Amicus Curiae Brief — Conestoga Wood Specialties Corp. v. Sebelius

No. 13-354, 13-356

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JAN 27 2514

OPPICE OF Fil Oper

In the ‘Supreme Court of the Gnited States

— —— .-__ —— eo -

KATHLEEN SEBELIUS, ET AL,

PETITIONERS,

Vv.

HOBBY LOBBY STORES, INC., ET AL.

oo

CONESTOGA WoobD SPECIALTIES CORP. ET AL,

PETITIONERS,

es

KATHLEEN SEBELIUS.,. ET AL.

ON WRITS OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD AND TENTH CIRCUITS

BRIEF OF AMICI CURIAE STATES OF

MICHIGAN, OHIO, AND 18 OTHER STATES

FOR CONESTOGA, HOBBY LOBBY, MARDEL

Michael DeWine

Ohio Attorney General

Eric E. Murphy

Ohio State Solicitor

30 East Broad Street,

17th Floor

Columbus, Ohio 43215

frederick D. Nelson

Senior Advisor

Attornevs for Amicus Curiae

State of Ohio

Bill Schuette

Michigan Attorney General

Aaron D. Lindstrom

Michigan Solicitor General

Counsel of Record

P.O. Box 30212

Lansing, Michigan 48909

lindstromd@michigan. gov

(517) 373-1124

B. Eric Restuccia

Deputy Solicitor General

Attorneys for Amicus Curiae

State of Michigan

QUESTION PRESENTED

Whether the Religious Freedom Restoration Act

protects the family businesses here that are closely-

held, for-profit corporations operated consistent with

religious principles that are contravened by the

application of the HHS Mandate promulgated under

the Affordable Care Act.

7]

TABLE OF CONTENTS

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Se Or ME os vciaciick vip casedctin ctsevinsanienadeaccsecianans iv

RTE OE SEIS CI aids iancscccetcsccinceccanckatomieersecenns 1

Introduction and Summary of Argument.................. 3

PII, 3s vice cca tessa cheasabksnenadmsenteb audatnatbeetderGckesaies 5

I. Congress did not exclude for-profit

corporations from RFRA’s protections................. 5

A. The government can establish no

universal religious principle excluding

the for-profit corporate form as a “means”

for the practice of religion....................cc0000000 g

B. The federal judiciary should not impose

on the state law of corporations a rule

mandating that for-profit corporations

may pursue only policies best calculated

ee IY GENIE. ccs cencuucovencondoasubandecdeinenmnaens 17

IJ. The HHS Mandate does not pass muster

I IY ced canacisacdncesnasoewes uaa sateen 25

A.

The HHS Mandate imposes a substantial

burden on the free exercise of religion of

Conestoga, Hobby Lobby, and Mardel as

family-owned businesses. .............2.s00cccee000s 25

The United States has exempted others

and does not have a compelling interest

in applying this mandate to the family

RII III sous cacakipansuncencinageessconzanele 32

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en on a 36

a a i a rcasecckscacursa cian 37

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TABLE OF AUTHORITIES

Cases

A.P. Smith Mfg Co. v. Barlow,

98 A.2d 581; 13 N.J. 145 (N.J. 1953) ................. 21

Autocam Corp. v. Sebelius,

ce TE LSE 8

Burks v. Lakser.

ee 20

Church of the Lukumi Babalu Aye, Inc. v. City of

Hialeah,

SD ED ns os ssccccewsececssvecsesscocececs 13, 26

Elgin v. Dep't of Treasury,

a 24

Federal Election Comm'n v. NRWC.

0 , coumnoennodoeceuaesnns 20

First Natl Bank of Boston v. Bellotti,

osc scsncssonssnsevcessoseceonccces 14

Gilardi v. U.S. Dep't of HHS,

ee ee Be CE, CAR. DUS) cccccccceccscccccccccccces 23

Hernandez v. Comm of Internal Revenue,

Te avamsideemerernenteonaseres 30

Korte v. Sebelius,

700 F.20 G64 (7th Cir. 2013) ..........-cccccccees passim

Lankford v. Menefee.

