Hobby Lobby Stores, Inc. v. Sebelius

FILED

United States Court of Appeals

Tenth Circuit

June 27, 2013

PUBLISH Elisabeth A. Shumaker

Clerk of Court

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

HOBBY LOBBY STORES, INC.;

MARDEL, INC.; DAVID GREEN;

BARBARA GREEN; MART GREEN;

STEVE GREEN; DARSEE LETT,

Plaintiffs-Appellants,

v. No. 12-6294

KATHLEEN SEBELIUS, in her

official capacity as Secretary of the

United States Department of Health

and Human Services; UNITED

STATES DEPARTMENT OF

HEALTH AND HUMAN SERVICES;

HILDA SOLIS, Secretary of the

United States Department of Labor;

UNITED STATES DEPARTMENT

OF LABOR; TIMOTHY GEITHNER,

Secretary of the United States

Department of Treasury; UNITED

STATES DEPARTMENT OF THE

TREASURY,

Defendants-Appellees.

______________________

EMERITUS PROFESSOR OF LAW

CHARLES E. RICE; PROFESSOR OF

LAW BRADLEY P. JACOB; TEXAS

CENTER FOR DEFENSE OF LIFE;

NATIONAL LEGAL FOUNDATION;

LIBERTY, LIFE AND LAW

FOUNDATION; AMERICAN

CENTER FOR LAW AND JUSTICE;

BREAST CANCER PREVENTION

INSTITUTE; BIOETHICS DEFENSE

FUND; LIFE LEGAL DEFENSE

FOUNDATION; THE RIGHT

REVEREND W. THOMAS

FRERKING, OSB; MISSOURI

ROUNDTABLE FOR LIFE;

ARCHDIOCESE OF OKLAHOMA

CITY; EAGLE FORUM; SANFORD

C. COATS; SENATOR DANIEL

COATS; SENATOR THAD

COCHRAN; SENATOR MIKE

CRAPO; SENATOR CHARLES

GRASSLEY; SENATOR ORRIN G.

HATCH, Senator; SENATOR JAMES

M. INHOFE; SENATOR MITCH

MCCONNELL; SENATOR PAT

ROBERTS; SENATOR RICHARD

SHELBY; CONGRESSMAN LAMAR

SMITH; ASSOCIATION OF GOSPEL

RESCUE MISSIONS; PRISON

FELLOWSHIP MINISTRIES;

ASSOCIATION OF CHRISTIAN

SCHOOLS INTERNATIONAL;

NATIONAL ASSOCIATION OF

EVANGELICALS; ETHICS &

RELIGIOUS LIBERTY

COMMISSION OF THE SOUTHERN

BAPTIST CONVENTION;

INSTITUTIONAL RELIGIOUS

FREEDOM ALLIANCE; CHRISTIAN

LEGAL SOCIETY; ASSOCIATION

OF AMERICAN PHYSICIANS &

SURGEONS; AMERICAN

ASSOCIATION OF PRO-LIFE

OBSTETRICIANS AND

GYNECOLOGISTS; CHRISTIAN

MEDICAL ASSOCIATION;

CATHOLIC MEDICAL

ASSOCIATION; NATIONAL

CATHOLIC BIOETHICS CENTER;

-2-

PHYSICIANS FOR LIFE;

NATIONAL ASSOCIATION OF PRO

LIFE NURSES; UNITED STATES

JUSTICE FOUNDATION;

CONGRESSMAN FRANK WOLF;

STATE OF OKLAHOMA;

WYWATCH FAMILY ACTION,

INC.; THE C12 GROUP;

PHYSICIANS FOR REPRODUCTIVE

HEALTH; THE AMERICAN

COLLEGE OF OBSTETRICIANS

AND GYNECOLOGISTS; THE

AMERICAN SOCIETY FOR

EMERGENCY CONTRACEPTION;

ASSOCIATION OF REPRODUCTIVE

HEALTH PROFESSIONALS;

AMERICAN SOCIETY FOR

REPRODUCTIVE MEDICINE;

SOCIETY FOR ADOLESCENT

HEALTH AND MEDICINE;

AMERICAN MEDICAL WOMEN'S

ASSOCIATION; NATIONAL

ASSOCIATION OF NURSE

PRACTITIONERS IN WOMEN'S

HEALTH; JAMES TRUSSELL;

SUSAN F. WOOD; DON DOWNING;

KATHLEEN BESINQUE;

AMERICANS UNITED FOR

SEPARATION OF CHURCH AND

STATE; UNION FOR REFORM

JUDAISM; CENTRAL

CONFERENCE OF AMERICAN

RABBIS; WOMEN OF REFORM

JUDAISM; HINDU AMERICAN

FOUNDATION; NATIONAL

WOMEN'S LAW CENTER;

AMERICAN ASSOCIATION OF

UNIVERSITY WOMEN; AMERICAN

-3-

FEDERATION OF STATE, COUNTY

AND MUNICIPAL EMPLOYEES

(AFSCME); BLACK WOMEN'S

HEALTH IMPERATIVE; BOULDER

NOW; COLORADO

ORGANIZATION FOR LATINA

OPPORTUNITY AND

REPRODUCTIVE RIGHTS (COLOR);

GENDER IMPACTS POLICY, a

project of the Center of Southwest

Culture; IBIS REPRODUCTIVE

HEALTH; LAW STUDENTS FOR

REPRODUCTIVE JUSTICE;

MERGERWATCH; NARAL

PRO-CHOICE AMERICA; NARAL

PRO-CHOICE COLORADO; NARAL

PRO-CHOICE WYOMING;

NATIONAL ORGANIZATION FOR

WOMEN FOUNDATION;

NATIONAL ORGANIZATION FOR

WOMEN-SANTA FE CHAPTER

(SANTA FE NOW); NATIONAL

PARTNERSHIP FOR WOMEN AND

FAMILIES; NEW

MEXICO-NATIONAL

ORGANIZATION FOR WOMEN

(NMNOW); PLANNED

PARENTHOOD OF ARKANSAS &

EASTERN OKLAHOMA, INC., d/b/a

Planned Parenthood of

Heartland-Oklahoma; PLANNED

PARENTHOOD ASSOCIATION OF

UTAH; PLANNED PARENTHOOD

OF KANSAS & MID-MISSOURI;

PLANNED PARENTHOOD OF THE

ROCKY MOUNTAINS, INC.;

POPULATION CONNECTION;

-4-

RAISING WOMEN'S VOICES FOR

THE HEALTH CARE WE NEED;

SERVICE EMPLOYEES

INTERNATIONAL UNION;

SOUTHWEST WOMEN'S LAW

CENTER; UTAH HEALTH POLICY

PROJECT; CENTER FOR

REPRODUCTIVE RIGHTS;

AMERICAN PUBLIC HEALTH

ASSOCIATION; GUTTMACHER

INSTITUTE; NATIONAL FAMILY

PLANNING & REPRODUCTIVE

HEALTH ASSOCIATION;

NATIONAL LATINA INSTITUTE

FOR REPRODUCTIVE HEALTH;

NATIONAL WOMEN'S HEALTH

NETWORK; R. ALTA CHARO,

Professor; REPRODUCTIVE

HEALTH TECHNOLOGIES

PROJECT; AMERICAN CIVIL

LIBERTIES UNION; AMERICAN

CIVIL LIBERTIES UNION OF

OKLAHOMA; ANTI-DEFAMATION

LEAGUE; CATHOLICS FOR

CHOICE; HADASSAH, THE

WOMEN'S ZIONIST

ORGANIZATION OF AMERICA,

INC.; INTERFAITH ALLIANCE

FOUNDATION; NATIONAL

COALITION OF AMERICAN NUNS;

NATIONAL COUNCIL OF JEWISH

WOMEN; RELIGIOUS COALITION

FOR REPRODUCTIVE CHOICE;

UNITARIAN UNIVERSALIST

ASSOCIATION; UNITARIAN

UNIVERSALIST WOMEN'S

FEDERATION; NATIONAL

HEALTH LAW PROGRAM;

MEXICAN AMERICAN LEGAL

DEFENSE AND EDUCATIONAL

FUND, INC.; ASIAN PACIFIC

-5-

AMERICAN LEGAL CENTER;

FORWARD TOGETHER;

NATIONAL HISPANIC MEDICAL

ASSOCIATION; IPAS; SEXUALITY

INFORMATION AND

EDUCATIONAL COUNCIL OF THE

U.S.; CAMPAIGN TO END AIDS;

HIV LAW PROJECT; NATIONAL

WOMEN AND AIDS COLLECTIVE;

HOUSING WORKS,

Amici Curiae.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

(D.C. NO. 5:12-CV-01000-HE)

S. Kyle Duncan (Luke W. Goodrich, Mark L. Rienzi, Eric S. Baxter, Lori H.

Windham, and Adèle Auxier Keim with him on the brief) The Becket Fund for

Religious Liberty, Washington, D.C., for Appellants.

Alisa B. Klein, Appellate Staff Attorney (Stuart F. Delery, Principal Deputy

Assistant Attorney General, Sanford C. Coats, United States Attorney, Beth S.

Brinkmann, Deputy Assistant Attorney General, and Mark B. Stern, Appellate

Staff Attorney, with her on the brief) Civil Division, United States Department of

Justice, Washington, D.C., for Appellees.

Before BRISCOE, Chief Judge, KELLY, LUCERO, HARTZ, TYMKOVICH,

GORSUCH, MATHESON, and BACHARACH, Circuit Judges. *

*

The Honorable Jerome A. Holmes is recused in this matter.

-6-

TYMKOVICH, Circuit Judge.

This case requires us to determine whether the Religious Freedom

Restoration Act and the Free Exercise Clause protect the plaintiffs—two

companies and their owners who run their businesses to reflect their religious

values. The companies are Hobby Lobby, a craft store chain, and Mardel, a

Christian bookstore chain. Their owners, the Greens, run both companies as

closely held family businesses and operate them according to a set of Christian

principles. They contend regulations implementing the 2010 Patient Protection

and Affordable Care Act force them to violate their sincerely held religious

beliefs. In particular, the plaintiffs brought an action challenging a regulation

that requires them, beginning July 1, 2013, to provide certain contraceptive

services as a part of their employer-sponsored health care plan. Among these

services are drugs and devices that the plaintiffs believe to be abortifacients, the

use of which is contrary to their faith.

We hold that Hobby Lobby and Mardel are entitled to bring claims under

RFRA, have established a likelihood of success that their rights under this statute

are substantially burdened by the contraceptive-coverage requirement, and have

established an irreparable harm. But we remand the case to the district court for

further proceedings on two of the remaining factors governing the grant or denial

of a preliminary injunction.

-7-

More specifically, the court rules as follows:

As to jurisdictional matters, the court unanimously holds that Hobby Lobby

and Mardel have Article III standing to sue and that the Anti-Injunction Act does

not apply to this case. Three judges (Kelly, Tymkovich, and Gorsuch, JJ.) would

also find that the Anti-Injunction Act is not jurisdictional and the government has

forfeited reliance on this statute. These three judges would also hold that the

Greens have standing to bring RFRA and Free Exercise claims and that a

preliminary injunction should be granted on their RFRA claim. A fourth judge

(Matheson, J.) would hold that the Greens have standing and would remand for

further consideration of their request for a preliminary injunction on their RFRA

claim.

Concerning the merits, a majority of five judges (Kelly, Hartz, Tymkovich,

Gorsuch, and Bacharach, JJ.) holds that the district court erred in concluding

Hobby Lobby and Mardel had not demonstrated a likelihood of success on their

RFRA claim. Three judges (Briscoe, C.J., and Lucero and Matheson, JJ.)

disagree and would affirm the district court on this question.

A majority of five judges (Kelly, Hartz, Tymkovich, Gorsuch, and

Bacharach, JJ.) further holds that Hobby Lobby and Mardel satisfy the irreparable

harm prong of the preliminary injunction standard. A four-judge plurality (Kelly,

Hartz, Tymkovich, Gorsuch, JJ.) would resolve the other two preliminary

injunction factors (balance of equities and public interest) in Hobby Lobby and

-8-

Mardel’s favor and remand with instructions to enter a preliminary injunction, but

the court lacks a majority to do so. Instead, the court remands to the district court

for further evaluation of the two remaining preliminary injunction factors. 1

One judge (Matheson, J.) reaches the merits of the plaintiffs’ constitutional

claim under the Free Exercise Clause, concluding that it does not entitle the

plaintiffs to preliminary injunctive relief. 2

Accordingly, for the reasons set forth below and exercising jurisdiction

under 28 U.S.C. § 1292(a)(1), we reverse the district court’s denial of the

plaintiffs’ motion for a preliminary injunction and remand with instructions that

the district court address the remaining two preliminary injunction factors and

then assess whether to grant or deny the plaintiffs’ motion.

1

The en banc court joins as follows:

(1) All judges join Part III; (2) Judges Kelly, Hartz, Tymkovich, Gorsuch,

and Bacharach join Parts I, II, III, IV, and V; (3) Judges Kelly, Hartz,

Tymkovich, and Gorsuch join Part VI in full, and Judge Bacharach joins as to

Section VI(B)(1) only; (4) Judge Hartz separately concurs; (5) Judge Gorsuch

separately concurs, joined by Judges Kelly and Tymkovich; (6) Judge Bacharach

concurs in part; (7) Chief Judge Briscoe concurs and dissents in part, joined by

Judge Lucero; and (8) Judge Matheson concurs and dissents in part.

2

Because the district court will be reviewing the RFRA claim, the majority

declines at this stage to reach the constitutional question of whether Hobby Lobby

and Mardel are likely to succeed on their Free Exercise claim. See, e.g., Lyng v.

Nw. Indian Cemetery Protective Ass’n, 485 U.S. 439, 445 (1988) (“A fundamental

and longstanding principle of judicial restraint requires that courts avoid reaching

constitutional questions in advance of the necessity of deciding them.”).

-9-

I. Background & Procedural History

A. The Plaintiffs

The plaintiffs in this case are David and Barbara Green, their three children

(Steve Green, Mart Green, and Darsee Lett), and the businesses they collectively

own and operate: Hobby Lobby Stores, Inc. and Mardel, Inc. David Green is the

founder of Hobby Lobby, an arts and crafts chain with over 500 stores and about

13,000 full-time employees. Hobby Lobby is a closely held family business

organized as an S-corp. Steve Green is president of Hobby Lobby, and his

siblings occupy various positions on the Hobby Lobby board. Mart Green is the

founder and CEO of Mardel, an affiliated chain of thirty-five Christian bookstores

with just under 400 employees, also run on a for-profit basis.

As owners and operators of both Hobby Lobby and Mardel, the Greens

have organized their businesses with express religious principles in mind. For

example, Hobby Lobby’s statement of purpose recites the Greens’ commitment to

“[h]onoring the Lord in all we do by operating the company in a manner

consistent with Biblical principles.” JA 22–23a. Similarly, Mardel, which sells

exclusively Christian books and materials, describes itself as “a faith-based

company dedicated to renewing minds and transforming lives through the

products we sell and the ministries we support.” JA 25a.

Furthermore, the Greens allow their faith to guide business decisions for

-10-

both companies. For example, Hobby Lobby and Mardel stores are not open on

Sundays; Hobby Lobby buys hundreds of full-page newspaper ads inviting people

to “know Jesus as Lord and Savior,” JA 24a; and Hobby Lobby refuses to engage

in business activities that facilitate or promote alcohol use.

The Greens operate Hobby Lobby and Mardel through a management trust

(of which each Green is a trustee), and that trust is likewise governed by religious

principles. The trust exists “to honor God with all that has been entrusted” to the

Greens and to “use the Green family assets to create, support, and leverage the

efforts of Christian ministries.” JA 21a. The trustees must sign “a Trust

Commitment,” which among other things requires them to affirm the Green

family statement of faith and to “regularly seek to maintain a close intimate walk

with the Lord Jesus Christ by regularly investing time in His Word and prayer.”

Id.

As is particularly relevant to this case, one aspect of the Greens’ religious

commitment is a belief that human life begins when sperm fertilizes an egg. In

addition, the Greens believe it is immoral for them to facilitate any act that causes

the death of a human embryo.

B. The Contraceptive-Coverage Requirement

Under the Patient Protection and Affordable Care Act (ACA),

employment-based group health plans covered by the Employee Retirement

Income Security Act (ERISA) must provide certain types of preventive health

-11-

services. See 42 U.S.C. § 300gg-13; 29 U.S.C. § 1185d. One provision mandates

coverage, without cost-sharing by plan participants or beneficiaries, of

“preventive care and screenings” for women “as provided for in comprehensive

guidelines supported by the Health Resources and Services Administration

[HRSA].” 42 U.S.C. § 300gg-13(a)(4). HRSA is an agency within the

Department of Health and Human Services (HHS).

