entity from its self-insured group

health plan. The plan is operated by a third-party

administrator, and, pursuant to health privacy regulations, the

Gilardis are actually prohibited from being informed whether

individual employees purchase contraceptive products, or

about any other information regarding employees’ health care

decisions. See Br. of Americans United for Separation of

Church and State, et al., at 29-30 (citing 45 C.F.R. § 164.508;

45 C.F.R. § 164.510). Moreover, the Gilardis are free to

procure Mandate-compliant coverage for their employees

through an entirely independent, third-party insurance carrier,

rather than administering their own group health plan. Id. This

is a far cry from personally purchasing contraceptives and

delivering them to employees.

Finally, the Gilardis suggest that because Freshway is

required to offer health insurance that includes contraception,

they as owners are being pressed to effectively endorse the

use of contraception. This claim fails because the Supreme

Court has held that a party’s First Amendment rights are not

violated when he must comply with a Government policy that

sends a message contrary to his beliefs. Hence, an institute of

higher education may be required to host military recruiters

on campus, even if it strongly opposes military policy. See

Rumsfeld v. Forum for Academic & Institutional Rights, Inc.,

547 U.S. 47 (2006). Parties who comply with a regulation

contrary to their beliefs “remain[] free to disassociate

[themselves] from those views.” Id. at 65 (citation omitted).

The Gilardis likewise remain free to “disassociate”

themselves from any message that might suggest that they

endorse contraception. They may denounce publicly the use

of contraception, for instance, by issuing a statement to

Freshway’s employees expressing their disapproval of the

Mandate and contraception; and they are free to continue

28

authorizing Freshway to display slogans on company delivery

trucks expressing their views about the sanctity of human life.

There are countless ways the Gilardis can make clear that

their involuntary compliance with federal law does not signify

that they endorse the use of contraception. See Group Health

Plans and Health Insurance Issuers Relating to Coverage of

Preventive Services Under the Patient Protection and

Affordable Care Act, 77 Fed. Reg. 8725, 8729 (Feb. 15, 2012)

(“Nothing in these final regulations precludes employers or

others from expressing their opposition, if any, to the use of

contraceptives, requires anyone to use contraceptives, or

requires health care providers to prescribe contraceptives if

doing so is against their religious beliefs.”).

For the foregoing reasons, the Gilardis simply cannot

establish that the Mandate substantially burdens their personal

objection to contraception. The Mandate does not regulate the

Gilardis; it regulates their companies. So the Mandate

requires nothing of the Gilardis, save what is required of any

managers of business operations subject to federal law. And

we do not normally assume that managers of for-profit

companies are personally affronted by the requirements of

federal law.

More particularly, the Mandate does not require the

Gilardis to use or purchase contraception themselves; it does

not require them to facilitate Freshway’s employees’ use of

contraceptives any more directly than they do by authorizing

Freshway to pay wages; and they remain free to publicly

express their disapproval of contraceptive products. Because

the Gilardis cannot show a substantial burden on their

personal religious exercise, they cannot prevail on the merits

of their RFRA claim as a matter of law. I would therefore

affirm the District Court’s denial of a preliminary injunction

29

on this ground, without inquiring into whether the Mandate

serves a compelling governmental interest.

IV. COMPELLING GOVERNMENTAL INTERESTS

JUSTIFY THE MANDATE

Even though I would deny the preliminary injunction on

the ground that the Gilardis cannot show that the Mandate

substantially burdens their exercise of religion, I will also

address the Government’s compelling interests in order to

respond to my colleagues’ opinion on this point.

In O Centro, the Court made clear that “the Government

can demonstrate a compelling interest in uniform application

of a particular program by offering evidence that granting the

requested religious accommodations would seriously

compromise its ability to administer the program.” 546 U.S. at

435. The Government has met this test in defending the

Mandate. The Mandate therefore satisfies the compelling

interest test under O Centro, Lee, Braunfeld, and Hernandez.