Sear, See, BED ©. SIG CIDA) 00. .ccecccecccccccccveses 21

Legatus v. Sebelius,

901 F.Supp.2d 980 (E.D. Mich. 2012)................ 33

Little Sisters of the Pooor v. Sebelius. (No.

Ta os cccliniiiiimmnisonnddil 29

Mohamad v. Palestinian Auth..

De re es i a Es 6

New York Times Co. v. Sullivan.

re Be CE sina did idiintinckenpiadintadectededectes 14.19

Newland v. Sebelius,

881 F. Supp.2d 1287 (D. Colo.. 2012)................. 33

O Centro Espirita Beneficiente Uniao do Vegetal

v. Ashcroft.

et ee I evenesnts cckisocciacsrivassesvinness passim

Roman Catholic Archdiocese of N_Y. v. Sebelius,

__ F. Supp.2d ___; 2013 WL 6579764 at *14

(ED NY, December 16, 2013) ......c.ccccccsccvesesccesces 30

Rowland v. California Men’s Colony.

ey Ie 0 Senvedeitccnsekneddsdasedactaptuniwacnatiies 7

Sherbert v. Verner,

Be Be es ee EE cisnctiiweaedanaevccvonineseteee 15, 26. 27

Soto-Hernandcz v. Holder.

‘i, 2p” @Ge fe | >. RN e TE RmERT Te WEn Dram 7

Thomas v. Review Board of Indiana Employment

Sec. Division.

ee ae Ee TOD otnscennacsvnbccincnoecotobinerecees passim

United States v. Ballard,

Se Se ee 5s wnnvdaceaunauanseontanadiovediees 25

United States v. Lee,

er oss copiassexnauseceucnaeioeesis 30, 31

Wisconsin v. Yoder,

Pw E82 i | 26. 27. 31, 32

Statutes

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ey ee Me RR yl 6) eam 17

rn NR, I CRI iiss reuhnsencencstarconsnesoneoniety 20

Be a en ee 18

Be I iio sh sisi ced ndpaiidndiainananeciibninwiness 18

Ss Oe IEE ciscsntlsenssdvcos sncnsdudecacéraneiupaadon 22

Be Oe ED sina icninsscpieabannanindecnenecorsioutencess 18

Ne a scecascsnoenpnnicvndionsaousscarconanes 20

ne iad asta ciackicshencnsrstvaunstaseanniipieren’ 20

ee oD se sadesccerensenvncsnnnarstccerdntcrscessive 26

as, Oe I vricseicieosinssccncsavipenizkensinvnaatnxese 5

A ss ee I aiivcsiserissccennsnceleasancessadenaneunsevess 5

ne eI atic kieiienceenseidencverndenlensstenasnséare 12

ee re IE asin tpcanvadicierbsaabambiundpscdsuegcisadnpeds 12

Se as IIE oo veisinadonsewesnnnensackiadncksvaievnentines 16

Other Authorities

De CG, GIF Bi iicciidsninvnccccinetiniesonisseneses 16

ALI Principles of Corporate Governance:

Analvsis and Recommendations § 2.01(b)

©, Rage PER aor iy Nand atl atte ESRD nA Be Ale oR ne a 21

M. Rienzi. God and the Profits: Is There Religious

Liberty For Money-Makers?

21 Geo. Mason L. Rev. 59. 112. 116 (2013)........ 14

Constitutional Provisions

I I 082 207 00 a | a eaabubuneaaunseanes 6

INTEREST OF AMICI CURIAE

The Amict States have a strong interest in

preserving their ability to structure the law of

corporations, as this Court long has recognized.

There is no general federal common law of

corporations. and the Amici States urge the Court

not to embark on the creation of such a thing. The

apparent position of the federal government is that

some national precept sounding either in federal

corporate common law or in some sort of federal

religious theory as applied to corporations precjudes

association in corporate form to carry out profit-

seeking business in accordance with guiding

religious principles. This view, which has no basis in

statute or precedent, affronts fundamental] concepts

of federalism and the values of religious liberty that

Congress sought to protect through the Religious

Freedom Restoration Act (RFRA).