When the ACA was enacted, there were no HRSA guidelines related to

preventive care and screening for women. As a result, HHS asked the Institute of

Medicine (an arm of the National Academy of Sciences) to develop

recommendations to help implement these requirements. In response, the Institute

issued a report recommending, among other things, that the guidelines require

coverage for “‘[a]ll Food and Drug Administration [FDA] approved contraceptive

methods, sterilization procedures, and patient education and counseling for all

women with reproductive capacity,’ as prescribed by a provider.” 77 Fed. Reg.

8725, 8725 (Feb. 15, 2012).

HRSA and HHS adopted this recommendation, meaning that

employment-based group health plans covered by ERISA now must include FDA-

approved contraceptive methods. The FDA has approved twenty such methods,

ranging from oral contraceptives to surgical sterilization. Four of the twenty

approved methods—two types of intrauterine devices (IUDs) and the emergency

contraceptives commonly known as Plan B and Ella—can function by preventing

-12-

the implantation of a fertilized egg. The remaining methods function by

preventing fertilization. 3

C. Exemptions from the Contraceptive-Coverage Requirement

A number of entities are partially or fully exempted from the

contraceptive-coverage requirement.

First, HHS “may establish exemptions” for “group health plans established

or maintained by religious employers and health insurance coverage provided in

connection with group health plans established or maintained by religious

employers with respect to any requirement to cover contraceptive services . . . .”

45 C.F.R. § 147.130(a)(1)(iv)(A).

3

There is an ongoing medical debate as to whether some of the

contraceptive methods relevant to this case act by preventing implantation or

fertilization. Compare, e.g., Physicians for Reproductive Health et al. Amicus Br.

at 12–13, with Ass’n of Am. Physicians & Surgeons et al. Amicus Br. at 12 &

n.21. This is relevant because Hobby Lobby and Mardel object to forms of

contraception that prevent uterine implantation, but they do not object to those

that prevent conception. For purposes of this appeal, however, there is no

material dispute. Both the government and the medical amici supporting the

government concede that at least some of the contraceptive methods to which the

plaintiffs object have the potential to prevent uterine implantation. See, e.g.,

Aple. Br. at 9 n.6 (noting that one of the three ways emergency contraceptive pills

function is by “inhibiting implantation” (quoting 62 Fed. Reg. 8610, 8611 (Feb.

25, 1997))); Physicians for Reproductive Health et al. Amicus Br. at 16 (noting

that some studies suggest the copper present in IUDs “can also alter molecules

present in the endometrial lining,” which causes “alteration of the endometrial

lining [that] prevents . . . implantation” (emphasis added)). Some of our

colleagues suggest this debate extends only to intrauterine devices, not Plan B and

Ella. See Briscoe Op. at 3. Whatever the merits of this argument, we need not

wade into scientific waters here, given the above-noted agreement that some of

the challenged devices function in a manner that Hobby Lobby and Mardel find

morally problematic.

-13-

HHS regulations currently define a “religious employer” as an organization

that: (1) has the inculcation of religious values as its purpose; (2) primarily

employs persons who share its religious tenets; (3) primarily serves persons who

share its religious tenets; and (4) is a non-profit organization described in a

provision of the Internal Revenue Code that refers to churches, their integrated

auxiliaries, conventions or associations of churches, and to the exclusively

religious activities of any religious order. See 45 C.F.R. § 147.130(a)(1)(iv)(B).

This definition of religious employer might change, however, as the federal

agencies responsible for implementing the preventive services portion of the ACA

have proposed a new rule that would eliminate the first three requirements above

and clarify that the exemption is available to all non-profit organizations falling

within the scope of a certain Internal Revenue Code provision. See 78 Fed. Reg.

8456, 8461 (Feb. 6, 2013).

Second, the government has proposed an accommodation for certain other

non-profit organizations, including religious institutions of higher education, that

have maintained religious objections to contraceptive coverage yet will not fall

within the amended definition of a religious employer. Many of these

organizations are currently subject to a temporary “safe harbor” provision that

temporarily exempts them from having to cover contraceptive services. The

government has proposed to route the contraceptive coverage for these

organizations through a middleman insurer or insurance plan administrator,

-14-

allowing the organizations to avoid directly providing contraceptive coverage.

See id. at 8458–68.

Third, if a business does not make certain significant changes to its health

plans after the ACA’s effective date, those plans are considered “grandfathered”

and are exempt from the contraceptive-coverage requirement. See 42 U.S.C.

§ 18011(a)(2). Grandfathered plans may remain so indefinitely.

Fourth, businesses with fewer than fifty employees are not required to

participate in employer-sponsored health plans. See, e.g., 26 U.S.C. § 4980H. To

the extent these businesses do not offer a health plan, they do not have to comply

with any aspect of the shared responsibility health coverage requirements,

including the contraceptive-coverage requirement. At the same time, the

government asserts that if an otherwise exempt small business offers a health

plan, it must comply with the contraceptive-coverage requirement. See Aple. Br.

at 39 (citing 42 U.S.C. § 300gg-13).

Relying on information released by the White House and HHS, the

plaintiffs estimate that at least 50 million people, and perhaps over a 100 million,

are covered by exempt health plans. JA 80a. The government argues that the

number of grandfathered health plans will decline over time, that grandfathered

plans may already cover the objected-to contraceptives, and that financial

incentives exist to push small businesses into the health insurance market, in

which case they would have to comply with the contraceptive-coverage

-15-

requirement. At the same time, the government has not offered contrary estimates

of individuals covered by exempt health plans.

No exemption, proposed or otherwise, would extend to for-profit

organizations like Hobby Lobby or Mardel. And the various government agencies

responsible for implementing the exceptions to the contraceptive-coverage

requirement have announced that no proposed exemption will extend to for-profit

entities under any circumstances because of what the government considers an

important distinction, discussed further below, between for-profit and non-profit

status.

D. The Expected Effect of the Contraceptive-Coverage Requirement

The Greens run the Hobby Lobby health plan, a self-insured plan, which

provides insurance to both Hobby Lobby and Mardel employees. Hobby Lobby

and Mardel cannot qualify for the “grandfathered” status exemption because they

elected not to maintain grandfathered status prior to the date that the

contraceptive-coverage requirement was proposed.

Nevertheless, the Greens object to providing coverage for any FDA-

approved contraceptives that would prevent implantation of a fertilized egg.

Because the Greens believe that human life begins at conception, they also

believe that they would be facilitating harms against human beings if the Hobby

Lobby health plan provided coverage for the four FDA-approved contraceptive

methods that prevent uterine implantation (Ella, Plan B, and the two IUDs). The

-16-

government does not dispute the sincerity of this belief.

The Greens present no objection to providing coverage for the sixteen

remaining contraceptive methods. In other words, the Greens are willing to

cover, without cost-sharing, the majority of FDA-approved contraceptive

methods, from the original birth control pill to surgical sterilization. But if

Hobby Lobby or Mardel employees wish to obtain Ella, Plan B, or IUDs, the

Greens object to being forced to provide such coverage.

According to the plaintiffs, the corporations’ deadline to comply with the

contraceptive-coverage requirement is July 1, 2013. If the Hobby Lobby health

plan does not cover all twenty contraceptive methods by that date, the businesses

will be exposed to immediate tax penalties, potential regulatory action, and

possible private lawsuits. See, e.g., 26 U.S.C. §§ 4980D, 4980H; 29 U.S.C.

§§ 1132, 1185d.

The most immediate consequence for Hobby Lobby and Mardel would

come in the form of regulatory taxes: $100 per day for each “individual to whom

such failure relates.” 26 U.S.C. § 4980D(b)(1). The plaintiffs assert that because

more than 13,000 individuals are insured under the Hobby Lobby plan (which

includes Mardel), this fine would total at least $1.3 million per day, or almost

$475 million per year. This assumes that “individual” means each individual

insured under Hobby Lobby’s plan. If the corporations instead drop employee

health insurance altogether, they will face penalties of $26 million per year. See

-17-

id. § 4980H.

E. Procedural History

The plaintiffs filed suit on September 12, 2012, challenging the

contraceptive-coverage requirement under RFRA, the Free Exercise Clause of the

First Amendment, and the Administrative Procedure Act. The plaintiffs

simultaneously moved for a preliminary injunction on the basis of their RFRA

and Free Exercise claims. The district court denied that motion. See Hobby

Lobby Stores, Inc. v. Sebelius, 870 F. Supp. 2d 1278 (W.D. Okla. 2012).

The plaintiffs then appealed the denial of the preliminary injunction and

moved for injunctive relief pending appeal. A two-judge panel denied relief

pending appeal, adopting substantially the same reasoning as the district court.

See Hobby Lobby Stores, Inc. v. Sebelius, No. 12-6294, 2012 WL 6930302 (10th

Cir. Dec. 20, 2012). The plaintiffs then sought emergency relief under the All

Writs Act from the Supreme Court, which also denied relief. See Hobby Lobby

Stores, Inc. v. Sebelius, 133 S. Ct. 641 (2012) (Sotomayor, J., in chambers).

The plaintiffs subsequently moved for initial en banc consideration of this

appeal, citing the exceptional importance of the questions presented. We granted

that motion. And given Hobby Lobby and Mardel’s July 1 deadline for

complying with the contraceptive-coverage requirement, we granted the plaintiffs’

motion to expedite consideration of this appeal.

-18-

II. The Religious Freedom Restoration Act

Hobby Lobby and Mardel’s central claims here arise under the Religious

Freedom Restoration Act. A plaintiff makes a prima facie case under RFRA by

showing that the government substantially burdens a sincere religious exercise.

Kikumura v. Hurley, 242 F.3d 950, 960 (10th Cir. 2001). The burden then shifts

to the government to show that the “compelling interest test is satisfied through

application of the challenged law ‘to the person’—the particular claimant whose

sincere exercise of religion is being substantially burdened.” Gonzales v.

O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 420 (2006)

(quoting 42 U.S.C. § 2000bb-1(b)). This burden-shifting approach applies even at

the preliminary injunction stage. Id. at 429.

The principal questions we must resolve here include: (1) whether Hobby

Lobby and Mardel are “persons” exercising religion for purposes of RFRA; (2) if

so, whether the corporations’ religious exercise is substantially burdened; and

(3) if there is a substantial burden, whether the government can demonstrate a

narrowly tailored compelling government interest.

III. Subject-Matter Jurisdiction

Before turning to the preliminary injunction standard, we must resolve two

issues that bear on our subject-matter jurisdiction—standing and the Anti-

Injunction Act.

-19-

A. Standing

We begin by examining whether Hobby Lobby and Mardel have standing to

sue in federal court. Article III of the Constitution limits federal judicial power

to “Cases” and “Controversies.” A party that cannot present a case or controversy

within the meaning of Article III does not have standing to sue in federal court.

And whenever standing is unclear, we must consider it sua sponte to ensure there

is an Article III case or controversy before us. See New Eng. Health Care Emp.

Pension Fund v. Woodruff, 512 F.3d 1283, 1288 (10th Cir. 2008).

Under the familiar three-part test for establishing Article III standing, a

plaintiff must show an injury that is “[1] concrete, particularized, and actual or

imminent; [2] fairly traceable to the challenged action; and [3] redressable by a

favorable ruling.” Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138, 1147 (2013)

(internal quotation marks omitted).

We conclude that Hobby Lobby and Mardel have Article III standing. Both

companies face an imminent loss of money, traceable to the contraceptive-

coverage requirement. Both would receive redress if a court holds the

contraceptive-coverage requirement unenforceable as to them. Both therefore

have Article III standing. 4

4

The plaintiffs also contend that the Greens, as owners of Hobby Lobby

and Mardel, have standing in their own right to bring the claims at issue here.

But there is no dispute that relief as to Hobby Lobby and Mardel would satisfy

the Greens. Because we conclude RFRA protects Hobby Lobby and Mardel, the

(continued...)

-20-

B. The Anti-Injunction Act

A second possible impediment to our subject-matter jurisdiction is the

Anti-Injunction Act (AIA). See 26 U.S.C. § 7421. Although the plaintiffs and

the government agree that the AIA does not apply here, “subject-matter

jurisdiction, because it involves a court’s power to hear a case, can never be

forfeited or waived.” Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006) (internal

quotation marks omitted). We therefore have an independent duty to determine

whether the AIA strips us of subject-matter jurisdiction. Id.

The AIA dictates, with statutory exceptions inapplicable to this case, that

“no suit for the purpose of restraining the assessment or collection of any tax

shall be maintained in any court by any person, whether or not such person is the

person against whom such tax was assessed.” 26 U.S.C. § 7421(a). As the

Supreme Court recently noted, the AIA “protects the Government’s ability to

collect a consistent stream of revenue, by barring litigation to enjoin or otherwise

obstruct the collection of taxes.” NFIB v. Sebelius, 132 S. Ct. 2566, 2582 (2012).

In this case, the corporations’ challenge relates to the government’s

authority under 26 U.S.C. § 4980D, which imposes a “tax” on any employer that

4

(...continued)

majority opinion does not reach whether the Greens may likewise bring RFRA

claims based on regulations applying to the companies they own. Four judges

would nonetheless conclude the Greens have standing and write separately on this

question. See Gorsuch Op. (joined by Kelly and Tymkovich, JJ.), infra; Matheson

Op., infra.

-21-

does not meet the ACA’s health insurance requirements, including the

contraceptive-coverage requirement. Id. § 4980D(a). As noted above, the “tax”

is set at $100 “for each day in the noncompliance period with respect to each

individual to whom such failure relates.” Id. § 4980D(b)(1). If an employer fails

to provide health insurance, the employer is subject to a tax under § 4980H. And,

as the Supreme Court recently instructed, when Congress uses the term “tax,” it is

a strong indication that Congress intends the AIA to apply. NFIB, 132 S. Ct. at

2582 (2012).

Still, the AIA does not apply to every lawsuit “tangentially related to

taxes,” Cohen v. United States, 650 F.3d 717, 727 (D.C. Cir. 2011) (en banc), and

the corporations’ suit is not challenging the IRS’s ability to collect taxes. Rather,

they seek to enjoin the enforcement of one HHS regulation, 45 C.F.R. § 147.130,

which requires Hobby Lobby and Mardel to provide their employees with health

plans that include “preventive care . . . provided for in [the] . . . [HRSA]

guidelines,” id. § 147.130(a)(1)(iv), which in turn “require coverage, without cost

sharing, for ‘[a]ll [FDA-]approved contraceptive methods,’” 77 Fed. Reg. at 8726

(Feb. 15, 2012). In other words, Hobby Lobby and Mardel are not seeking to

enjoin the collection of taxes or the execution of any IRS regulation; they are

seeking to enjoin the enforcement, by whatever method, of one HHS regulation

that they claim violates their RFRA rights.

-22-

Indeed, a regulatory tax is just one of many collateral consequences that

can result from a failure to comply with the contraceptive-coverage requirement.

See, e.g., 29 U.S.C. § 1132(a)(5) (authorizing the Secretary of Labor to enforce

the contraceptive-coverage requirement against non-compliant insurers);

42 U.S.C. § 300gg-22(a)(2) (authorizing the Secretary of HHS to exact penalties

against non-compliant insurers in states where the state government does not

enforce the health insurance requirements).

And just as the AIA does not apply to any suit against the individual

mandate, which is enforced by the IRS, see NFIB, 132 S. Ct. at 2584, so too does

the AIA not apply to any suit against the contraceptive-coverage requirement,

even though it also may be enforced by the IRS. The statutory scheme makes

clear that the tax at issue here is no more than a penalty for violating regulations

related to health care and employer-provided insurance, see, e.g., 42 U.S.C.

§ 300gg-22(b)(2)(C)(i) (calculating the maximum “penalty” that the Secretary of

HHS can impose on non-compliant insurers in the same way that 26 U.S.C.

§ 4980D(b)(1) calculates the “tax” for non-compliant employers, namely “$100

for each day for each individual with respect to which such a failure occurs”), and

the AIA does not apply to “the exaction of a purely regulatory tax,” Robertson v.

United States, 582 F.2d 1126, 1127 (7th Cir. 1978).

-23-

Both sides agree that the AIA should not apply for essentially these same

reasons. We are convinced by this reasoning and proceed to resolve the merits of

the RFRA claim.

IV. Preliminary Injunction Standard

As noted above, the district court denied Hobby Lobby and Mardel’s

request for preliminary injunctive relief. We review the denial of a preliminary

injunction for abuse of discretion. Little v. Jones, 607 F.3d 1245, 1250 (10th Cir.

2010). A district court abuses its discretion by denying a preliminary injunction

based on an error of law. Westar Energy, Inc. v. Lake, 552 F.3d 1215, 1224 (10th

Cir. 2009).

Under the traditional four-prong test for a preliminary injunction, the party

moving for an injunction must show: (1) a likelihood of success on the merits;

(2) a likely threat of irreparable harm to the movant; (3) the harm alleged by the

movant outweighs any harm to the non-moving party; and (4) an injunction is in

the public interest. See, e.g., Winter v. NRDC, 555 U.S. 7, 20 (2008).