The Mandate obviously serves the compelling interests of

promoting public health, welfare, and gender equality. Br. for

the Appellees 38-40. See, e.g., Bd. of Dirs. of Rotary Int’l v.

Rotary Club of Duarte, 481 U.S. 537, 549 (1987) (“Even if

[the Act] does work some slight infringement on [plaintiffs’]

right of expressive association, that infringement is justified

because it serves the State’s compelling interest in eliminating

discrimination against women.”); Roberts v. U.S. Jaycees, 468

U.S. 609, 626 (1984) (“Assuring women equal access to . . .

goods, privileges, and advantages clearly furthers compelling

state interests.”); Prince, 321 U.S. 158 (upholding child labor

laws); Olsen v. DEA, 878 F.2d 1458, 1462 (D.C. Cir. 1989)

(upholding laws regulating drug use).

30

Contraceptive products are used for health care purposes

beyond preventing unwanted pregnancy. They are prescribed

to prevent disease. Contraceptives reduce the risk of ovarian,

endometrial, and gynecologic cancers. See Br. of the Ovarian

Cancer Nat’l Alliance, et al. at 5-25 (describing how the

Mandate is based, in part, on ensuring that women have

access to cancer-preventative benefits unrelated to preventing

pregnancy). Contraceptives and sterilization also preserve the

health of adult women with diabetes, lupus, and heart

conditions, who would be at physical risk if they became

pregnant. See Br. of Nat’l Health Law Program, et al. at 7-13.

Coverage for contraceptive products eliminates gender

discrimination because the cost of contraception falls

disproportionately on women, and the costs of health care are

generally much higher for women than men. Br. for the

Appellees at 41 (“Congress found that . . . ‘women of

childbearing age spend 68 percent more in out-of-pocket

health care costs than men.’” (quoting 155 CONG. REC.

S28843 (daily ed. Dec. 1, 2009) (statement of Sen.

Gillibrand))). Gender inequality in the cost of health care is

caused, in part, by the fact that many health services specific

to women have historically been excluded from insurance

coverage. See Br. for Nat’l Women’s Law Center, et al. at 7

(“Congress intended . . . to help alleviate the ‘punitive

practices of insurance companies that charge women more

and give [them] less in benefits.’” (quoting 155 CONG. REC.

S28842 (Dec. 1, 2009) (statement of Sen. Mikulski))).

Furthermore, it is critical to the functioning of the

Affordable Care Act’s statutory scheme that exemptions from

the Mandate are, like exemptions from the Social Security

tax, extremely limited. Allowing religious exemptions to for-

profit, secular corporations would undermine the universal

coverage scheme: If the Gilardis’ companies were exempted

31

from covering contraception, another corporation’s owners

might just as well seek a religious exemption from covering

certain preventative vaccines. A Christian Scientist, whose

religion has historically opposed conventional medical

treatment, might claim that his corporation is entitled to a

religious exemption from covering all medical care except

healers who treat medical ailments with prayer. Paul Vitello,

Christian Science Seeks Truce with Modern Medicine, N.Y.

TIMES, Mar. 24, 2010, at A20, available at

http://www.nytimes.com/2010/03/24/nyregion/24heal.html?p

agewanted=all&_r=0 (last visited Oct. 13, 2013). Muslim or

Jewish business owners might claim a religious exemption

from covering any medication derived from pork products

(for instance, the gelatin used to make capsules or coating of

many pills). S. Pirzada Sattar & Debra A. Pinals, Letter to the

Editor, When Taking Medications Is a Sin, 53 PSYCHIATRIC

SERVICES 213 (2002), available at

http://journals.psychiatryonline.org/article.aspx?Volume=53&

page=213&journalID=18 (last visited Oct. 13, 2013). Just as

in Lee and Braunfeld, “[t]he whole point of . . . a ‘uniform’

[policy] would . . . be[] defeated by exceptions.” O Centro,

546 U.S. at 435 (quoting Sherbert, 374 U.S. at 408

(discussing Braunfeld, 366 U.S. at 608-09)).