More specifically, to the extent that the position

of the federal government rests on a notion that a

for-profit company may act only to maximize profits

and cannot take into account matters of corporate

conscience, the premise contradicts longstanding

state policies and undermines the States traditional

prerogatives to shape corporate law.

Further, the Amict States have a substantial

interest in protecting religious liberty as one of the

central features of American self-governing society.

Religious liberty is a foundational freedom. Each

state constitution has provisions safeguarding the

religious exercise of the State's citizens. Like the

federal government, many States have enacted

additional laws to guarantee religious freedom.

Moreover, the States seek to foster a robust

business climate in which diverse employers can

succeed to the benefit of all: the States have a very

real interest in the businesses and jobs that the

harsh penalties of the HHS Mandate threaten to

eradicate. The States seek to prevent judicial

revision of RFRA that would fabricate a blanket

exclusion from the statute’s coverage for enterprises

operated by families that are guided by their faiths

as they engage in commerce. RFRA as _ written

advances both liberty and prosperity. Without its

protections, the family-owned businesses before this

Court would be in jeopardy of having to shutter their

facilities, lay off their employees, or operate under

threat of draconian penalties in a way that violates

sincerely held principles of religious faith.

The Amici States submit that Conestoga Wood

Specialties, Hobby Lobby, Mardel. and businesses

like them—that is. entities maintained to operate

consistent with religious principles—may raise

claims under RFRA, and that the HHS Mandate is a

substantial burden on these family-owned, for-profit

businesses. The Amici States thus urge this Court to

affirm the decision of the en banc Tenth Circuit in

Hobby Lobby and to reverse the Third Circuit panel

majority in Conestoga Wood on RFRA grounds.

INTRODUCTION AND SUMMARY OF

ARGUMENT

The threshold question here is whether for-

profit, secular businesses may exercise religion and

therefore fall within the religious liberty protections

of RFRA. It is a question that is basic to American

democracy. Its answer requires this Court to return

to first principles. And the answer is a simple one.

Americans may form a corporation for profit and

at the same time adhere to religious principles in

their business operation. This is true whether it is

the Hahns or Greens operating their businesses

based on their Christian principles. a Jewish-owned

deli that does not sell non-kosher foods, or a Muslim-

owned financial brokerage that will not lend money

for interest. The idea is as American as apple pie.

And RFRA guarantees that federal regulation may

not substantially burden the free exercise of religion

absent a compelling governmental interest advanced

through the least restrictive means.

Any contrary conclusion creates an untenable

divide between for-profit and non-profit corporations.

All sides admit that RFRA extends its protections

bevond individuals to at least some corporations.

Despite assumptions made by certain of the judges

below, nothing in the relevant state laws restricts

corporate endeavors to the sole purpose of

maximizing revenue at al] cost. There is and should

be no general federal common law of corporations.

And nothing in RFRA limits its application to

administratively certified religious entities.

The argument put forward by the United States

is predicated on a view that seeking profit changes

everything. Not so. The Hahns and the Greens, as do

others, seek to operate their family-owned businesses

according to religious principles. That they seek also

to earn a profit does not nullify or discredit their

beliefs. The federal courts cannot rewrite state law

on corporations somehow to change this reality.

The Mandate also imposes a substantial burden

on these family-owned businesses. Conestoga. Hobby

Lobby, and Mardel are guided by religious principles

affirming the inviolability of human life, and no one

questions the sincerity of those beliefs in these cases.

Courts should not become enmeshed in evaluating

the interpretive merits or proper doctrinal weight of

religious principles. Their religious propriety is not

for the courts to second guess. And the government

lacks a compelling interest justifying the substantial

burden it seeks to impose when the businesses

adhere to these guiding religious principles. The

Affordable Care Act includes several sweeping

exceptions. The claim that the Mandate must be

applied to entities with a sincere religious objection

is belied by the fact that it already excludes tens of

millions of plan participants.