Hobby Lobby and Mardel urge that we apply a relaxed standard under

which it can meet its burden for a preliminary injunction by showing the second,

third, and fourth factors “tip strongly in [its] favor,” and then satisfy the first

factor “by showing that questions going to the merits are so serious, substantial,

difficult, and doubtful as to make the issue ripe for litigation and deserving of

more deliberate investigation.” Okla. ex rel. Okla. Tax Comm’n v. Int’l

-24-

Registration Plan, Inc., 455 F.3d 1107, 1113 (10th Cir. 2006). But we need not

resolve whether this relaxed standard would apply here, given that a majority of

the court holds that Hobby Lobby and Mardel have satisfied the likelihood-of-

success prong under the traditional standard.

The district court ruled that the corporations failed the likelihood-of-

success element because even closely held family businesses like Hobby Lobby

and Mardel are not protected by RFRA.

We disagree with this conclusion and determine that the contraceptive-

coverage requirement substantially burdens Hobby Lobby and Mardel’s rights

under RFRA. And at this stage, the government has not shown a narrowly

tailored compelling interest to justify this burden.

V. Merits

A. Hobby Lobby and Mardel Are “Persons Exercising Religion”

Under RFRA

RFRA provides, as a general rule, that the “Government shall not

substantially burden a person’s exercise of religion.” 42 U.S.C. § 2000bb-1(a)

(emphasis added). The parties dispute whether for-profit corporations, such as

Hobby Lobby and Mardel, are persons exercising religion for purposes of RFRA.

We thus turn to the question of whether Hobby Lobby, as a family owned

business furthering its religious mission, and Mardel, as a Christian bookstore,

can take advantage of RFRA’s protections.

-25-

The government makes two arguments for why this is not the case. First, it

cites to civil rights statutes and labor laws that create an exemption for religious

organizations. It then references case law suggesting that non-profit status is an

objective criterion for determining whether an entity is a religious organization

for purposes of these civil rights statutes and labor laws. The government

therefore argues that, as a matter of statutory interpretation, RFRA should be read

to carry forward the supposedly preexisting distinction between non-profit,

religious corporations and for-profit, secular corporations. Second, the

government asserts that the for-profit/non-profit distinction is rooted in the Free

Exercise Clause. It suggests Congress did not intend RFRA to expand the scope

of the Free Exercise Clause. The government therefore concludes RFRA does not

extend to for-profit corporations.

We reject both of these arguments. First, we hold as a matter of statutory

interpretation that Congress did not exclude for-profit corporations from RFRA’s

protections. Such corporations can be “persons” exercising religion for purposes

of the statute. 5 Second, as a matter of constitutional law, Free Exercise rights

may extend to some for-profit organizations.

5

We recognize there is at least tentative disagreement among the courts of

appeal on this question. Compare, e.g., Grote v. Sebelius, 708 F.3d 850, 855–56

(7th Cir. 2013) (corporation is a “person” for purposes of RFRA), with Conestoga

Wood Specialities Corp. v. Sec’y of U.S. Dep’t of Health & Human Servs., No.

13-1144, 2013 WL 1277419, at *2 (3d Cir. Feb. 8, 2013) (corporation is not a

“person” under RFRA).

-26-

1. Statutory Interpretation

a. The Dictionary Act

We begin with the statutory text. RFRA contains no special definition of

“person.” Thus, our first resource in determining what Congress meant by

“person” in RFRA is the Dictionary Act, which instructs: “In determining the

meaning of any Act of Congress, unless the context indicates otherwise * * * the

word[] ‘person’ . . . include[s] corporations, companies, associations, firms,

partnerships, societies, and joint stock companies, as well as individuals.”

1 U.S.C. § 1. Thus, we could end the matter here since the plain language of the

text encompasses “corporations,” including ones like Hobby Lobby and Mardel.

In addition, the Supreme Court has affirmed the RFRA rights of corporate

claimants, notwithstanding the claimants’ decision to use the corporate form. See

O Centro Espirita Beneficente Uniao do Vegetal v. Ashcroft, 389 F.3d 973, 973

(10th Cir. 2004) (en banc) (affirming a RFRA claim brought by “a New Mexico

corporation on its own behalf”), aff’d, 546 U.S. 418 (2006). 6

6

We further note that RFRA defines religious exercise by cross-reference

to the Religious Land Use and Institutionalized Persons Act (RLUIPA). See 42

U.S.C. § 2000bb-2(4) (“the term ‘exercise of religion’ means religious exercise,

as defined in section 2000cc-5 of this title”). According to the relevant portion of

RLUIPA, “‘religious exercise’ includes any exercise of religion, whether or not

compelled by, or central to, a system of religious belief.” Id. § 2000cc-5(7)(A).

RLUIPA further notes that both “person[s]” and “entit[ies]” can exercise the

religious rights it grants. Id. § 2000cc-5(7)(B). RLUIPA therefore provides

further support that RFRA, to which it is linked, encompasses both natural

persons and anything that qualifies as an “entity”— which of course would

(continued...)

-27-

b. Other Statutes

Given that no one disputes at least some types of corporate entities can

bring RFRA claims, the next question is whether Congress intended to exclude

for-profit corporations, as opposed to non-profit corporations, from RFRA’s

scope. Notably, neither the Dictionary Act nor RFRA explicitly distinguishes

between for-profit and non-profit corporations; the Dictionary Act merely

instructs that the term “persons” includes corporations.

At the same time, we acknowledge the Dictionary Act definition does not

apply if “the context indicates otherwise.” 1 U.S.C. § 1. Generally, “context”

here “means the text of the Act of Congress surrounding the word at issue, or the

text of other related congressional Acts.” Rowland v. Cal. Men’s Colony, 506

U.S. 194, 199 (1993). The government contends that RFRA’s “context” points to

exemptions for religious employers in other statutes, and in particular it directs us

to the religious exemptions contained in Title VII, the Americans with

Disabilities Act (ADA), and the National Labor Relations Act (NLRA). But

rather than providing contextual support for excluding for-profit corporations

from RFRA, we think these exemptions show that Congress knows how to craft a

corporate religious exemption, but chose not to do so in RFRA.

6

(...continued)

encompass corporations. And this definition likewise does not distinguish

between for-profit and non-profit status or between religious and secular entities.

-28-

Under Title VII, for example, the prohibition on discrimination on the basis

of religion does not apply to an employer that is “a religious corporation,

association, educational institution, or society.” 42 U.S.C. §2000e-1(a). The

ADA contains similar language. See id. § 12113(d)(1), (2). The government also

notes that the Supreme Court has construed the NLRA to remove the National

Labor Relations Board’s jurisdiction over schools operated by churches. See

NLRB v. Catholic Bishop, 440 U.S. 490 (1979). 7

The government argues that in enacting RFRA against the backdrop of

these statutes, Congress “carried forward [a] distinction between non-profit,

religious organizations and for-profit, secular companies.’” Aple. Br. at 16. In

short, the government believes Congress used “person” in RFRA as extreme

shorthand for something like “natural person or ‘religious organization’ as that

term was used in exemptions for religious organizations as set forth in Title VII,

the ADA, and the NLRA.”

This reading strikes us as strained. Indeed, the exemptions present in Title

VII, the ADA, and the NLRA suggest the opposite inference from what the

7

Catholic Bishop turned on constitutional avoidance, not on statutory text

or congressional intent. See id. at 507 (“in the absence of a clear expression of

Congress’[s] intent to bring teachers in church-operated schools within the

jurisdiction of the Board, we decline to construe the Act in a manner that could in

turn call upon the Court to resolve difficult and sensitive questions arising out of

the guarantees of the First Amendment Religion Clauses”). But for present

purposes we will accept the government’s characterization of Catholic Bishop as

“context” for RFRA.

-29-

government draws. Rather than implying that similar narrowing constructions

should be imported into statutes that do not contain such language, they imply

Congress is quite capable of narrowing the scope of a statutory entitlement or

affording a type of statutory exemption when it wants to. The corollary to this

rule, of course, is that when the exemptions are not present, it is not that they are

“carried forward” but rather that they do not apply. Cf. Chickasaw Nation v.

United States, 208 F.3d 871, 880 (10th Cir. 2000) (holding, in light of the fact

that Congress had created a number of other tax exemptions for Indian tribes,

“[i]f Congress wishes to exempt Indian tribes from excise taxes that otherwise

might be reasonably construed as applying to them, it should do so explicitly”),

aff’d, 534 U.S. 84 (2001).

In addition, Congress knows how to ensure that a prior-enacted statute

restricts the meaning of a later-enacted statute. RFRA is just such a statute,

restricting later-enacted federal statutes unless those statutes specifically exempt

themselves. See 42 U.S.C. § 2000bb-3(b). Congress put nothing similar in Title

VII, the ADA, or the NLRA.

c. Case Law

The government nonetheless points to Corporation of the Presiding Bishop

of the Church of Jesus Christ of Latter-day Saints v. Amos, 483 U.S. 327 (1987),

for the idea that the for-profit/non-profit distinction was well-established in

-30-

Congress’s mind before it enacted RFRA. We disagree with the government’s

interpretation of Amos.

Amos involved employees of non-profit and arguably non-religious

businesses run by the Mormon Church. These businesses had fired certain

Mormon employees who did not follow church behavioral standards, and the

employees sued under Title VII. The Church moved to dismiss based on Title

VII’s exemption for “religious corporation[s],” 42 U.S.C. §2000e-1(a)—the same

exemption on which the government bases its argument that Congress intended to

limit RFRA to non-profit entities.

The plaintiffs countered “that if construed to allow religious employers to

discriminate on religious grounds in hiring for nonreligious jobs, [the exemption]

violates the Establishment Clause.” Amos, 483 U.S. at 331 (emphasis added).

The district court agreed, reasoning in part that Title VII’s exemption unlawfully

advanced religion because it could “permit churches with financial resources

impermissibly to extend their influence and propagate their faith by entering the

commercial, profit-making world.” Id. at 337.

The Supreme Court reversed. It concluded this particular part of the

district court’s reasoning was incorrect because it assumed the existence of for-

profit activities yet none of the Mormon businesses at issue operated on a for-

profit basis. The Court never reached the question of how for-profit activity

might have changed its analysis. Id.

-31-

Two Amos concurrences raised concerns about religion-sponsored for-profit

activity more explicitly. But both concurrences were careful not to categorically

exclude such activity from Title VII’s exemption. See id. at 345 n.6 (Brennan, J.,

concurring) (emphasizing that the non-profit distinction was important but also

noting “[i]t is . . . conceivable that some for-profit activities could have a

religious character”); id. at 349 (O’Connor, J., concurring) (noting that the

question “remains open” whether “activities conducted by religious organizations

solely as profit-making enterprises” would qualify as religious).

From these references to non-profit status in Amos, the government

concludes that the for-profit/non-profit distinction matters a great deal. But we

do not see what the government sees in Amos. Amos was about whether Title

VII’s religious exemption violates the Establishment Clause. The Amos majority

rendered no opinion on how for-profit activity might affect that question. At best,

then, Amos leaves open the question of whether for-profit status matters for Title

VII’s religious employer exemption. We do not see how it provides the “context”

that would render the Dictionary Act’s definition of “person” inappropriate in

RFRA.

Nor do the other post-RFRA circuit cases on which the government relies

provide more guidance. The government cites Spencer v. World Vision, Inc., 633

F.3d 723 (9th Cir. 2010) (per curiam), and University of Great Falls v. NLRB, 278

F.3d 1335 (D.C. Cir. 2002). The question in Spencer was whether a faith-based

-32-

humanitarian organization could receive the same Title VII exemption at issue in

Amos. In a fractured opinion, the court concluded the organization was eligible,

in part because it did not engage in for-profit business activity. But Spencer

established no categorical rule regarding for-profit entities. Judge O’Scannlain,

in explaining why he agreed to make non-profit status a relevant consideration,

nonetheless noted that Amos left open the potential effect of for-profit status. Id.

at 734 & n.13 (O’Scannlain, J., concurring).

The D.C. Circuit’s Great Falls decision comes to essentially the same

place, concluding that for-profit status can be one relevant factor among others

when it comes to certain religious exemptions. In that case, the University of

Great Falls contended that it was exempt from NLRB jurisdiction under both

Catholic Bishop and RFRA. The D.C. Circuit adopted a three-factor test for the

NLRB to use “to determine whether it has jurisdiction [over a school claiming the

Catholic Bishop exemption] without delving into matters of religious doctrine or

motive, and without coercing an educational institution into altering its religious

mission to meet regulatory demands.” Great Falls, 278 F.3d at 1345. Among the

three factors was whether the institution “is organized as a nonprofit.” Id. at 1343

(internal quotation marks omitted).

But Great Falls did not say that only non-profits can qualify for the

Catholic Bishop exemption. See id. (“non-profit institutions have a more

compelling claim to a Catholic Bishop exemption than for-profit businesses”).

-33-

Moreover, the opinion made clear that its analysis did not settle anything as to

RFRA: “a ruling that an entity is not exempt from [NLRB] jurisdiction under

Catholic Bishop may not foreclose a [RFRA] claim that requiring that entity to

engage in collective bargaining would ‘substantially burden’ its ‘exercise of

religion.’” Id. at 1347.

To the extent the government believes Spencer and Great Falls form part of

what “Congress carried forward” when enacting RFRA, Aple. Br. at 16, Spencer

and Great Falls, of course, post-date RFRA. Congress therefore could not have

carried them forward into RFRA. And to the extent the government sees Spencer

and Great Falls as following principles laid down in Amos—which pre-dates

RFRA—we disagree. Amos decides nothing about for-profit entities’ religious

rights. In short, none of these cases say anything about what Congress intended

in RFRA. 8

In conclusion, the government has given us no persuasive reason to think

that Congress meant “person” in RFRA to mean anything other than its default

meaning in the Dictionary Act—which includes corporations regardless of their

8

We also note that even the dissent in Grote v. Sebelius, 708 F.3d 850 (7th

Cir. 2013), would not establish a categorical rule against for-profit religious

exercise. Grote involved a car parts business, but the dissent opined that “there

do exist some corporate entities which are organized expressly to pursue religious

ends, and I think it fair to assume that such entities may have cognizable religious

liberties independent of the people who animate them, even if they are profit-

seeking.” Id. at 856 (Rovner, J., dissenting).

-34-

profit-making status. 9

2. Free Exercise

The government further argues that the “[t]he distinction between

non-profit, religious organizations and for-profit, secular companies is rooted in

the text of the First Amendment,” Aple. Br. at 12 (internal quotation marks

omitted). It claims this understanding of the First Amendment informed what

Congress intended by “person” in RFRA. Undoubtedly, Congress’s

understanding of the First Amendment informed its drafting of RFRA, but we see

no basis for concluding that such an understanding included a for-profit/non-

profit distinction.

a. RFRA’s Purpose

RFRA was Congress’s attempt to legislatively overrule Employment

Division v. Smith, 494 U.S. 872 (1990). Smith had abrogated much of the

Supreme Court’s earlier jurisprudence regarding whether a neutral law of general

9

The dissents suggest we have improperly placed the burden of persuasion

on the government rather than the plaintiffs in our assessment of whether Hobby

Lobby and Mardel are persons exercising religion for purposes of RFRA. See

Briscoe Op. at 10-11 & n.3; Matheson Op. at 4–11. The question of the allocation

of a burden for satisfying the preliminary injunction factors—which we agree

rests with the plaintiffs—and the force of the legal arguments advanced by both

sides are two different things. The default presumption is that the Dictionary Act

applies. Rowland, 506 U.S. at 200. Regardless of who bears the overall burden

of persuasion, we do not think it is the plaintiffs’ duty to prove a negative—i.e.,

to offer up all possible “context[s]” that might “indicate otherwise,” 1 U.S.C.

§ 1—and then refute them. In our adversarial system, arguments for otherwise-

indicating context naturally come from the party opposing the Dictionary Act’s

definition. The government’s arguments in this regard do not convince us.

-35-

application nonetheless impermissibly burdened a person’s Free Exercise rights.

The pre-Smith test exempted such a person from the law’s constraints unless the

government could show a compelling need to apply the law to the person. Id. at

882–84. Smith eliminated that test on the theory that the Constitution permits

burdening Free Exercise if that burden results from a neutral law of general

application. Id. at 878–80.

Congress responded to Smith by enacting RFRA, which re-imposed a

stricter standard on both the states and the federal government. The Supreme

Court held that Congress could not constitutionally apply RFRA to the states, City

of Boerne v. Flores, 521 U.S. 507, 532 (1997), but RFRA still constrains the

federal government, Kikumura, 242 F.3d at 959.

Congress, through RFRA, intended to bring Free Exercise jurisprudence

back to the test established before Smith. There is no indication Congress meant

to alter any other aspect of pre-Smith jurisprudence—including jurisprudence

regarding who can bring Free Exercise claims. We therefore turn to that

jurisprudence.

b. Corporate and For-Profit Free Exercise Rights

It is beyond question that associations—not just individuals—have Free

Exercise rights: “An individual’s freedom to speak, to worship, and to petition the

government for the redress of grievances could not be vigorously protected from

interference by the State unless a correlative freedom to engage in group effort

-36-

toward those ends were not also guaranteed.” Roberts v. U.S. Jaycees, 468 U.S.