The existing exemptions to the Mandate do not establish

that the Government lacks a compelling interest in enforcing

it against all large, for-profit secular employers. First, the

exemptions are not as broad as the Gilardis make them out to

be. The exemption for grandfathered plans is temporary,

intended to be a means for gradually transitioning employers

into mandatory coverage. A health plan loses grandfathered

status as soon as it changes its cost-sharing, benefits, or

employer-contribution terms. 45 C.F.R. § 147.140(g). The

Department of Health and Human Service’s “mid-range

estimate” is that 66% of small employer plans and 45% of

32

large employer plans will relinquish their grandfathered status

by the end of 2013. Interim Final Rules for Group Health

Plans and Health Insurance, 75 Fed. Reg. 34,538, 34,552

(June 17, 2010).

In fact, the Gilardis voluntarily relinquished Freshway’s

grandfathered status by increasing the employees’ co-

payments for doctor visits. Br. for the Appellees at 43; Joint

Appendix at 25. That the Gilardis voluntarily relinquished

grandfathered status despite their opposition to the Mandate

supports the Department’s prediction that most other

employers are likely to do so in the short term, as they will

inevitably modify their coverage plans to accommodate

changes in the cost of health care.

Furthermore, contrary to the Gilardis’ suggestion,

employers with fewer than fifty employees are not

specifically exempted from the Mandate. Rather they are

exempt altogether from being required to provide health

coverage under the Affordable Care Act. 26 U.S.C.

§ 4980H(c)(2)(A). Small businesses that do elect to provide

health coverage—as many do in order to offer more

competitive benefits to employees and to receive tax

benefits—must provide coverage that complies with the

Mandate. Br. for the Appellees at 42. In other words, the

Mandate would apply to the Gilardis even if they had fewer

than fifty employees, so long as they chose to provide health

coverage, as they contend they are committed to doing. Br. of

Appellants at 13-14.

The only permanent, specific exemption from the

Mandate is for religious, non-profit employers. 45 C.F.R.

§ 147.130(a)(1)(iv)(B) (current rules defining religious non-

profits in terms of Internal Revenue Code status); Coverage of

Certain Preventative Services Under the Affordable Care Act,

33

78 Fed. Reg. 8456, 8462 (Feb. 6, 2013) (proposed rules

exempting any non-profit organization that holds itself out as

a religious organization). This exemption for religious non-

profits surely does not undermine the Government’s position

that uniform enforcement is essential to the scheme, in the

way that the exemption for Native American tribes using

peyote was fatal to such a claim in O Centro. In O Centro, the

existing exemption for the religious use of peyote by Native

American tribes was much larger than the exemption sought

by the 130 members of the Christian Spiritist sect. If the

Controlled Substances Act was administrable with a much

larger exemption for all Native Americans, why would a

smaller exemption for 130 hoasca users defeat the scheme?

Furthermore, the nature of the exemption sought in

O Centro—the Christian Seperatist sect’s sacramental use of

hoasca—was essentially indistinguishable from the nature of

the exemption that had already been granted for the Native

American tribes’ sacramental use of peyote.

This case is a far cry from the situation seen in O Centro.

The exemption sought by the Gilardis for secular, for-profit

corporations is potentially much larger than the exemption for

non-profit religious entities that exists under the Mandate. In

addition, the exemption sought in this case is fundamentally

different from the exemption that has already been granted.