Government directives cannot confine religious

liberty to the sanctuary or sacristy. Such a truncated

view of religion threatens to create a barren public

square, empty of the religious beliefs of ordinary

Americans. This is an important principle. and it

protects all persons.

ARGUMENT

I. Congress did not exclude for-profit

corporations from RFRA’s protections.

The government's position that religion can be

exercised through certain corporate forms but not

others cannot appropriately be established as

governmental religious theory and has no basis in

the relevant state corporations laws. As the Tenth

Circuit observes, “no one disputes that at least some

types of corporate entities can bring RFRA claims.”

Hobby Lobby Stores, Inc. v. Sebelius, 723 F.3d 1114.

1129 (2013) (also noting that “the Supreme Court

has affirmed the RFRA rights of corporate claimants.

notwithstanding the claimants’ decision to use the

corporate form,” citing O Centro Espirita Bencficiente

Uniao do Vegetal v. Ashcroft, 546 U.S. 418 (2006)).

After all. Congress deliberately chose to extend

the protections of RFRA not only to individuals. but

to “persons.” 42 U.S.C. § 2000bb(b)(2) (purpose of

RFRA is “to provide a claim or defense to persons

whose religious exercise is substantially burdened by

government’). RFRA thus provides that

“(gljovernment shall not substantially burden a

person's exercise of religion even if the burden

results from a rule of general applicability,” unless

the test of strict scrutiny is satisfied. 42 U.S.C.

§ 2000bb-1(a). And Congress has made itself clear-—

in the very first section of the first chapter of the

United States Code—that unless otherwise indicated

by context, “the word[ ] ‘person’ ... include{s]

corporations, companies. associations. firms.

partnerships, societies. and joint stock companies, as

well as individuals.” 1 U.S.C. § 1: cf. Mohamad v.

Palestinian Auth., 132 S. Ct. 1702, 1707 (2012)

(federal statutes and courts typically use the word

“individual” when secking “to distinguish between a

natural person and a corporation’).

Even the Hobby Lobby dissenters and the

Conestoga panel majority, along with’ the

government, concede that RFRA does not limit its

protections to “individuals” and that, for example,

“Congress clearly recognized that ... religious

organizations enjoy free exercise rights, and ... that

RFRA’s reach would extend to them.” Hobby Lobby,

723 F.3d at 1169 (Briscoe, C.J., dissenting);

Conestoga, 724 F.3d at 385 (“other religious entities”

along with churches can exercise religion); U.S. Pet.

in Hobby Lobby at 19 (adopting Judge Briscoe's

formulation and acknowledging that RFRA extends

bevond individuals to reach various religious “organ-

izations” and “institutions”). Nonetheless, they take

the view that, while non-profits or corporations the

government deems not “secular” are “able to engage

in religious exercise” under RFRA, “a _ for-profit,

secular corporation” is categorically excluded from

RFRA protections. See, e.g., Conestoga, 724 F.3d at

388.' But RFRA’s statutory language, universally

acknowledged as extending beyond individuals,

makes no such distinction. “{T]he plain language of

! The Conestoga panel majority does not analyze the RFRA

question apart from its First Amendment discussion, but

conflates the two issues by stating that “[o]ur conclusion that a

for-profit, secular corporation cannot assert a claim under the

Free Exercise Clause necessitates the conclusion that a for-

profit, secular corporation cannot engage in the exercise of

religion... [.so Conestoga] cannot assert a RFRA claim.” Jd.

~)

the text encompasses ‘corporations. including ones

like Hobby Lobby and Mardel.” 723 F.3d at 1129.

Rather than accepting the binary choice the

Dictionary Act suggests between a context in which

“persons” includes corporations and one in which,

contrary to general rule, “persons” excludes

corporations, the government and certain of the

lower court judges somehow divine that Congress

intended—silently—to distinguish among different

types of corporations and flatly exclude from RFRA

protection those authorized by state charter to

engage in for-profit commerce. Congress, they say.

intended to delineate a distinction based on tax

status and the IRS code. But “[t}hat line is nowhere

to be found in the text of RFRA or any related act of

Congress. Nor can it be found in the statute’s

broader contextual purpose.” Korte v. Sebelius, 735

F.3d 654, 675 (7th Cir. 2013).