609, 622 (1984) (emphasis added). Therefore, courts have “recognized a right to

associate for the purpose of engaging in those activities protected by the First

Amendment—speech, assembly, petition for the redress of grievances, and the

exercise of religion. The Constitution guarantees freedom of association of this

kind as an indispensable means of preserving other individual liberties.” Id. at

618 (emphasis added); see also Citizens United v. FEC, 558 U.S. 310, 342–43

(2010) (“First Amendment protection extends to corporations . . . [, and the

Court] has thus rejected the argument that . . . corporations or other associations

should be treated differently under the First Amendment simply because such

associations are not natural persons.” (internal quotation marks omitted)).

Accordingly, the Free Exercise Clause is not a “‘purely personal’

guarantee[] . . . unavailable to corporations and other organizations because the

‘historic function’ of the particular [constitutional] guarantee has been limited to

the protection of individuals.” First Nat’l Bank of Boston v. Bellotti, 435 U.S.

765, 778 n.14 (1978). As should be obvious, the Free Exercise Clause at least

extends to associations like churches—including those that incorporate. See, e.g.,

Church of Lukumi Babalu Aye, Inc. v. City of Hialeah, 508 U.S. 520, 525 (1993)

(holding that a “not-for-profit corporation organized under Florida law” prevailed

on its Free Exercise claim); see also Terrett v. Taylor, 13 U.S. (9 Cranch) 43, 49

(1815) (Story, J.) (“[The] legislature may . . . enable all sects to accomplish the

-37-

great objects of religion by giving them corporate rights for the manag[e]ment of

their property, and the regulation of their temporal as well as spiritual

concerns.”).

In addition, the Supreme Court has settled that individuals have Free

Exercise rights with respect to their for-profit businesses. See, e.g., United States

v. Lee, 455 U.S. 252 (1982) (considering a Free Exercise claim of an Amish

employer); Braunfeld v. Brown, 366 U.S. 599 (1961) (plurality opinion)

(considering a Free Exercise claim by Jewish merchants operating for-profit).

In short, individuals may incorporate for religious purposes and keep their

Free Exercise rights, and unincorporated individuals may pursue profit while

keeping their Free Exercise rights. With these propositions, the government does

not seem to disagree. The problem for the government, it appears, is when

individuals incorporate and fail to satisfy Internal Revenue Code § 501(c)(3). At

that point, Free Exercise rights somehow disappear.

This position is not “rooted in the text of the First Amendment,” Aple. Br.

at 12, and therefore could not have informed Congress’s intent when enacting

RFRA. As an initial matter, the debates in Congress surrounding the adoption of

the First Amendment demonstrate an intent to protect a range of conduct broader

than the mere right to believe whatever one chooses. Indeed, at the time of the

amendment’s inception in Congress, a competing formulation for the “free

exercise of religion” was “rights of conscience.” See Michael W. McConnell, The

-38-

Origins and Historical Understanding of Free Exercise of Religion, 103 Harv. L.

Rev. 1409, 1488 (1990) [hereinafter McConnell, The Origins]; see also

Hosanna-Tabor Evangelical Lutheran Church & Sch. v. EEOC, 132 S. Ct. 694,

702 (2012) (citing McConnell, The Origins, supra). As compared to exercise,

which “strongly connoted action” in the language of the day, “conscience”

suggested mere thoughts, opinions, or internal convictions. McConnell, The

Origins, supra at 1489. Congress chose exercise, indicating that, as the Supreme

Court has frequently held, the protections of the Religion Clauses extend beyond

the walls of a church, synagogue, or mosque to religiously motivated conduct, as

well as religious belief. Id. at 1488–89.

The distinction gains force here because religious conduct includes

religious expression, which can be communicated by individuals and for-profit

corporations alike. See Smith, 494 U.S. at 877–78 (1990); see also Lee Strang,

The Meaning of “Religion” in the First Amendment, 40 Duq. L. Rev. 181, 234

(2002) (stating that the shift from “conscience” to “religion” “connote[d] a

‘community of believers’ and allow[ed] for protection of the ‘corporate or

institutional aspect of religious belief’” (footnote omitted)); McConnell, The

Origins, supra at 1490 (stating that an “important difference between the terms

‘conscience’ and ‘religion’ is that ‘conscience’ emphasizes individual judgment,

while ‘religion’ also encompasses the corporate or institutional aspects of

religious belief” (footnote omitted)). For example, the Supreme Court has stated

-39-

that the exercise of religion includes “proselytizing.” Smith, 494 U.S. at 877.

And, as discussed above, Hobby Lobby and Mardel—two for-profit corporations

—proselytize by purchasing hundreds of newspaper ads to “know Jesus as Lord

and Savior.” JA 24a. Because Hobby Lobby and Mardel express themselves for

religious purposes, the First Amendment logic of Citizens United, 558 U.S. at

342–55, where the Supreme Court has recognized a First Amendment right of for-

profit corporations to express themselves for political purposes, applies as well.

We see no reason the Supreme Court would recognize constitutional protection

for a corporation’s political expression but not its religious expression.

We also believe that a constitutional distinction would conflict with the

Supreme Court’s Free Exercise precedent. First, we cannot see why an individual

operating for-profit retains Free Exercise protections but an individual who

incorporates—even as the sole shareholder—does not, even though he engages in

the exact same activities as before. This cannot be about the protections of the

corporate form, such as limited liability and tax rates. Religious associations can

incorporate, gain those protections, and nonetheless retain their Free Exercise

rights.

Moreover, when the Supreme Court squarely addressed for-profit

individuals’ Free Exercise rights in Lee and Braunfeld, its analysis did not turn on

the individuals’ unincorporated status. Nor did the Court suggest that the Free

Exercise right would have disappeared, using a more modern formulation, in a

-40-

general or limited partnership, sole professional corporation, LLC, S-corp, or

closely held family business like we have here. 10

In addition, sincerely religious persons could find a connection between the

exercise of religion and the pursuit of profit. Would an incorporated kosher

butcher really have no claim to challenge a regulation mandating non-kosher

butchering practices? The kosher butcher, of course, might directly serve a

religious community—as Mardel, a Christian bookstore, does here. But we see no

reason why one must orient one’s business toward a religious community to

preserve Free Exercise protections. A religious individual may enter the for-

profit realm intending to demonstrate to the marketplace that a corporation can

succeed financially while adhering to religious values. As a court, we do not see

how we can distinguish this form of evangelism from any other.

We are also troubled—as we believe Congress would be—by the notion

that Free Exercise rights turn on Congress’s definition of “non-profit.” What if

Congress eliminates the for-profit/non-profit distinction in tax law? Do for-profit

corporations then gain Free Exercise rights? Or do non-profits lose Free Exercise

rights? Or what if Congress, believing that large organizations are less likely to

have a true non-profit motive, declares that non-profit entities may not have more

10

To the extent the government believes the for-profit/non-profit

distinction derives from the nature of business versus religion, we note that the

varieties of corporate form do not mirror such a bright-line rule. See, e.g., Cal.

Corp. Code §§ 14600–31 (establishing “benefit corporations” that may pursue

profits while balancing social welfare goals).

-41-

than 1,000 employees? Would a church with more than 1,000 employees lose its

Free Exercise rights? Or consider a church that, for whatever reason, loses its

501(c)(3) status. Does it thereby lose Free Exercise rights?

To hypotheticals like these, the government cites to the Supreme Court’s

recent Hosanna-Tabor decision, where the Court recognized a ministerial

exception that foreclosed review of the propriety of the decision of a “church”

(understood in a broad sense that includes all religions) to hire or retain a

“minister” (with the same broad meaning). In recognizing this ministerial

exception, the Court found the exception precluded a claim brought under the

Americans with Disabilities Act by a former employee of a school run by a

denomination of the Lutheran church. The Court reiterated the uncontroversial

proposition that “the text of the First Amendment . . . gives special solicitude to

the rights of religious organizations.” Hosanna-Tabor, 132 S. Ct. at 706. From

this language, the government draws a narrow application of the Free Exercise

Clause.

We do not share this interpretation. The main point of the Court was that

the Religion Clauses add to the mix when considering freedom of association.

See also id. at 712–13 (Alito, J., concurring) (“As the Court notes, the First

Amendment ‘gives special solicitude to the rights of religious organizations,’ but

our expressive-association cases are nevertheless useful in pointing out what . . .

essential rights are [held by religious organizations].” (emphasis added)). But it

-42-

does not follow that because religious organizations obtain protections through

the Religion Clauses, all entities not included in the definition of religious

organization are accorded no rights.

And, by relying on this language from Hosanna-Tabor, the government

appears to concede that the for-profit/non-profit distinction is actually immaterial

even under its own theory of the case. Under the government’s position, only

“religious organizations” receive Free Exercise rights. Any other organization,

non-profit or for-profit, could not receive such protection. But Hosanna-Tabor

was not deciding for-profit corporations’ Free Exercise rights, and it does not

follow that the Congress which enacted RFRA would have understood the First

Amendment to contain such a bright-line rule.

The district court, nonetheless, saw incongruence between Free Exercise

rights and the corporate form: “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.” Hobby

Lobby, 870 F. Supp. 2d at 1291. But this is equally true of churches or other

entities that exercise religion. The Church of Lukumi Babalu Aye, Inc., for

example, did not itself pray, worship, or observe sacraments—nor did the sect in

-43-

O Centro. But both certainly have Free Exercise rights. See O Centro, 546 U.S.

at 423; Lukumi, 508 U.S. at 525. 11

The government nonetheless raises the specter of future cases in which, for

example, a large publicly traded corporation tries to assert religious rights under

RFRA. That would certainly seem to raise difficult questions of how to

determine the corporation’s sincerity of belief. But that is not an issue here.

Hobby Lobby and Mardel are not publicly traded corporations; they are closely

held family businesses with an explicit Christian mission as defined in their

governing principles. The Greens, moreover, have associated through Hobby

Lobby and Mardel with the intent to provide goods and services while adhering to

Christian standards as they see them, and they have made business decisions

according to those standards. And the Greens are unanimous in their belief that

the contraceptive-coverage requirement violates the religious values they attempt

to follow in operating Hobby Lobby and Mardel. It is hard to compare them to a

large, publicly traded corporation, and the difference seems obvious. Thus, we do

11

This is not a special case of associational standing. Associational

standing requires, among other things, that all members of the association “would

otherwise have standing to sue in their own right.” S. Utah Wilderness Alliance

v. Office of Surface Mining Reclamation & Enforcement, 620 F.3d 1227, 1246

(10th Cir. 2010). Although this may often be true for religious organizations, we

are aware of no case in which it has been set forth as a requirement. When a

religious organization sues in its own right, we do not ask, for example, whether

every member of the religious group shares the same belief and therefore faces

the same infringement on his or her belief. We accept the entity for what it

claims to represent, regardless of unity among the individuals that associate

through that entity.

-44-

not share any concerns that our holding would prevent courts from distinguishing

businesses that are not eligible for RFRA’s protections.

We need not decide today whether any of these factors is necessary, but we

conclude that their collective presence here is sufficient for Hobby Lobby and

Mardel to qualify as “persons” under RFRA. 12

B. Substantial Burden

The next question is whether the contraceptive-coverage requirement

constitutes a substantial burden on Hobby Lobby and Mardel’s exercise of

religion.

The government urges that there can be no substantial burden here because

“[a]n employee’s decision to use her health coverage to pay for a particular item

or service cannot properly be attributed to her employer.” Aple. Br. at 13. There

12

The dissenters refer to this analysis as a departure from First

Amendment law. See Briscoe Op. at 16; Matheson Op. at 10–11. Not so. Where

did Hobby Lobby and Mardel lose their Free Exercise rights? Was it when they

incorporated? This alone cannot be the relevant trigger because religions may

incorporate as well. Was it when they began operating for-profit? Again, this

alone cannot be the relevant event because the Supreme Court in Lee and

Braunfeld recognized Free Exercise rights in a for-profit context. Is it because

Hobby Lobby and Mardel do not have an explicitly religious purpose, like a

church? Once again, this alone cannot be the relevant distinction. Lee and

Braunfeld demonstrate that activities without an explicitly religious purpose still

implicate Free Exercise rights.

In noting that the claim presented by Hobby Lobby and Mardel may differ

from that of a publicly traded company, Chief Judge Briscoe also implies that we

have created some sort of problematic multi-factor test for future RFRA claims.

See Briscoe Op. at 18–22. But our holding simply reflects the facts presented

here and explains their relevance to the statutory analysis.

-45-

are variations on this same theme in many of the amicus briefs supporting the

government’s position, all of which stand for essentially the same proposition:

one does not have a RFRA claim if the act of alleged government coercion

somehow depends on the independent actions of third parties.

This position is fundamentally flawed because it advances an understanding

of “substantial burden” that presumes “substantial” requires an inquiry into the

theological merit of the belief in question rather than the intensity of the coercion

applied by the government to act contrary to those beliefs. In isolation, the term

“substantial burden” could encompass either definition, but for the reasons

explained below, the latter interpretation prevails. Our only task is to determine

whether the claimant’s belief is sincere, and if so, whether the government has

applied substantial pressure on the claimant to violate that belief.

No one disputes in this case the sincerity of Hobby Lobby and Mardel’s

religious beliefs. And because the contraceptive-coverage requirement places

substantial pressure on Hobby Lobby and Mardel to violate their sincere religious

beliefs, their exercise of religion is substantially burdened within the meaning of

RFRA.

1. The Substantial Burden Test

Our most developed case discussing the substantial burden test is

Abdulhaseeb v. Calbone, 600 F.3d 1301 (10th Cir. 2010). In Abdulhaseeb, we

were required to resolve a RFRA claim brought by Madyun Abdulhaseeb, a

-46-

Muslim prisoner who raised a religious objection to the prison’s failure to provide

him a halal diet. Abdulhaseeb alleged that the prison cafeteria’s failure to serve

halal food violated his rights under the Religious Land Use and Institutionalized

Persons Act (RLUIPA), a statute that adopts RFRA’s “substantial burden”

standard. 13

In analyzing Abdulhaseeb’s claim, we held that a government act imposes a

“substantial burden” on religious exercise if it: (1) “requires participation in an

activity prohibited by a sincerely held religious belief,” (2) “prevents

participation in conduct motivated by a sincerely held religious belief,” or

(3) “places substantial pressure on an adherent . . . to engage in conduct contrary

to a sincerely held religious belief.” Id. at 1315. Our analysis in Abdulhaseeb

only concerned the third prong of this test, related to “substantial pressure.” As

we will explain below, the same is true here.

The substantial pressure prong rests firmly on Supreme Court precedent, in

particular: Thomas v. Review Board of the Indiana Employment Security Division,

450 U.S. 707 (1981), and United States v. Lee, 455 U.S. 252 (1982).

The plaintiff in Thomas was a Jehovah’s Witness who had worked for a

company that owned both a foundry and factory. The foundry processed sheet

steel for a variety of industrial purposes. The factory manufactured turrets for

13

Congress intended the substantial burden tests in RFRA and RLUIPA to

be interpreted uniformly. See Grace United Methodist Church v. City of

Cheyenne, 451 F.3d 643, 661 (10th Cir. 2006).

-47-

military tanks. The plaintiff started working at the foundry but was transferred to

the factory. Although he had no objection to working in the foundry, he raised a

religious objection to his factory job, claiming that “he could not work on

weapons without violating the principles of his religion.” Thomas, 450 U.S. at

710. He quit his job and was eventually denied unemployment benefits. He then

challenged this decision as improperly burdening his right to exercise his religion,

a claim which ultimately reached the Supreme Court.

In considering the Free Exercise claim, the Court noted that the plaintiff

could not clearly articulate the basis for the difference between processing steel

that might be used in tanks and manufacturing the turrets themselves. Id. at 715.

But that was not relevant to resolving the plaintiff’s claim. Rather, the Court

observed, “the judicial process is singularly ill equipped to resolve such

differences in relation to the Religion Clauses.” Id. Further, “[p]articularly in

this sensitive area, it is not within the judicial function and judicial competence to

inquire whether the petitioner . . . correctly perceived the commands of [his]

faith. Courts are not arbiters of scriptural interpretation.” Id. at 716 (internal

quotation marks omitted).

As to the distinction between factory and foundry work, the Court reasoned

that “[the plaintiff’s] statements reveal no more than that he found work in

the . . . foundry sufficiently insulated from producing weapons of war. We see,

therefore, that [the plaintiff] drew a line, and it is not for us to say that the line he

-48-

drew was an unreasonable one.” Id. at 715. In other words, the distinction that

the plaintiff drew was not as important as the fact that he made it based upon his

religious beliefs. Once the plaintiff drew this line, it did not matter whether the

line was “acceptable, logical, consistent, or comprehensible to others in order to

merit First Amendment protection.” Id. at 714.