The Court has long recognized that federal workplace

regulations apply differently to secular, for-profit corporations

than to non-profit religious organizations. E.g., Hosanna-

Tabor Evangelical Lutheran Church and School v. EEOC,

132 S. Ct. 694 (2012) (Free Exercise Clause shields a minister

of a religious non-profit from being sued for violating the

Americans with Disabilities Act); Corp. of Presiding Bishop

of Church of Jesus Christ of Latter-day Saints v. Amos, 483

U.S. 327 (1987) (Title VII’s exemption of non-profit churches

from provisions prohibiting religious discrimination does not

34

violate Establishment Clause); NLRB v. Catholic Bishop of

Chicago, 440 U.S. 490 (1979) (interpreting the National

Labor Relations Act as exempting Church-operated

educational institutions from National Labor Review Board’s

jurisdiction). In exempting religious non-profits, the

Department of Health and Human Services reasoned that

“[r]eligious accommodations in related areas of federal law,

such as the exemption for religious organizations under Title

VII of the Civil Rights Act of 1964, are available to nonprofit

religious organizations but not to for-profit secular

organizations.” Coverage of Certain Preventive Services

Under the Affordable Care Act, 78 Fed. Reg. 8456, 8462

(Feb. 6, 2013). The Americans with Disabilities Act also

exempts religious non-profits, but not for-profit, secular

corporations. 42 U.S.C. § 12113(d)(1), (2).

If an exemption for religious non-profits were taken as

proof that the Government lacks a compelling interest in

enforcing regulations against secular, for-profit corporations,

this would suggest that secular corporations should likewise

be entitled to religious exemptions from Title VII, the

National Labor Relations Act, and the Americans with

Disabilities Act. Furthermore, the Mandate’s exception for

religious non-profits is nothing like the exceptions in Church

of the Lukumi Babalu Aye, Inc. v. City of Hialeah, 508 U.S.

520 (1993), where the ordinances prohibiting animal

sacrifices were so replete with exceptions that the Court

concluded their purpose was “suppression of . . . the Santeria

worship service.” Id. at 534.

It is very important to recall that the Court in Lee rejected

the argument that limited exemptions from the Social Security

tax proved the Government lacked a compelling interest in

uniform enforcement all for-profit employers. The Court

explained that Congress was justified in “dr[awing] a line . . .

35

exempting the self-employed Amish but not all persons

working for an Amish employer.” 455 U.S. at 261. The

Court’s reasoning is equally applicable here: “When followers

of a particular sect enter into commercial activity as a matter

of choice, the limits they accept on their own conduct as a

matter of conscience and faith are not to be superimposed on

the statutory schemes which are binding on others in that

activity.” Id. The Court explained that “[g]ranting an

exemption from social security taxes to an employer operates

to impose the employer’s religious faith on the employees.”

Id.; accord Hernandez, 490 U.S. at 700 (“The fact that

Congress has already crafted some deductions and

exemptions in the Code also is of no consequence, for the

guiding principle is that a tax ‘must be uniformly applicable

to all, except as Congress provides explicitly otherwise.’”

(quoting Lee, 455 U.S. at 261)).

Freshway, the employer in Lee, and other for-profit

corporations are different from religious non-profits in that

they use labor to make a profit, rather than to perpetuate a

religious values-based mission. In choosing to use labor for

financial gain, the corporation and its owners submit

themselves to legislation—such as Title VII, the Fair Labor

Standards Act, the Americans with Disabilities Act, and the

Affordable Care Act—designed to protect the health, safety,

and welfare of employees. They cannot voluntarily capitalize

on labor but invoke their personal religious values to deny

employees the benefit of laws enacted to promote employee

welfare.

Because the Gilardis have voluntarily chosen to capitalize

on labor, they have agreed to accept certain limitations on

their conduct that arise from the Government’s compelling

interest in securing the safety and welfare of their employees.

For this reason, even if the Mandate were a substantial burden

36

on the Gilardis’ religious exercise—which it is not—this

record supports the conclusion that the burden is justified by

the Government’s compelling interest in enforcing a public-

welfare statutory scheme that, like the Social Security tax,

simply “could not function” if for-profit employers of various

“denominations were allowed to challenge the . . . system

because . . . payments were spent in a manner that violates

their religious belief.” O Centro, 546 U.S. at 435 (quoting

Lee, 455 U.S. at 258).

The judgment of the District Court should be affirmed.