The textually required “interpretive

presumption,” cf. Soto-Hernandez v. Holder, 729 F.3d

1, 5 (ist Cir. 20138) (evaluating in another context

Dictionary Act’s “context” phrase), that “person”

includes corporations and associations unless the

context indicates otherwise is not trumped by

legislative history. “Context here means the text of

the Act of Congress surrounding the word at issue. or

the texts of other related congressional Acts. and this

is simply an instance of the word’s ordinary meaning

....I1f Congress had meant to point further afield, as

to legislative history, for example, it would have been

natural to use a more spacious phrase... ” Rowland

v. California Men's Colony, 506 U.S. 194, 199 (1993).

So, ineluctably, the lack of any legislative history

suggesting that some in Congress may have wanted

to limit the reach of RFRA contrary to the usual

Dictionary Act presumption cannot provide “context”

to overcome the general rule.

Given the text of the enactment and this Court’s

precedents. courts may not reverse the presumption

simply because Congress did not debate the

presumption in enacting RFRA. Chief Judge

Briscoe's Hobby Lobby dissent thus errs in seeking to

stand the presumption on its head. 723 F.3d at 1167

(Briscoe. C.J.: “it is unreasonable to assume from

Congress's silence that Congress anticipated that for-

profit corporations would be covered as ‘persons’

under RFRA”: also making a similar countertextual

argument that “[a]t the time of RFRA’s passage, the

Supreme Court had never addressed whether ... a

for-profit corporation possessed free exercise rights

under the First Amendment’).2

“ The Sixth Circuit panel decision in Autocam Corp. v. Sebelius,

730 F.3d 618 (6th Cir. 2013), also acknowledges that RFRA’s

‘legislative history makes no mention of for-profit corpor-

ations. Jd. at 627. But from this lack of evidence, the Sixth

Circuit concludes: “This ts a sufficient indication that Congress

did not intend the term ‘person’ to cover entities like Autocam

when it enacted RFRA.” /d. Jurists in equally good faith could

conclude precisely the opposite-—-that the absence of any

legislative history that Congress sought to exclude for-profit

corporations proves that the government has failed to overcome

the presumption that they qualify as “persons.” Regardless, the

concept of Congress legislating through silence in legislative

history presents a treacherous path, and the Amici States urge

that the prudent course is to rely on what Congress actually

said in the statute that it passed.

The government, confronted with the

acknowledged application of RFRA to certain

corporations, and unable to point to any enactment

or even congressional statements drawing its

proposed for-profit/non-profit distinction in the

RFRA context, instead leans upon an apparent

amalgam of governmentally determined religious

theory and a federal gloss on state corporations law.

The government's position errs both in suggesting

that religious belief cannot be practiced in a

commercial endeavor. and in urging federal] courts to

superimpose onto state law a concept that religious

practice somehow is incompatible with state law

principles of limited hability (principles that do not

hinge on profit status).

Because the government’s position appears to

rest on a mishmash of religious opinion and state

corporate law apprehensions, it is useful to unpack

what analytically should be separate components.

A. The government can_ establish no

universal religious principle excluding

the for-profit corporate form as a

“means” for the practice of religion.

The record is unequivocal that the devout

Christian Mennonite family that owns Conestoga

Wood and the devout Christian family that operates

Hobby Lobby and Mardel understand as a matter of

their religious faiths that their family companies

provide a “means by which individuals [should]

practice religion” (to use a formulation of the

Conestoga panel majority. 724 F.3d at 386). “It is

undisputed that the Hahns are entirely committed to

10

their faith, which influences all aspects of their lives.