Accepting the plaintiff’s religious beliefs as sincere, the Court then

examined “the coercive impact” upon him of being “put to a choice between

fidelity to religious belief or cessation of work.” Id. at 717. On that score, the

Court found a substantial burden:

Where the state conditions receipt of an important

benefit upon conduct proscribed by a religious faith, or

where it denies such a benefit because of conduct

mandated by religious belief, thereby putting substantial

pressure on an adherent to modify his behavior and to

violate his beliefs, a burden upon religion exists. While

the compulsion may be indirect, the infringement upon

free exercise is nonetheless substantial.

Id. at 717–18 (emphasis added).

United States v. Lee similarly demonstrates that the burden analysis does

not turn on whether the government mandate operates directly or indirectly, but

on the coercion the claimant feels to violate his beliefs. The question in Lee was

“whether the payment of social security taxes and the receipt of benefits interferes

with the free exercise rights of the Amish.” 455 U.S. at 256–57. The Court first

identified the religious belief at issue, namely, that “it [is] sinful [for the Amish]

-49-

not to provide for their own elderly and needy,” and it is concomitantly sinful to

pay into the social security system and thereby enable other Amish to shirk their

duties toward the elderly and needy. Id. at 255 & n.3. Thus, the belief at issue in

Lee turned in part on a concern of facilitating others’ wrongdoing.

In responding to Lee’s claims, the government did not question the

sincerity of the plaintiff’s belief, but it did raise a direct/indirect argument, i.e.,

“that payment of social security taxes will not threaten the integrity of the Amish

religious belief or observance.” Id. at 257. As in Thomas, the Court in Lee would

not indulge the government on this point, reasoning simply that “[i]t is not within

the judicial function and judicial competence . . . to determine whether” a

plaintiff “has the proper interpretation of [his] faith.” Id. (internal quotation

marks omitted).

The Court in Lee found “a conflict between the Amish faith and the

obligations imposed by the social security system.” Id. But, it said, “[n]ot all

burdens on religion are unconstitutional.” Id. The Court concluded, under the

circumstances, that the burden was justified by “the Government’s interest in

assuring mandatory and continuous participation in and contribution to the social

security system”—an interest which the Court described as “very high.” Id. at

258–59. The Court determined that this interest justified the acknowledged

-50-

burden on religious belief. Id. 14 But again, the analysis did not turn on whether

the Amish faced direct or indirect coercion or whether the supposed violations of

their faith turned on actions of independent third parties. The Court recognized

the belief for what it was, accepted that the government was imposing a burden,

and then analyzed the strength of the government’s interest.

Given the foregoing, our first step in Abdulhaseeb was to identify the belief

in question—the immorality of a non-halal diet—and to determine if the belief

was sincerely held. Finding it was, we stated that “the issue is not whether the

lack of a halal diet that includes meats substantially burdens the religious exercise

of any Muslim practitioner, but whether it substantially burdens Mr.

Abdulhaseeb’s own exercise of his sincerely held religious beliefs.” 600 F.3d at

1314 (emphasis in original). We concluded that the prison cafeteria’s “failure to

provide a halal diet either prevents Mr. Abdulhaseeb’s religious exercise, or, at

the least, places substantial pressure on Mr. Abdulhaseeb not to engage in his

religious exercise by presenting him with a Hobson’s choice—either he eats a

non-halal diet in violation of his sincerely held beliefs, or he does not eat.” Id. at

1317. Thus, the plaintiff faced a substantial burden.

14

The Free Exercise interest in Lee would today be described in the RFRA

context as a “substantial burden on religious exercise,” albeit one justified by a

compelling government interest. See O Centro, 546 U.S. at 421. Further, the

government agreed at oral argument that it is correct to view Lee as a case in

which the Court found a “substantial burden” for purposes of the framework in

RFRA.

-51-

2. Applying the Substantial Burden Test

The claims of Hobby Lobby and Mardel are similar to those raised in

Thomas, Lee, and Abdulhaseeb, and the framework provided in those cases guides

our analysis.

First, we must identify the religious belief in this case. The corporate

plaintiffs believe life begins at conception. Thus, they have what they describe as

“a sincere religious objection to providing coverage for Plan B and Ella since they

believe those drugs could prevent a human embryo . . . from implanting in the

wall of the uterus, causing the death of the embryo.” JA 35a. And they allege a

“sincere religious objection to providing coverage for certain contraceptive

[IUDs] since they believe those devices could prevent a human embryo from

implanting in the wall of the uterus, causing the death of the embryo.” Id.

Further, Hobby Lobby and Mardel object to “participating in, providing access to,

paying for, training others to engage in, or otherwise supporting” the devices and

drugs that yield these effects. Aplt. Br. at 27 (citing JA 14a).

Second, we must determine whether this belief is sincere. The government

does not dispute the corporations’ sincerity, and we see no reason to question it

either. 15

15

“One can, of course, imagine an asserted claim so bizarre, so clearly

nonreligious in motivation, as not to be entitled to protection under the Free

Exercise Clause; but that is not the case here . . . .” Thomas, 450 U.S. at 715.

The assertion that life begins at conception is familiar in modern religious

(continued...)

-52-

Third, we turn to the question of whether the government places substantial

pressure on the religious believer. Here, it is difficult to characterize the pressure

as anything but substantial. To the extent Hobby Lobby and Mardel provide a

health plan, they would be fined $100 per employee, per day the plan does not

meet the contraceptive-coverage requirement. 26 U.S.C. § 4980D(b)(1). With

over 13,000 employees, that comes to more than $1.3 million per day, or close to

$475 million per year. And if Hobby Lobby and Mardel simply stop offering a

health plan—dropping health insurance for more than 13,000 employees—then

the companies must pay about $26 million per year, see id. § 4980H(c)(1) (fining

employer $2,000 per employee per year), and put themselves “at a competitive

disadvantage in [their] efforts to recruit and retain employees,” JA 40a.

With this dilemma created by the statute, we believe that Hobby Lobby and

Mardel have made a threshold showing regarding a substantial burden.

Ordinarily, the question of substantial burden would involve subsidiary factual

issues. See Kikumura, 242 F.3d at 961; id. at 966 (Holloway, J., concurring in

part and dissenting in part); id. at 966–67 (Ebel, J., concurring). But in the

district court, the government did not question the significance of the financial

burden. And, the government has not done so in this appeal. Thus, the district

court record leaves only one possible scenario: Hobby Lobby and Mardel

15

(...continued)

discourse, although of course not universally held. Moral culpability for enabling

a third party’s supposedly immoral act is likewise familiar.

-53-

incurred a substantial burden on their ability to exercise their religion because the

law requires Hobby Lobby and Mardel to:

! compromise their religious beliefs,

! pay close to $475 million more in taxes every year, or

! pay roughly $26 million more in annual taxes and drop health-

insurance benefits for all employees.

This is precisely the sort of Hobson’s choice described in Abdulhaseeb, and

Hobby Lobby and Mardel have established a substantial burden as a matter of

law.

3. The Government’s Arguments

The government resists this conclusion, contending the regulations place no

burden on Hobby Lobby or Mardel. It insists the insurance coverage at issue is

just another form of non-wage compensation—supposedly the equivalent of

money—and therefore should not present problems under RFRA.

Such reasoning cannot be squared with the Supreme Court’s holding in

Thomas. The Supreme Court emphasized that when the plaintiff drew a moral

line between foundry and factory work, it was not the Court’s prerogative to

determine whether the line he drew “was an unreasonable one.” Thomas, 450

U.S. at 715.

Just so here: Hobby Lobby and Mardel have drawn a line at providing

coverage for drugs or devices they consider to induce abortions, and it is not for

-54-

us to question whether the line is reasonable. This is especially so given that

Hobby Lobby and Mardel stand in essentially the same position as the Amish

carpenter in Lee, who objected to being forced to pay into a system that enables

someone else to behave in a manner he considered immoral. That is precisely the

objection of Hobby Lobby and Mardel. It is not the employees’ health care

decisions that burden the corporations’ religious beliefs, but the government’s

demand that Hobby Lobby and Mardel enable access to contraceptives that Hobby

Lobby and Mardel deem morally problematic. As the Supreme Court accepted the

religious belief in Lee, so we must accept Hobby Lobby and Mardel’s beliefs. 16

For similar reasons, the government’s reliance on Zelman v. Simmons-

Harris, 536 U.S. 639 (2002), and Board of Regents v. Southworth, 529 U.S. 217

(2000), is misplaced. First, in Zelman, the Supreme Court addressed an

16

At oral argument, the concern was raised whether our ruling here would

permit Hobby Lobby and Mardel to withhold wages on religious grounds if they

knew the wages would be used to purchase the objected-to contraceptives. This

argument ignores the fact that the government can justify a substantial burden on

religious exercise by demonstrating a compelling interest, and uniform

enforcement of labor laws such as the Fair Labor Standards Act, which governs

the payment of wages, would give rise to such an interest. See, e.g., Dole v.

Shenandoah Baptist Church, 899 F.2d 1389, 1397–99 (4th Cir. 1990). In a

similar vein, Chief Judge Briscoe’s dissent suggests that this opinion has “opened

the floodgates to RFRA litigation challenging any number of federal statutes that

govern corporate affairs.” Briscoe Op. at 25; see also Matheson Op. at 6 n.3.

This argument similarly fails to acknowledge both RFRA’s allowance that a

narrowly tailored compelling interest can justify a substantial burden and RFRA’s

requirement that the belief be sincere. Cf. United States v. Quaintance, 608 F.3d

717 (10th Cir. 2010) (rejecting an argument that RFRA barred the prosecution of

members of a marijuana distribution conspiracy who claimed that use of the drug

was central to their religious beliefs).

-55-

Establishment Clause challenge to a school voucher program where an

overwhelming majority of the students were using vouchers to enroll at religious

schools. 536 U.S. at 647. The Court concluded that such a program did not

violate the Establishment Clause in part because “the perceived endorsement of a

religious message[] is reasonably attributable to the individual recipient, not to

the government,” id. at 652, and in part because “no reasonable observer would

think a neutral program of private choice, where state aid reaches religious

schools solely as a result of the numerous independent decisions of private

individuals, carries with it the imprimatur of government endorsement,” id. at 655

(emphasis added).

Southworth involved a similar claim brought by university students who

challenged a mandatory fee that would be used in part to fund other student

groups that produced speech the plaintiffs found objectionable. 529 U.S. at 230.

The Court concluded that because funds for student activities were distributed to

student groups on a viewpoint-neutral basis, this system prevented “any mistaken

impression that the student [groups] speak for the University” or for the plaintiffs.

Id. at 233 (internal quotation marks omitted).

The government attempts to analogize these Free Speech and Establishment

Clause cases to the question here. The government suggests that because it was

not possible to attribute the offensive speech to the students in Southworth and

-56-

the support for religious schools to the state in Zelman, it is also impossible to

attribute an employee’s independent choice to the employer.

We reject this position because it assumes that moral culpability for the

religious believer can extend no further than the government’s legal culpability in

the Establishment or Free Speech contexts. Again, Thomas teaches that the

plaintiff is not required to articulate a legal principle for the line he draws, let

alone point to an analog from potentially related fields of constitutional law. And

the question here is not whether the reasonable observer would consider the

plaintiffs complicit in an immoral act, but rather how the plaintiffs themselves

measure their degree of complicity. 17

Hobby Lobby and Mardel have therefore established a substantial burden to

their sincerely held religious beliefs. We now turn to the final question: whether

the government has presented a compelling interest implemented through the least

restrictive means available. 18

17

At oral argument, the government relied upon language from Doremus v.

Bd. of Ed. of Borough of Hawthorne, 342 U.S. 429 (1952), a taxpayer standing

case. The Supreme Court denied the taxpayer standing to bring the claims,

reasoning in part that “the interests of a taxpayer in the moneys of the federal

treasury are too indeterminable, remote, uncertain and indirect to furnish a basis

for an appeal to the preventive powers of the Court over their manner of

expenditure.” Id. at 433. Doremus does not apply here because Hobby Lobby

and Mardel do not bring their claims as taxpayers but rather as entities alleging

injury from coercive government regulation. Thus, the taxpayer standing

concerns animating the court’s Doremus decision are not implicated here.

18

The district court relied on a test for substantial burden applied by the

(continued...)

-57-

C. Compelling Interest and Least Restrictive Means

As noted above, even at the preliminary injunction stage, RFRA requires

the government to demonstrate that mandating a plaintiff’s compliance with the

contraceptive-coverage requirement is “the least restrictive means of advancing a

compelling interest.” O Centro, 546 U.S. at 423 (citing 42 U.S.C.

§ 2000bb-1(b)). As the Supreme Court emphasized, this standard requires that we

“look[] beyond broadly formulated interests justifying the general applicability of

government mandates and scrutinize[] the asserted harm of granting specific

exemptions to particular religious claimants.” Id. at 431.

The interest must also be narrowly tailored. “RFRA requires the

Government to demonstrate that the compelling interest test is satisfied through

application of the challenged law ‘to the person’—the particular claimant whose

sincere exercise of religion is being substantially burdened.” Id. at 430 (quoting

42 U.S.C. § 2000bb-1(b)) (emphasis added). Thus, the government must show

with “particularity how [even] admittedly strong interest[s]” “would be adversely

affected by granting [the] exemption” specifically requested by Hobby Lobby and

Mardel. Wisconsin v. Yoder, 406 U.S. 205, 236 (1972).

18

(...continued)

Seventh Circuit in Civil Liberties for Urban Believers v. City of Chicago, 342

F.3d 752 (7th Cir. 2003). As the district court noted, the Seventh Circuit used

Civil Liberties to change the test for what constitutes “inhibition” of religious

practice by defining inhibition as any government act that “bears direct, primary,

and fundamental responsibility for rendering religious exercise . . . effectively

impracticable.” Id. at 761. But Abdulhaseeb does not accept this formulation.

-58-

1. Compelling Interest

The government asserts two interests here: “the interests in [1] public

health and [2] gender equality.” Aple. Br. at 34. We recognize the importance

of these interests. But they nonetheless in this context do not satisfy the Supreme

Court’s compelling interest standards.

First, both interests as articulated by the government are insufficient under

O Centro because they are “broadly formulated interests justifying the general

applicability of government mandates.” 546 U.S. at 431. And the government

offers almost no justification for not “granting specific exemptions to particular

religious claimants.” Id.

Second, the interest here cannot be compelling because the contraceptive-

coverage requirement presently does not apply to tens of millions of people. As

noted above, this exempted population includes those working for private

employers with grandfathered plans, for employers with fewer than fifty

employees, and, under a proposed rule, for colleges and universities run by

religious institutions. As the Supreme Court has said, “a law cannot be regarded

as protecting an interest of the highest order when it leaves appreciable damage to

that supposedly vital interest unprohibited.” Lukumi, 508 U.S. at 547; see also

O Centro, 546 U.S. at 433 (citing Lukumi as instructive in determining whether

exemptions undermine a compelling government interest for purposes of RFRA).

The exemptions at issue here would yield precisely this result: they would leave

-59-

unprotected all women who work for exempted business entities.

On this question, O Centro is particularly instructive. In that case, a

religious group sought an exemption for the sacramental use of hoasca, a

hallucinogen classified as a Schedule I(c) controlled substance under the

Controlled Substances Act. The question in O Centro was limited to whether the

government could show a compelling governmental interest under RFRA to

justify what was indisputably a substantial burden on the plaintiffs’ exercise of

religion. The government in part relied on its interest in promoting public health

and safety and upon Congress’s determination that hoasca “‘has a high potential

for abuse,’ ‘has no currently accepted medical use,’ and has ‘a lack of accepted

safety for use . . . under medical supervision.’” O Centro, 546 U.S. at 433

(quoting 21 U.S.C. § 812(b)(1)).

The Supreme Court refused to credit this argument, however, in part

because the CSA and related regulations contained an exemption for the religious

use of another substance categorized as a Schedule I hallucinogen, peyote. As the

Court reasoned, “Everything the Government says about the [dangerous

chemicals] in hoasca . . . applies in equal measure to the [dangerous chemicals] in

peyote.” Id. Because both the Executive Branch and Congress had decreed a

religious exemption for Native American use of peyote, the Court concluded that

“it [was] difficult to see how” those same concerns could “preclude any

consideration of a similar exception for” the religious use of hoasca. Id. If the

-60-

peyote exemption in O Centro, which applied to “hundreds of thousands of Native

Americans,” id., was enough to undermine the government’s compelling interest

argument in that case, we conclude the exemption for the millions of individuals

here must dictate a similar result.

2. Least Restrictive Means

Even if the government had stated a compelling interest in public health or

gender equality, it has not explained how those larger interests would be

undermined by granting Hobby Lobby and Mardel their requested exemption.

Hobby Lobby and Mardel ask only to be excused from covering four

contraceptive methods out of twenty, not to be excused from covering

contraception altogether. The government does not articulate why

accommodating such a limited request fundamentally frustrates its goals.19

3. Hobby Lobby and Mardel Employees

Finally, we note a concern raised both at oral argument and in the

government’s briefing that Hobby Lobby and Mardel are, in effect, imposing their

religious views on their employees or otherwise burdening their employees’

religious beliefs. But Hobby Lobby and Mardel do not prevent employees from

using their own money to purchase the four contraceptives at issue here.

19

The government suggests on appeal that a limited number of women can

only use the four contraceptives to which Hobby Lobby and Mardel object. The

government did not raise this argument below nor has it provided any factual

support for this claim. It is free to raise this argument below in permanent

injunction proceedings.

-61-

Of course, employees of Hobby Lobby and Mardel seeking any of these

four contraceptive methods would face an economic burden not shared by

employees of companies that cover all twenty methods. But the government must

show why the employees’ burden creates a compelling interest that can only be

met by requiring the corporations to conform to a mandate.

Accommodations for religion frequently operate by lifting a burden from

the accommodated party and placing it elsewhere. The government itself has

even taken this step with the contraceptive-coverage requirement by

accommodating certain religious employers, at the expense of their employees.

That is part of accommodating religion—and is RFRA’s basic purpose.

* * *

In sum, for all of these reasons, Hobby Lobby and Mardel have established

they are likely to succeed on their RFRA claim.

VI. Remaining Preliminary Injunction Factors 20

Having concluded that Hobby Lobby and Mardel are likely to succeed on

the merits, we turn to the remaining preliminary injunction factors: whether

Hobby Lobby and Mardel face irreparable harm; whether the balance of equities

tips in Hobby Lobby and Mardel’s favor; and whether an injunction is in the

public interest. Att’y Gen. of Okla. v. Tyson Foods, Inc., 565 F.3d 769, 776 (10th

Cir. 2009). The district court did not analyze these factors (having disposed of

20

Judge Bacharach joins only Section VI(B)(1) of this Part.

-62-

the question on the likelihood-of-success prong) but Hobby Lobby and Mardel

nonetheless ask that we reach them.

A. Propriety of Reaching the Remaining Factors

“If the district court fails to analyze the factors necessary to justify a

preliminary injunction, this court may do so [in the first instance] if the record is

sufficiently developed.” Westar Energy, 552 F.3d at 1224. The record we have is

the record the parties chose to create below—it is the record they deemed

sufficient for the district court to decide the preliminary injunction question. For

each element, we believe this record suffices for us to resolve each of the

remaining preliminary injunction factors. 21

In addition, “in First Amendment cases, the likelihood of success on the

merits will often be the determinative factor.” ACLU of Illinois v. Alvarez, 679

F.3d 583, 589 (7th Cir. 2012), cert. denied, 133 S. Ct. 651 (2012). That is

because:

21

In many First Amendment cases, courts of appeal have weighed these

additional factors in the first instance after having determined that the district

court had erroneously denied the preliminary injunction on the likelihood-of-

success element. See, e.g., Tenafly Eruv Ass’n, Inc. v. Borough of Tenafly, 309

F.3d 144, 178 (3d Cir. 2002) (so holding in the context of a Free Exercise Claim);

Newsom ex rel. Newsom v. Albemarle Cnty. Sch. Bd., 354 F.3d 249, 261 (4th Cir.

2003) (same in the context of Free Speech claim); ACLU of Illinois v. Alvarez,

679 F.3d 583, 589 (7th Cir. 2012) (same), cert. denied, 133 S. Ct. 651 (2012); see

also Heideman v. S. Salt Lake City, 348 F.3d 1182, 1191 (10th Cir. 2003)

(addressing—in the context of an affirmance of a denial of a preliminary

injunction on a Free Exercise claim—all the preliminary injunction factors, even

though the district court seemed to only address likelihood of success).

-63-

! “the loss of First Amendment freedoms, for even minimal

periods of time, unquestionably constitutes irreparable injury,”

Heideman v. S. Salt Lake City, 348 F.3d 1182, 1190 (10th Cir.

2003) (internal quotation marks omitted);

! “when [a] law . . . is likely unconstitutional, the[] interests [of

those the government represents, such as voters] do not

outweigh [a plaintiff’s interest] in having [its] constitutional

rights protected,” Awad v. Ziriax, 670 F.3d 1111, 1131–32

(10th Cir. 2012); and

! “it is always in the public interest to prevent the violation of a

party’s constitutional rights,” id. at 1132.

This is likewise true here since RFRA is no ordinary statute: “Federal

statutory law adopted after November 16, 1993 is subject to [RFRA] unless such

law explicitly excludes such application by reference to this chapter.” 42 U.S.C.

§ 2000bb-3(b). Congress thus obligated itself to explicitly exempt later-enacted

statutes from RFRA, which is conclusive evidence that RFRA trumps later federal

statutes when RFRA has been violated. That is why our case law analogizes

RFRA to a constitutional right. Kikumura, 242 F.3d at 963 (stating, in analyzing

a RFRA claim, that “[w]hen an alleged constitutional right is involved, most

courts hold that no further showing of irreparable injury is necessary” (emphasis

added; internal quotation marks omitted)); see also Michael Paulsen, A RFRA

Runs Through It: Religious Freedom and the U.S. Code, 56 Mont. L. Rev. 249,

253 (1995) (characterizing RFRA as a “super-statute” given its binding nature on

subsequent federal action). Congress did not exempt the ACA from RFRA, nor

-64-

did it create any sort of wide-ranging exemption for HHS and other agencies

charged with implementing the ACA through the regulations challenged here.

Finally, the government nowhere contested the factual adequacy or

accuracy of Hobby Lobby and Mardel’s allegations, and given that those

allegations were established through a verified complaint, they are deemed

admitted for preliminary injunction purposes. IDS Life Ins. Co. v. SunAmerica

Life Ins. Co., 136 F.3d 537, 542 (7th Cir. 1998) (noting that “[v]erified

complaints[ are] the equivalent of affidavits”); 11A Charles Alan Wright et al.,

Fed. Prac. & Proc. § 2949 (2d ed., Apr. 2013 update) (“[T]he written evidence [in

a preliminary injunction proceeding] is presumed true if it is not contradicted.”).

In short, the record before us is enough to resolve the remaining

preliminary injunction factors. Given Hobby Lobby and Mardel’s July 1

deadline, prudence strongly counsels in favor of reaching those factors. Thus, we

would reach them and find that they favor Hobby Lobby and Mardel. Indeed, as

we discuss next, even if likelihood of success was not enough to settle the

question, we would find in favor of Hobby Lobby and Mardel.

B. Analysis of Remaining Factors

1. Irreparable Harm

Hobby Lobby and Mardel have established a likely violation of RFRA. We

have explicitly held—by analogy to First Amendment cases—that establishing a

likely RFRA violation satisfies the irreparable harm factor. See Kikumura, 242

-65-

F.3d at 963 (“a plaintiff satisfies the irreparable harm analysis by alleging a

violation of RFRA”); see also O Centro Espirita Beneficiente Uniao Do Vegetal

v. Ashcroft, 342 F.3d 1170, 1187 (10th Cir. 2003) (same). Hobby Lobby and

Mardel have therefore demonstrated irreparable harm.

2. Balance of Equities

Nor is there any question about the balance of equities. A preliminary

injunction would forestall the government’s ability to extend all twenty approved

contraceptive methods to Hobby Lobby and Mardel’s 13,000 employees. But

Hobby Lobby and Mardel will continue to provide sixteen of the twenty

contraceptive methods, so the government’s interest is largely realized while

coexisting with Hobby Lobby and Mardel’s religious objections. And in any

event, the government has already exempted health plans covering millions of

others. These plans need not provide any of the twenty contraceptive methods.

By contrast, Hobby Lobby and Mardel remain subject to the Hobson’s

choice between catastrophic fines or violating its religious beliefs. Accordingly,

the balance of equities tips in Hobby Lobby and Mardel’s favor.

3. Public Interest

Finally, as stated above, “it is always in the public interest to prevent the

violation of a party’s constitutional rights.” Awad, 670 F.3d at 1132. Again, as

already noted, although RFRA violations are not constitutional violations,

Congress has given RFRA similar importance by subjecting all subsequent

-66-

congressional enactments to a strict scrutiny standard of review unless those

enactments explicitly exclude themselves from RFRA. See 42 U.S.C. § 2000bb-

3(b). And accommodating the two companies in this case does not undermine the

application of the contraceptive-coverage requirement to the vast number of

employers without religious objections. Because Hobby Lobby and Mardel have

demonstrated a likely violation of their RFRA rights, an injunction would be in

the public interest.

In sum, all preliminary injunction factors tip in favor of Hobby Lobby and

Mardel, and we would therefore remand to the district court with instructions to

enter a preliminary injunction.

VII. Conclusion

For the reasons set forth above, we reverse the district court’s denial of the

plaintiffs’ motion for a preliminary injunction and remand with instructions that

the district court address the remaining two preliminary injunction factors and

then assess whether to grant or deny the plaintiffs’ motion. The Clerk is directed

to issue the mandate forthwith.

-67-

12-6294 - Hobby Lobby Stores, Inc., et al. v. Sebelius, et al.

HARTZ, Circuit Judge, concurring:

I join Judge Tymkovich’s opinion but write separately to explain why I think (1)

that all corporations come within the protection of the Free Exercise Clause and RFRA

and (2) that the substantial-burden analysis here is a simple one.

I. CORPORATIONS AS PERSONS

To analyze whether corporations have civil rights, one must begin by recognizing

what they are. For our purposes, two characteristics are the most important. First,

ordinarily they are a means of organizing group activity, for social or business reasons.

Second, the personal liability of owners is limited, thereby encouraging investment in the

enterprise. The sole aim of a corporation may be to maximize profit or long-term value to

shareholders. But no law requires a strict focus on the bottom line, and it is not

uncommon for corporate executives to insist that corporations can and should advance

values beyond the balance sheet and income statement. See ALI Principles of Corporate

Governance: Analysis and Recommendations § 2.01(b) (2012) (“Even if corporate profit

and shareholder gain are not thereby enhanced, the corporation, in the conduct of its

business: . . . (2) May take into account ethical considerations that are reasonably

regarded as appropriate to the responsible conduct of business; and (3) May devote a

reasonable amount of resources to public welfare, humanitarian, educational and

philanthropic purposes.”) .

Those who argue that a for-profit corporation does not have a right to the free

exercise of religion point to three features of such an entity: (1) it is for profit, (2) it has

adopted a corporate form, and (3) it is a group activity. It is unclear which of these

features is thought to be the one that disqualifies corporations from the free-exercise right.

In my view, however, none of these features can justify denial of rights protected under

the First Amendment, including the right to free exercise of religion.

The first feature is the easiest to address because the Supreme Court has already

recognized that profit-seekers have a right to the free exercise of religion. In Braunfeld v.

Brown, 366 U.S. 599, 601 (1961), the Court entertained a free-exercise challenge to

Sunday blue laws by Jewish merchants “engage[d] in the retail sale of clothing and home

furnishings.” And in United States v. Lee, 455 U.S. 252, 254 (1982), an Amish farmer

and carpenter was permitted to object on religious grounds to paying Social Security

taxes for his employees. Perhaps profit-making is not a religious enterprise, but those

who engage in profit-making enterprises can still have religious convictions that require

them to do or refrain from doing certain things in their businesses. The Constitution does

not require compartmentalization of the psyche, saying that one’s religious persona can

participate only in nonprofit activities. As Justice Brennan wrote, “[A] State may [not]

put an individual to a choice between his business and his religion.” Braunfeld, 366 U.S.

at 611 (Brennan, J., dissenting).

Also, there is no principled reason why an individual who uses the corporate form

in a business must thereby sacrifice the right to the free exercise of religion. Rabbi

-2-

Manischewitz starts a business preparing kosher matzo. A city ordinance prohibits

certain kosher practices. No one could doubt that he can challenge the ordinance under

the Free Exercise Clause or RFRA. But, some say, he can no longer raise such a

challenge if he decides to limit his personal liability arising from the business by

converting it to a sole-shareholder corporation. Why? True, the government may impose

special duties on those who use a corporate form, such as a duty to produce corporate

records, and those duties may require limitations on constitutional rights. See Wilson v.

United States, 221 U.S. 361, 383–85 (1911) (no Fifth Amendment privilege to refuse to

produce corporate records). But surely the limitations must relate to use of the corporate

form. Does it make sense to say, “Since you have acted to reduce your personal financial

risk, you can now be required to stop making kosher matzo.”? What does limiting

financial risk have to do with choosing to live a religious life? Although a corporation

takes on a legal identity distinct from the sole shareholder, First Amendment

jurisprudence is based on the substance of the constitutional protections, not matters of

form. See Bd. of Cnty. Comm’rs v. Umbehr, 518 U.S. 667, 679–80 (1996) (citing cases);

Bd. of Educ. v. Grumet, 512 U.S. 687, 698 (1994) (plurality opinion) (“In the

circumstances of these cases, the difference between thus vesting state power in the

members of a religious group as such instead of the officers of its sectarian organization

is one of form, not substance.”). Indeed, as Judge Tymkovich’s opinion recites, use of the

corporate form has not disqualified nonprofit corporations from invoking the protections

of the Free Exercise Clause and RFRA. And for-profit corporations have been protected

-3-

by rights to freedom of speech and freedom of the press. See, e.g., Simon & Schuster,

Inc. v. Members of N.Y. State Crime Victims Bd., 502 U.S. 105 (1991); New York Times

Co. v. Sullivan, 376 U.S. 254 (1964).

What about the group-activity feature of corporations? No one suggests that

organizations, in contrast to their members, have souls. But it does not follow that people

must sacrifice their souls to engage in group activities through an organization. Working

with others through an organization can often be advantageous in many respects. Of

course, one who acts through a group loses a measure of personal autonomy and privacy.

The group may say something that is anathema to one of its members or do something

contrary to the religious faith of a member. Thus, the civil liberties of an organization—

say, to exercise religion or to speak—must be considered distinct from the civil liberties

of any particular member. Its speech or conduct may reflect the view of only a bare

majority of the members, or even just the view of the members’ delegate—such as the

editor of a newspaper or the pastor of a congregation. It suffices that the speech or

conduct represents an “official position.” See Boy Scouts of Am. v. Dale, 530 U.S. 640,

655 (2000) (“[T]he First Amendment simply does not require that every member of a

group agree on every issue in order for the group’s policy to be ‘expressive association.’

The Boy Scouts takes an official position . . . and that is sufficient for First Amendment

purposes.”) But the advantages of acting through an organization may still be attractive

to the individual. One who wants to have a prosperous business, but a business that still

does nothing contrary to one’s faith, can reasonably decide that the best way to

-4-

accomplish this is to join with like-minded persons, perhaps as partners, perhaps as fellow

shareholders. Is that desire to be thwarted because the government can require the

organization to engage in sins that could not be required of any of the members

individually? Rabbi Manischewitz need not comply with an ordinance prohibiting the

baking of kosher matzo, but when he obtains investors and the business is incorporated as

Manischewitz, Inc., the anti–kosher law can be enforced against it? Must he reorganize

the business as a sole proprietorship to continue to make and sell kosher matzo?1

As noted in Judge Tymkovich’s opinion, the Supreme Court has recognized that

civil liberties are preserved for those who work through groups. “An individual’s

freedom to speak, to worship, and to petition the government for the redress of grievances

could not be vigorously protected from interference by the State unless a correlative

freedom to engage in group effort toward those ends were not also guaranteed.” Roberts

v. United States Jaycees, 468 U.S. 609, 622 (1984); cf. Grumet, 512 U.S. at 698

(“religious people (or groups of religious people) cannot be denied the opportunity to

exercise the rights of citizens simply because of their religious affiliations or

commitments, for such a disability would violate the right to religious free exercise”

1

Judge Matheson suggests that it is not necessary for the corporation to have a

RFRA claim because the rabbi himself could raise a claim as an individual. See

Matheson Op. at 20–21 n.15. But I do not share his confidence that a shareholder,

director, or officer can have a personal free-exercise claim (under the First Amendment or

RFRA) to challenge a law that commands only the corporation.

-5-

(emphasis added)).2 There is no reason why that group should lose constitutional

protection if it is organized in corporate form. Cf. United States v. Int’l Union UAW-CIO,

352 U.S. 568, 597 (1957) (Douglas, J., dissenting, joined by C. J. Warren and J. Black)

(“Some may think that one group or another should not express its views in an election

because it is too powerful, because it advocates unpopular ideas, or because it has a

record of lawless action. But these are not justifications for withholding First

Amendment rights from any group—labor or corporate.”).

Perhaps in certain circumstances the use of the corporate form can be a proper

ground for limiting (but not eliminating) First Amendment rights. The reasons argued for

restricting political expenditures by corporations include the asserted inclinations and

advantages of corporations in corrupting officeholders. See Citizens United v. Fed.