They feel bound, as the district court observed, ‘to

operate Conestoga in accordance with their religious

beliefs and moral principles.” 724 F.3d at 390

(Jordan. J., dissenting) (quoting Conestoga Wood

Specialties Corp. v. Sebelius, 917 F. Supp. 2d 394,

402 (E.D. Pa. 2013): cf. 724 F.3d at 389 (“our decision

here is in no way intended to marginalize the Hahns’

commitment to the Mennonite faith”); Hobby Lobby,

723 F.3d at 1120, 1121-22 (Hobby Lobby and Mardell

are closely held family businesses whose owners

“operate them according to a set of Christian

principles.” for “[t]he Greens have organized their

businesses with express religious principles in

mind’).

The government and the judges who have

adopted its position provide no support for their

implicit assumption that while the _ non-profit

corporate form may provide a “means by which

individuals practice religion.” the for-profit corporate

form cannot. See Conestoga, 724 F.3d at 386 (“That

churches—as means by which individuals practice

religion—have long enjoyed the protections of the

Free Exercise Clause is not determinative of the

question of whether for-profit, secular corporations

should be granted these same protections”). Indeed.

Chief Judge Briscoe’s Hobby Lobby dissent finds the

(religious) proposition that anvone could understand

operation of “a successful for-profit corporation” as a

“form of evangelism” to be “most remarkablfe].” 723

F.3d at 1172. A judge is entitled, of course, to her

own religious views. But the Amici States submit

that what is truly “remarkable” in our pluralistic

society is that the government would seek to

11

enshrine this theological conclusion as the basis for

regulation.

After all, the question of what sort of corporate

entity may provide a “means by which individuals

practice religion” would seem intrinsically a religious

one and not readily or appropriately susceptible of

government determination. And to any extent that it

might be fitting for government to ponder the

matter, some have found it far easier to conceive of

religious views that would understand al) aspects of

endeavor as a “means bv which” to practice religion

than to identify any certain religion that insists that

religious practice be confined exclusively to church

services. “At bottom, the government's argument is

premised on a far-too-narrow view of religious

freedom. Religious exercise is protected in the home

and the house of worship but not beyond. Religious

people do not practice their faith in that

compartmentalized way; free exercise rights are not

so circumscribed.” Korte, 735 F.3d at 681.

Because the Hahns and the Greens believe that

their religions require that they live out their faiths

in all their walks of life. it is not clear by what

principle the government concludes that church

corporations may provide a “means by which” these

Americans may practice their religion but their

family-held businesses cannot. To whatever extent

this unexplained conclusion is advanced as a matter

of religious doctrine. the lower court judges who have

adopted it exceed their proper scope in decreeing on

the subject. As this Court has underscored: “Courts

are not arbiters of scriptural interpretation.” Thomas

12

v. Review Board of Indiana Employment Sec.

Division, 450 U.S. 707. 716 (1981).

The Amici States have a strong interest in not

having the religious views of their citizens evaluated

for correctness or orthodoxy by the government or

the federal courts. And Congress has protected that

interest through RFRA. defining the _ protected

“exercise of religion” broadly as “any exercise of

religion, whether or not compelled bv or central to, a

system of religious belief.” 42 U.S.C. § 2000bb-2

(referencing 42 U.S.C. § 2000cc-5’s definition). If it is

the view of at least some religions, or more precisely

some religious adherents, that religion is to inform

all aspects of one’s life and can be practiced behind

the checkout counter at a wood-products store, the

kosher deli. or the local family bookstore, it is not for

the government to gainsavy such belief.

The only further lght that supporters of the

government's position shed on the religious theory

component of their analysis in the determinations

below is found in the Conestoga panel’s quotation

from the reversed district court opinion in Hobby

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

rev d en banc, 723 F.3d 1114 (10th Cir. 2013), that

“[gjeneral business corporations do not ... exercise

religion. They do not pray, worship, observe

sacraments or take other religiously-motivated

actions separate and apart from the intention and

direction of their individual actors.” 724 F.3d at 385.