Election Comm’n, 558 U.S. 310, 447–75 (Stevens, J., dissenting). But no such concern

has been raised here, and I fail to see how such a concern could arise. A corporation

exercising religious beliefs is not corrupting anyone. Nor do I see how it would have any

special inclination or advantage in exercising religious beliefs to the public detriment.

In short, those arguing that for-profit corporations cannot be “persons” under

RFRA can find no support in any principles established in Supreme Court First

2

To be entitled to First Amendment protection, the group’s speech or conduct

need not be the purpose for forming the group. See Boy Scouts of Am. v. Dale, 530 U.S.

640, 655 (2000) (“[A]ssociations do not have to associate for the ‘purpose’ of

disseminating a certain message in order to be entitled to the protections of the First

Amendment. An association must merely engage in expressive activity that could be

impaired to be entitled to protection.”).

-6-

Amendment jurisprudence. They must resort to pointing out that the Supreme Court has

never ruled that a for-profit corporation has a right to the free exercise of religion. But

neither has it ruled to the contrary. The fact of the matter is that it has never had to decide

the issue. Interestingly, the issue was raised by the government in Gallagher v. Crown

Kosher Super Market of Massachusetts, Inc., 366 U.S. 617 (1961), one of the associated

cases challenging Sunday blue laws on various grounds. Because the Court had already

rejected the free-exercise claim in another decision, it said that it did not have to decide

whether the corporation, its customers, or the rabbis who supervised the condition of

kosher meat had standing to bring a free-exercise challenge. See id. at 631. But the three

dissenters, Justices Douglas, Brennan, and Stewart, implicitly found standing.

Of course, a corporation is protected only in its sincere religious beliefs. Chief

Judge Briscoe’s opinion expresses concern about “how easily an ‘exercise of religion’

could now be asserted by a corporation to avoid or take advantage of any governmental

rule or requirement.” Briscoe Op. at 4. This is certainly a proper concern, just as courts

can properly be concerned about the sincerity of prisoners who convert to Judaism and

demand kosher meals. But sincerity questions with respect to corporations should not be

unmanageable. It should not be hard to determine who has authority to speak or act for

the corporation. And sincerity can be measured by consistency of the present stated

belief with the history of the enterprise. Unlike prisoners, for example, corporations are

not known to have epiphanies or sudden conversions.

-7-

Insofar as Chief Judge Briscoe’s opinion is concerned about “open[ing] the

floodgates to RFRA litigation challenging any number of federal statutes that govern

corporate affairs,” id. at 25, it does not explain why that danger is any greater than the

possibility of litigation on behalf of sole proprietors, or perhaps partnerships and other

business organizations. But in any event, it makes no sense under RFRA to refuse to

grant a merited exemption just because others may also seek it. How ironic if a burden on

religious objectors can be justified because “too many” objectors find a law repugnant.

The fears expressed are reminiscent of what the Supreme Court wrote almost a quarter-

century ago:

The government’s ability to enforce generally applicable prohibitions of

socially harmful conduct, like its ability to carry out other aspects of public

policy, cannot depend on measuring the effects of a governmental action on

a religious objector’s spiritual development. To make an individual’s

obligation to obey such a law contingent upon the law’s coincidence with

his religious beliefs, except where the State’s interest is compelling—

permitting him, by virtue of his beliefs, to become a law unto himself,

contradicts both constitutional tradition and common sense. . . . Any

society adopting such a system would be courting anarchy, but that danger

increases in direct proportion to the society’s diversity of religious beliefs,

and its determination to coerce or suppress none of them.

Emp’t Div. v. Smith, 494 U.S. 872, 885, 888 (1990) (citations and internal quotation

marks omitted). Accordingly, the Court held that a “neutral law of general applicability”

cannot be challenged on free-exercise grounds. Id. at 879; see id. at 888–89 (listing civic

obligations, such as paying taxes and minimum wages, that could otherwise be subject to

“constitutionally required” exemptions). That view, of course, was soundly rejected

when Congress enacted RFRA.

-8-

II. SUBSTANTIAL BURDEN

I would also add a few words on the meaning of “substantial burden.” It is

important to distinguish between two types of laws that may violate the right to free

exercise of religion. Some laws require a person to do something contrary to the person’s

religious beliefs or to refrain from doing something required by those beliefs. Other laws

do not order the violation of a religious duty but simply make it more difficult for a

person to obey that duty. As I understand Supreme Court precedent, the first type of law

imposes a substantial burden on free exercise, whatever the penalty imposed for violating

the law. Measuring coercive impact to determine whether the law imposes a “substantial”

burden is necessary only for the second type of law. For example, in Lee the law required

the Amish businessman to pay social security taxes, which his faith prohibited him from

doing. The substantial-burden discussion in Lee is short and sweet: “Because the

payment of the taxes or receipt of benefits violates Amish religious beliefs, compulsory

participation in the social security system interferes with their free exercise rights.” 455

U.S. at 257. And in Thomas, which required the payment of unemployment benefits to a

worker who was fired for refusing to engage in work contrary to his religious beliefs, the

Court turned to an analysis of the burden on the worker only after noting that “the Indiana

[unemployment-compensation] law does not compel a violation of conscience.” 450 U.S.

at 717. Later cases that examined whether there was a substantial burden similarly

pointed out that compliance with the law would not itself violate the person’s religious

views. See Jimmy Swaggart Ministries v. Bd. of Equalization, 493 U.S. 378, 391 (“There

-9-

is no evidence in this case that collection and payment of the tax violates appellant’s

sincere religious beliefs.”); Hernandez v. Comm’r, 490 U.S. 680, 699 (“Neither the

payment nor the receipt of taxes is forbidden by the Scientology faith generally, and

Scientology does not proscribe the payment of taxes in connection with auditing or

training sessions specifically.”). The law we address today compels the corporations to

act contrary to their religious beliefs. They therefore suffer a substantial burden. I see no

need to examine how damaging the sanctions for noncompliance would be or how

difficult it would be for the corporations to rearrange their present manner of operating

their businesses to avoid violating the law.

-10-

12-6294, Hobby Lobby Stores, Inc., et al. v. Sebelius, et al.

GORSUCH, joined by KELLY and TYMKOVICH, Circuit Judges, concurring.

Judge Tymkovich explains why Hobby Lobby and Mardel are entitled to a

preliminary injunction. I write to explain why the Greens themselves, as

individuals, are also entitled to relief and why the Anti-Injunction Act does not

preclude us from supplying that relief.

***

All of us face the problem of complicity. All of us must answer for

ourselves whether and to what degree we are willing to be involved in the

wrongdoing of others. For some, religion provides an essential source of

guidance both about what constitutes wrongful conduct and the degree to which

those who assist others in committing wrongful conduct themselves bear moral

culpability. The Green family members are among those who seek guidance from

their faith on these questions. Understanding that is the key to understanding this

case.

As the Greens explain their complaint, the ACA’s mandate requires them to

violate their religious faith by forcing them to lend an impermissible degree of

assistance to conduct their religion teaches to be gravely wrong. No one before

us disputes that the mandate compels Hobby Lobby and Mardel to underwrite

payments for drugs or devices that can have the effect of destroying a fertilized

human egg. No one disputes that the Greens’ religion teaches them that the use

of such drugs or devices is gravely wrong. 1 It is no less clear from the Greens’

uncontested allegations that Hobby Lobby and Mardel cannot comply with the

mandate unless and until the Greens direct them to do so — that they are the

human actors who must compel the corporations to comply with the mandate.

And it is this fact, the Greens contend, that poses their problem. As they

understand it, ordering their companies to provide insurance coverage for drugs or

devices whose use is inconsistent with their faith itself violates their faith,

representing a degree of complicity their religion disallows. In light of the

crippling penalties the mandate imposes for failing to comply with its dictates —

running as high as $475 million per year — the Greens contend they confront no

less than a choice between exercising their faith or saving their business.

No doubt, the Greens’ religious convictions are contestable. Some may

even find the Greens’ beliefs offensive. But no one disputes that they are

sincerely held religious beliefs. This isn’t the case, say, of a wily businessman

1

See Gov’t Br. at 9 n.6 (acknowledging that some of the drugs referenced

in the ACA mandate can “inhibit[] implantation”); Plaintiffs’ Complaint ¶ 95

(suggesting same and citing an FDA publication). The dissent takes issue with

the government’s concession and asserts that the drugs referenced in the ACA

mandate do not have the effect of preventing the implantation of a fertilized egg.

See Briscoe Op. at 3, 31. But the dissent also acknowledges that the devices

referenced in the mandate do have this effect. Id. at 3. Given this, there is no

dispute from any quarter that the ACA forces Hobby Lobby and Mardel to

underwrite something (be it drug or device) that offends the Greens’ religious

beliefs, and of course the only relief the corporations or Greens seek is relief

sufficient to protect those beliefs. See Tymkovich Op. at 13 n.3.

-2-

seeking to use an insincere claim of faith as cover to avoid a financially

burdensome regulation. See United States v. Quaintance, 608 F.3d 717 (10th Cir.

2010) (an example of just that). And to know this much is to know the terms of

the Religious Freedom Restoration Act apply. The Act doesn’t just apply to

protect popular religious beliefs: it does perhaps its most important work in

protecting unpopular religious beliefs, vindicating this nation’s long-held

aspiration to serve as a refuge of religious tolerance.

The Greens’ claim in this case closely parallels claims the Supreme Court

vindicated in Thomas and Lee. In Thomas, the plaintiff, a faithful Jehovah’s

Witness, was willing to participate in manufacturing sheet steel he knew might

find its way into armaments, but he was unwilling to work on a fabrication line

producing tank turrets. Thomas v. Review Bd. of the Ind. Employment Sec. Div.,

450 U.S. 707, 711 (1980). That’s the line he understood his faith to draw when it

came to complicity in war-making, an activity itself forbidden by his faith. The

Supreme Court acknowledged this line surely wasn’t the same many others would

draw, and that it wasn’t even necessarily the same line other adherents to the

plaintiff’s own faith might always draw. But the Court proceeded to hold that it

was not, is not, the place of courts of law to question the correctness or the

consistency of tenets of religious faith, only to protect the exercise of faith. Id. at

714-16. No different result can reasonably follow here.

In Lee, a devout Amish employer refused to pay social security taxes on

-3-

behalf of his employees. See United States v. Lee, 455 U.S. 252, 254-55 (1982).

The employer’s faith taught that it is sinful to accept governmental assistance.

By being forced to pay social security taxes on behalf of his employees, the

employer argued, he was being forced to create for his employees the possibility

of accepting governmental assistance later. This much involvement or

complicity, the employer argued, was itself sinful under the teachings of his

religion. The government argued there — much as the government argues here —

that the enforcement of its mandate on the employer would “not threaten the

integrity of the [employer’s] religious belief” because the employer didn’t have to

accept social security benefits himself and his employees could choose for

themselves whether to do so. See Lee, 455 U.S. at 257; Brief for Gov’t, Lee (No.

80-767), 1981 WL 389829 at *10 (June 5, 1981). The Supreme Court squarely

rejected this argument in language no less applicable to our case, explaining that

it is not within “the judicial function and competence . . . to determine whether

the Government has the proper interpretation of the Amish faith.” 455 U.S. at

257.

The district court reached a different result only because it mistook the

nature of the Greens’ objection. As the district court described it, “the particular

burden of which plaintiffs complain is that funds, which plaintiffs will contribute

to a group health plan, might, after a series of independent decisions by health

care providers and patients covered by Hobby Lobby’s plan, subsidize someone

-4-

else’s participation in an activity that is condemned by plaintiff’s religion.”

Order at 23 (Nov. 19, 2012), ECF No. 45 (emphasis added). The dissent

proceeds along the same lines today, asserting that the Greens have no claim

because they do not “become a party to, or otherwise encourage, an individual

employee’s decision to use a particular drug or device.” Briscoe Op. at 34. All

this, however, mistakes or rewrites the Greens’ sincerely held religious

convictions. As the Greens describe it, it is their personal involvement in

facilitating access to devices and drugs that can have the effect of destroying a

fertilized human egg that their religious faith holds impermissible. And as we

have seen, it is not for secular courts to rewrite the religious complaint of a

faithful adherent, or to decide whether a religious teaching about complicity

imposes “too much” moral disapproval on those only “indirectly” assisting

wrongful conduct. Whether an act of complicity is or isn’t “too attenuated” from

the underlying wrong is sometimes itself a matter of faith we must respect.

Thomas and Lee teach no less. 2

2

The primary authority the dissent relies on for its reading of the Greens’

religious objection turns out to be another circuit dissent that itself fails to

account for Thomas or Lee. See Grote v. Sebelius, 708 F.3d 850, 856-57 (7th Cir.

2013) (Rovner, J., dissenting). The only other authority the dissent relies on has

nothing to do with RFRA, let alone the degree to which we must defer to a

sincerely held religious belief about complicity. It concerns instead the degree of

assistance the government (not a religious person) may afford religious activities

before running afoul of the Constitution’s Establishment Clause (not an article of

religious faith). See Briscoe Op. at 34 (citing Zelman v. Simmons-Harris, 536

(continued...)

-5-

With that much in mind, it is beyond question that the Greens have Article

III standing to pursue their claims individually. This is so not simply because the

company shares of which they are the beneficial owners would decline in value if

the mandate’s penalties for non-compliance were enforced, though that alone

would satisfy Article III. See Franchise Tax Bd. of Cal. v. Alcan Aluminium Ltd.,

493 U.S. 331, 336 (1990); Grubbs v. Bailes, 445 F.3d 1275, 1280 (10th Cir.

2006). It is also because the mandate infringes the Greens’ religious liberties by

requiring them to lend what their religion teaches to be an impermissible degree

of assistance to the commission of what their religion teaches to be a moral

wrong. This sort of governmental pressure to compromise an article of religious

faith is surely sufficient to convey Article III standing to the Greens, as it was for

the plaintiffs in Thomas and Lee and in so many other religious liberty cases.

Certainly our sister circuits have had no trouble finding Article III standing in

similar cases where, say, individual pharmacists sought to contest regulations

requiring their employers to dispense some of the same drugs or devices

challenged here, see Stormans, Inc. v. Selecky, 586 F.3d 1109, 1121 (9th Cir.

2009), or where individual soldiers sought to challenge military rules prohibiting

their on-base day-care providers from including religious practices in their

programs, see Hartmann v. Stone, 68 F.3d 973, 979 n.4 (6th Cir. 1995). Indeed, I

2

(...continued)

U.S. 639, 652 (2002)).

-6-

do not understand the government or any of my colleagues to dispute the Greens’

Article III standing. 3

But what of prudential standing doctrines, and perhaps most especially the

shareholder standing rule? Prudential standing doctrines are not jurisdictional:

they may be forfeited or waived. Finstuen v. Crutcher, 496 F.3d 1139, 1147

(10th Cir. 2007). In this case, the government did not raise prudential standing as

a defense in the district court; the district court did not raise the issue for itself

but proceeded to address the Greens’ claim on the merits; and the government did

not mention any prudential standing concern in its principal brief to this court.

To be sure, the government finally took up that cudgel when we asked for

supplemental briefing on the issue. But even then it left critical questions

unaddressed.

Take this one. Under the plain text of RFRA, standing is “governed by the

general rules of standing under article III.” 42 U.S.C. § 2000bb-1(c) (emphasis

added). Congress’s directive seems clear on its face — the text expressly tells us

to apply the rules of standing under Article III and makes no mention of

3

The dissent emphasizes the fact that the Greens are the beneficial owners

of Hobby Lobby and Mardel through trusts rather than the corporation’s direct

owners, see Briscoe Op. at 32, but I do not take this discussion as going so far as

to suggest the Greens lack Article III standing. See generally Gollust v. Mendell,

501 U.S. 115, 125-27 (1991) (indirect ownership of one corporation through

another found sufficient for standing under federal securities laws); Fed. R. Civ.

P. 17(a)(1)(E) (allowing a trustee to sue in her own name on behalf of a trust).

-7-

prudential (non-Article III) standing rules. In this way, the plain language seems

to suggest prudential standing doctrine failed to make its way into RFRA. The

government never confronts this possibility, let alone suggests the statute’s

language is fairly susceptible to an alternative reading that might suffice to

suggest an ambiguity about its meaning. In fact, the government’s supplemental

brief on prudential standing doesn’t even cite RFRA’s text.

That’s not all. Judicially importing prudential standing doctrine into RFRA

would appear not only to defy the statute’s plain text, it would also appear to run

the risk of rendering the text surplusage. After all, Congress could hardly

suspend Article III standing rules even if it wished to do so, and Congress had no

need to speak if it wished to leave existing prudential rules in place. See Bennett

v. Spear, 520 U.S. 154, 163 (1997) (Congress “legislates against the background

of . . . prudential standing doctrine, which applies unless it is expressly negated”).