But the fact that corporations can act only through

human agency in no way distinguishes for-profit

corporations from the non-profits and churches that

the panel concedes can exercise religion. Churches do

13

not pray or “observe the sacraments or take other

religiously-motivated actions separate and apart”

from their individual actors any more than

Conestoga or Hobby Lobby or Mardel do, and RFRA

protections extend to guard their corporate religious

exercise precisely to safeguard the religious liberties

of the “individua] actors” involved. See Hobby Lobby.

723 F.3d at 1136 (“The Church of Lukumi Babalu

Aye, Inc., for example, did not ttse/f pray, worship, or

observe sacraments—nor did the sect in O Centro.

But both certainly have Free Exercise rights.”)

(emphasis in original).

People commonly associate to exercise religion.

and religion can be exercised through the corporate

form. See. e.g., Church of the Lukumi Babalu Ave,

Inc. v. City of Hialeah. 508 U.S. 520. 525 (1993)

(“{The] Church of the Lukumi Babalu Aye, Inc. is a

not-for-profit corporation organized under Florida

law in 1973. The Church and its congregants practice

the Santeria religion.”). And neither the Conestoga

panel majority nor the district court Hobby Lobby

opinion on which it relies ever explains how any

corporate entitvy—including those that they and the

government acknowledge do qualify for RFRA

protection—can exercise religion apart from the

direction and management of the human beings who

participate in them. That is the way that all entities

work.

Similarly, Conestoga’s related suggestion that

corporations are excluded from RFRA protection

because they cannot “beheve’ at all.” 724 F.3d at 385

(quoting implication from Judge Briscoe's Hobby

Lobby dissent), again fails to reckon with the

14

universal acknowledgment that RFRA protects

churches and other non-profit religious corporations.

Nor can the suggestion be reconciled with decades of

precedent that the mght to express corporate views

(views held and shared corporately, even if deemed

not “believed”) indeed is constitutionally protected.

Cf. First Nat? Bank of Boston v. Bellotti, 435 U.S.

765 (1978); New York Times Co. v. Sullivan, 376 U.S.

254 (1964).%

As Judge Jordan's Conestoga dissent notes, “[o]f

course, corporations do not picket, or march on

Capitol Hill, or canvas door-to-door for moral causes

either. but the [mJajority would not claim that

corporations do not have First Amendment rights to

free speech or to. petition the government.

Corporations have those rights . . . because we are

concerned in this case with people, even when they

operate through the particular form of association

called a corporation.” 724 F.3d at 398 n.14.

Thus, the government's position rests on what

the Conestoga majority identifies as a failure to “see

how a for-profit ‘artificial being. invisible, intangible,

3+ Moreover. the law is accustomed to looking to the conduct and

intent of humans in assessing corporate purposes or intent. See,

e.g.. M. Rienzi, God and the Profits: Is There Religious Liberty

For Money-Makers? 21 Geo. Mason L. Rev. 59, 112, 116 (2013).

(recognizing that for-profit corporations can form criminal

intent. be found hable for religious discrimination, assert rights

under the Establishment Clause, and act on corporate ethical

and environmental views: “the corporate form does not forec!ose

assertion of ... RFRA rights.” and there is “no principled or

permissible reason to treat religious exercise in [a]

disfavored manner’).

15

and existing only in contemplation of law, ... that

was created to make money could exercise such an

inherently ‘human’ right.” 724 F.3d at 385 (citation

omitted). Because all corporations are in this sense

“artificial .... invisible, intangible, and existing only

in contemplation of law,” the only distinction the

panel majority identifies between (covered) non-

profits and _ for-profit entities to which the

government says RFRA protections do not extend is

found in the phrase “created to make money.” But to

say that for-profit corporations are not covered

because they are for-profit is not so much an

explanation as a tautology. Conestoga provides no

real explanation for the analytic distinction. As the

Tenth Circuit observes, no legal principle precludes

entering “the ffor-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.’

Hobby Lobby, 723 F.3d at 1135. And an individual

Judge’s hesitation over that religious concept is not

an appropriate basis for legal decision and is

trumped in any event by the text of RFRA.