So if Congress’s directive in § 2000bb-1(c) cannot curb the operation of

constitutional standing rules, and if Congress’s directive is not needed to

perpetuate prudential standing rules, what work is left for it to accomplish? The

most obvious candidate is to rule out the use of prudential standing restrictions

and, as we’ve seen, the text is certainly sufficient to that task. Again, however,

the government fails to consider, let alone refute, this complication.

To be sure, at oral argument the government finally directed us to Jackson

v. Dist. of Columbia, 254 F.3d 262 (D.C. Cir. 2001), and suggested that case

-8-

endorsed the use of prudential standing doctrine in RFRA cases. But it turns out

that Jackson discussed only the interaction of exhaustion (not standing) doctrine

and RFRA. See id. at 266-67. Moreover, when Jackson briefly mentioned

standing in the course of addressing the plaintiffs’ exhaustion argument, it

proceeded to consult the legislative history without first identifying an ambiguity

in the text, as it was obliged to do. See Conn. Nat’l Bank v. Germain, 503 U.S.

249, 253 (1992) (“We have stated time and again that courts must presume that a

legislature says in a statute what it means and means in a statute what it says

there. When the words of a statute are unambiguous, then, this first canon is also

the last: judicial inquiry is complete.” (citations and internal quotation marks

omitted)).

At the end of the day, then, and even after inviting supplemental briefing,

we are left with almost no help from the government on the critical question of

the statutory text’s receptivity to prudential standing doctrine. Without that

assistance, without as well some meaningful adversarial engagement on the

question, we run a serious risk of reaching “an improvident or ill-advised

opinion,” not to mention causing unfairness to the individual plaintiffs who

cannot now respond to the government’s eleventh-hour oral argument reference to

Jackson. See Hill v. Kemp, 478 F.3d 1236, 1250-51 (10th Cir. 2007) (citing

Headrick v. Rockwell Int’l Corp., 24 F.3d 1272, 1277-78 (10th Cir. 1994) (White,

J.)). Applying our normal forfeiture rules in these circumstances is both more

-9-

prudent and more just. We should bypass questions of prudential standing and

reach the merits of the Greens’ claims, just as the district court did and both

parties have.

That said, even if we were to entertain prudential standing questions at this

late stage and assume the doctrine applies to RFRA despite the gaping questions

the government left unaddressed, it’s far from clear the doctrine bars the Greens’

claim on its own terms. The government points us in the general direction of the

shareholder standing rule, a feature of prudential standing doctrine barring

corporate owners from asserting claims belonging to the corporation. See Alcan,

493 U.S. at 336. But that prudential rule does not bar corporate owners from

bringing suit if they have “a direct, personal interest in a cause of action . . . even

if the corporation’s rights are also implicated.” Id. And in our case the Greens

contend that they, as the controlling owners and operators of Hobby Lobby and

Mardel, are the human beings who must direct the corporations to comply with

the mandate and do so in defiance of their faith. They contend the ACA prevents

them as individuals from owning and managing a corporation of the size of

Hobby Lobby and Mardel — from practicing their traditional trade — without

violating their religious beliefs. That much would seem to qualify as a

quintessentially “direct” and “personal” interest protected even under the

shareholder standing rule. See Heart of Am. Grain Inspection Serv., Inc. v.

Missouri Dep’t of Agriculture, 123 F.3d 1098, 1102 (8th Cir. 1987) (both

-10-

employee grain inspectors and their corporate employer had standing to sue to

enjoin law preventing employer from weighing grain because not only would the

corporation be injured but the inspectors themselves would be “prevented from

practicing their trade by virtue of the state’s actions”) (emphasis added));

Grubbs, 445 F.3d at 1280. On this score, we find ourselves in full agreement

with Judge Matheson. 4

Turning finally to the merits, they are by this point clear enough. Unlike

Hobby Lobby and Mardel, there can be no colorable question that the Greens are

“persons” entitled to RFRA’s protections. Neither can there be any colorable

question that the Greens face a “substantial burden” on their “exercise of

religion.” This statutory threshold is met when, among other things, the

government presents a plaintiff with a “Hobson’s choice — an illusory choice

where the only realistically possible course of action trenches on an adherent’s

sincerely held religious belief.” Abdulhaseeb v. Calbone, 600 F.3d 1301, 1315

(10th Cir. 2010). As we have already seen, the Greens face precisely that — a

choice between abiding their religion or saving their business. With respect to

4

Whether other individuals with lesser claims to involvement in a

company or effecting a governmental mandate could lay claim to such a direct

and personal interest is, no doubt, an important question, but it is one for a

different case with different facts, not the one we confront today. Ours simply is

not the case of “managers” seeking standing, see Briscoe Op. at 34, it is one

involving individuals who are the beneficial owners, as well as the directors and

officers, of privately held companies.

-11-

the remaining statutory and equitable factors, Judge Tymkovich shows why they

all favor granting rather than withholding the requested relief, and none of that

discussion warrants repetition here. Here it is enough to observe simply that the

Greens, no less than Hobby Lobby and Mardel, merit the court’s protection while

this case proceeds.

In many ways this case is the tale of two statutes. The ACA compels the

Greens to act. RFRA says they need not. We are asked to decide which

legislative direction controls. The tie-breaker is found not in our own opinions

about good policy but in the laws Congress enacted. Congress structured RFRA

to override other legal mandates, including its own statutes, if and when they

encroach on religious liberty. When construing any “federal statutory law

adopted after November 16, 1993,” Congress told us in no uncertain terms we

should deem it “subject to [RFRA] unless such law explicitly excludes such

application.” See 42 U.S.C. § 2000bb-3(b). In this way, RFRA is indeed

something of a “super-statute.” Michael Paulsen, A RFRA Runs Through It:

Religious Freedom and the U.S. Code, 56 Mont. L. Rev. 249, 253 (1995). And

because the government identifies no explicit exclusion in the ACA to its dictates,

it is RFRA’s legislative direction that must prevail in the end. Indeed, though our

opinions today may be many and the routes we follow various, no fewer than six

of us agree that the district court’s holding failed to give sufficient attention to

RFRA’s powerful voice.

-12-

***

We could not, of course, reach the merits of the RFRA question if we

thought the Anti-Injunction Act barred our way. The AIA precludes our

consideration of suits seeking to “restrain the assessment or collection of any

[federal] tax.” 26 U.S.C. § 7421(a). Though they agree on little else, both sides

before us insist this lawsuit doesn’t meet that description. But a non-trivial

argument could be made that they are all wrong: the plaintiffs, after all, seek to

restrain the government’s use of any of the ACA’s enforcement mechanisms,

including one that is expressly labeled a “tax.” See 26 U.S.C. § 4980D(a). And

Congress’s decision to label something a tax usually is enough for it to trigger the

AIA, “even where that label [is] inaccurate.” See NFIB v. Sebelius, 132 S. Ct.

2566, 2583 (2012).

I write to emphasize that, even if the parties are wrong and the AIA does

apply to this case, it still wouldn’t allow us to avoid reaching the merits. It

wouldn’t because the government has expressly waived any reliance on the AIA:

not only did it fail to raise the AIA as a defense in the district court, it

discouraged us from applying the statute when we invited additional briefing on

the matter. So long as the AIA affords the government only a waivable defense

— so long as it doesn’t impose on the courts a jurisdictional limit on our statutory

authority to entertain this case — we are bound to reach the merits. And a

waivable defense, we are persuaded, is all the AIA provides.

-13-

The Supreme Court has cautioned that “[j]urisdiction . . . is a word of

many, too many, meanings.” Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83,

90 (1998) (internal quotation marks omitted). As a result, the Court has

instructed us against relying on “drive-by jurisdictional rulings” that do not

properly grapple with the distinctions between procedural requirements, claim

elements, and bona fide jurisdictional limits on a court’s power. See Reed

Elsevier, Inc. v. Muchnick, 559 U.S. 154, 161 (2010); Arbaugh v. Y&H Corp., 546

U.S. 500, 510-11 (2006); Steel Co., 523 U.S. at 91. To rein in courts’ “profligate

use of the term jurisdiction,” the Supreme Court has recently adopted “a readily

administrable bright line for determining whether to classify a statutory limitation

as jurisdictional.” Sebelius v. Auburn Reg’l Med. Ctr., 133 S. Ct. 817, 824 (2013)

(alterations omitted) (internal quotation marks omitted). That rule requires us to

“inquire whether Congress has clearly stated that the rule is jurisdictional; absent

such a clear statement . . . courts should treat the restriction as nonjurisdictional

in character.” Id.; see also Gonzalez v. Thaler, 132 S. Ct. 641, 648-49 (2012);

Arbaugh, 546 U.S. at 515–16. Statutes that speak clearly to “the courts’

statutory or constitutional power to adjudicate the case” must of course be treated

as jurisdictional and given their full effect. Steel Co., 523 U.S. at 89 (emphasis in

original). But statutes that speak to the rights or obligations of parties to a

lawsuit establish “claim-processing rules,” are not and should not be treated as

“jurisdictional prescriptions.” Reed Elsevier, 559 U.S. at 161. In addition to the

-14-

consulting statutory text, we may when necessary consider as well “context,

including [the Supreme] Court’s interpretation of similar provisions in many

years past.” Id. at 168.

When it comes to the AIA, all of these considerations point in the same

direction.

First and most importantly, the AIA’s text dictates merely that “[e]xcept as

provided in [other provisions inapplicable here] no suit for the purpose of

restraining the assessment or collection of any tax shall be maintained in any

court by any person.” 26 U.S.C. § 7421(a). Similar to other claims processing

rules, the statute does not apply its prohibition to the court (let alone more

specifically to the court’s power or jurisdiction) but applies its prohibition instead

to a person. Indeed, the AIA’s language is nearly identical to the language of the

copyright statute analyzed in Reed Elsevier — and we know with certainty that

language “says nothing about whether a federal court has subject-matter

jurisdiction.” 559 U.S. at 1664. Compare 26 U.S.C. § 7421(a) (AIA: “no suit . . .

shall be maintained”), with 17 U.S.C. § 411(a) (copyright statute: “no civil action

. . . shall be instituted”).

Second, the AIA does not even appear in the same title of the Code as most

statutes bearing on federal courts’ jurisdiction. See 28 U.S.C. § 1330 et seq.

Instead, Congress chose to place the AIA in Title 26, in a chapter of the tax code

discussing claims processing rules in proceedings brought by “Taxpayers and

-15-

Third Parties.” On at least two occasions, the Supreme Court has found

Congress’s decision to locate a statute “separate” from jurisdictional provisions

suggestive contextual evidence that the statute in question was non-jurisdictional.

See Reed Elsevier, 559 U.S. at 164-65; Arbaugh, 546 U.S. at 514. Precisely the

same sort of suggestive contextual evidence exists here.

Third, in both of these respects (in both its language and placement) the

AIA contrasts sharply with its cousin, the Tax Injunction Act (TIA), a provision

controlling federal jurisdiction over suits seeking to enjoin state rather than

federal tax collection. The TIA speaks directly to courts rather than to the

parties. See 28 U.S.C. § 1341 (“The district courts shall not enjoin, suspend or

restrain the assessment, levy or collection of any tax under State law . . . .”

(emphasis added)). And the TIA is located within the same chapter of the same

title of the U.S. Code as the other principal statutes governing federal jurisdiction.

See id. Facts like these suggest Congress could have easily made the AIA

jurisdictional if it wished and that it “would have spoken in clearer terms [in the

AIA] if it intended” to do so. Gonzalez, 132 S. Ct. at 649. Neither is it insensible

to think Congress might wish to protect state taxes even more than its own from

federal lawsuits: comity and federalism concerns lurk there, while federal taxes

and the lower federal courts are equally creations of Congress itself.

Finally, there is the Supreme Court’s treatment of the AIA in past cases. It

is settled that the courts have “no authority to create equitable exceptions to

-16-

jurisdictional requirements.” Bowles v. Russell, 551 U.S. 205, 214 (2007). Yet

the Supreme Court has repeatedly recognized equitable exceptions to the AIA’s

application. See, e.g., Bob Jones Univ. v. Simon, 416 U.S. 725, 742-46 (1974);

Enochs v. Williams Packing, 370 U.S. 1, 7 (1962). In fact, the Supreme Court has

expressly indicated that the predecessor to the AIA — containing substantially the

same language — is non-jurisdictional, going so far as to allow the Solicitor

General to proffer a “waiver of a defense” so the Court could reach the merits of

the case before it. See Helvering v. Davis, 301 U.S. 619, 639 (1937) (discussing

Rev. Stat. § 3224). All of these results would seem impossible if the AIA really

were jurisdictional. Admittedly, both the Supreme Court and this court have on

other occasions referred to the statute as jurisdictional. See, e.g., Enochs v.

Williams Packing & Nav. Co., 370 U.S. 1, 5 (1962); Sterling Consulting Corp. v.

United States, 245 F.3d 1161, 1167 (10th Cir. 2001). But these cases employ the

jurisdictional label with little or no analysis — amounting to exactly the sort of

“drive-by jurisdictional rulings” the Court tells us to view with a jaundiced eye.

And more recently the Supreme Court has approached the AIA much more

gingerly, taking care to avoid the jurisdictional epithet. See NFIB v. Sebelius,

132 S. Ct. 2566, 2582 (2012) (holding that the AIA didn’t apply in that case by its

own terms).

In the end, the AIA shows none of the hallmarks of a jurisdictional

restriction, and has many features that collectively indicate otherwise. The

-17-

government can waive its application, and it has done so before us. Given that,

we can be sure, perhaps doubly sure, that reaching the merits of this case is

appropriate and indeed our duty.

-18-

12-6294, Hobby Lobby Stores, Inc., et al. v. Sebelius, et al.

BACHARACH, J., concurring.

I join Parts I, II, III, IV, V, and VI(B)(1) of Judge Tymkovich’s thorough,

finely-crafted opinion. Like Judge Tymkovich, I believe that Hobby Lobby

Stores, Inc. and Mardel, Inc. are “persons” under the Religious Freedom

Restoration Act. I write separately to:

! discuss the need for a remand so that the district court

can address the balancing elements of the preliminary-

injunction inquiry and

! address prudential standing and conclude that we should

instruct the district court to dismiss the Greens’ claims.

I. The Need for Remand to the District Court on the Balancing Elements

I respectfully decline to join Parts VI(A), (B)(2), and (B)(3) of the plurality

opinion because I believe that the required balancing of interests should be

conducted by the district court rather than the court of appeals. Because we

convene as an appellate tribunal, rather than a front-line court of equity, our only

function is to determine whether the district court committed legal error.

The district court did err, as the plurality concludes, by holding that Hobby

Lobby and Mardel are unlikely to succeed on the merits. Still, Hobby Lobby and

Mardel can obtain a preliminary injunction only if they persuade a court of three

additional elements: (1) irreparable injury; (2) avoidance of injury to the public

interest; and (3) greater injury to themselves, if a preliminary injunction were to

be denied, than to the defendants if a preliminary injunction were to be granted.

See Plurality Op., Part VI; see also Winter v. Natural Res. Def. Council, Inc., 555

U.S. 7, 20 (2008) (identifying the equitable elements for a preliminary

injunction). These elements have not been addressed by the district court.

I agree with the plurality that Hobby Lobby and Mardel have demonstrated

irreparable injury, for the government argued in the district court that the

elements involving irreparable injury and likelihood of success had merged.

The remaining issue is whether the district court should be allowed to

engage in the balancing required by the other two elements or whether, as the

plurality proposes, we should undertake that task ourselves. Unlike the plurality,

I think the equitable balancing should be performed by the district court.

As the Supreme Court has recognized, “the decision whether to grant or

deny injunctive relief rests within the equitable discretion of the district courts.”

eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 394 (2006). Thus, when a

district court has not addressed one or both of the balancing elements because of a

legal error involving some other part of the inquiry, the general practice is to

remand the case to the district court for initial consideration of the public interest

and balancing of the potential harm to the parties. 1 Our court ordinarily follows

1

See eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 394 (2006)

(vacating the decision of the court of appeals and ordering a remand so that the

district court could address the equitable elements of a preliminary injunction);

Acumed LLC v. Stryker Corp., 483 F.3d 800, 811 (Fed. Cir. 2007) (remanding a

case to the district court and explaining that “[i]f we were to weigh the evidence

ourselves to reach a conclusion on injunctive relief, we would effectively be

(continued...)

-2-

this practice. See Kikumura v. Hurley, 242 F.3d 950, 963 (10th Cir. 2001)

(remanding for consideration of the public interest and balancing of interests

because the district court had not discussed them).

The reasons for this practice are sound. As the Seventh Circuit Court of

Appeals observed, the “cold record” before the appellate court may not reflect the

district judge’s sense of the equities. Lawson Prods., Inc. v. Avnet, Inc., 782 F.3d

1429, 1437-38 (7th Cir. 1986). Thus, it is hard to imagine why an appellate

tribunal would be better than the district court at balancing the relevant interests.

Id.

Now that we have decided the issues of likelihood of success o

This text is long and has been trimmed here. Open the source document for the complete record.