Surely no judicially cognizable universal

religious principle marks “profit” as invalidating any

and all religious exercise. Cf. Thomas, 450 U.S. at

709-11: Sherbert v. Verner, 374 U.S. 398, 399-400

(1963). At least for government purposes under

RFRA, “[t]here is nothing inherently incompatible

between religious exercise and profit-seeking.” Korte.

735 F.3d at 681. On the flip side, too. generally “[t}]he

fact that a corporation is one not for profit does not

mean that its activities or enterprises may not be

16

conducted for gain, profit, or net income so long as it

is used for the purposes set forth in its articles and

there is no pecuniary gain to the incorporators or

members nor distribution of income or profits to

them.” 1 Fletcher Cyc. Corp. §68.05.

RFRA applies broadly to any sincere religious

exercise and even in the context of generally

applicable and neutral regulation. 42 U.S.C.

§2000bb-1({a). Nothing in its text begins to suggest

that Congress intended a carve-out based. for

example, on whether Mardel elects to sell its Bibles

at a price-point that yields a monetary “profit,” or at

a price that vields a loss. The government to date has

not offered any citation supporting the proposition

that religion is so alien to the marketplace that it

never can be exercised in commercial pursuits.

Nonetheless, “[o]n the government’s understanding

of religious liberty. a Jewish restaurant operating for

profit could be denied the right to observe Kosher

dietary restrictions. That cannot be right.” Korte, 735

F.3d at 681.

What remains of the government’s’. theory

depends, then, on the view that some nationally

applicable theory of the law of corporations bars for-

profit corporations from pursuing any motive beyond

profit seeking.

17

B. The federal judiciary should not impose

on the state law of corporations a rule

mandating that for-profit corporations

may pursue only policies best calculated

“to make money.”

Just as “profit” is not a dirty word that

automatically should discredit the values by which

an enterprise is operated, neither is it necessarily

the exclusive animating reason for corporate

existence of familv-owned businesses such as

Conestoga, Hobby Lobby, and Mardel. States do not

generally require for-profit corporations to reject all

goals that do not maximize revenues. and the

government points to no federal law to that effect.

Rather, states including Pennsvlvania and

Oklahoma (the states of incorporation of the

companies at issue here) allow corporations to be

formed and operated for lawful purposes including

the pursuit of their owners’ conception of the public

good in the business context. The federal courts

should not deem pursuit of such higher ends to be

somehow inconsistent with a hope of remuneration

in the here and now. So long as they act consistent

with their fiduciary responsibilities to shareholders,

corporate charters, and other applicable

requirements, corporate directors may lead their

companies to pursue a wide variety of missions. See,

e.g., 15 Pa. Cons. Stat. § 1715(a)(1) (explicitly

authorizing corporate directors to “consider to the

extent they deem appropriate’ factors including the

effects of any corporate action not only on the Hahn

family as shareholders and their employees and

customers, but upon the broader communities in

which Conestoga operates). Federal courts should

18

not engraft onto state law new constraints restricting

all corporate policies solely to those best calculated

“to make money.” Cf. Conestoga, 724 F.3d at 385.

Significantly, neither the government nor the

judges below who adopt its position identify any

provision of Pennsylvania or Oklahoma law that

precludes a corporation from operating according to

guiding religious principles agreed upon by its

ownership. The Amici States also are aware of no

such relevant law. Cf. 15 Pa. Cons. Stat. §1301

(business corporations may be incorporated “for any

lawful purpose or purposes’), §1501 (business

corporations given “the legal capacity of natural

persons to act’): 18 Okl. St. §10085(B) (corporation

may be incorporated or organized “to conduct or

promote any lawful business or purposes” not barred

by state law), §1016(9) (corporations may contribute

to the public welfare). Hence, family-owned

companies that sell products and create jobs may be

operated legally, as a general matter, according to

agreed-upon guiding religious principles of their

owners regardless of whether such companies are

organized under Pennsylvania’s or Oklahoma’s

general business or non-profit statutes. And RFRA

ensures that the guiding religious principles under

which they are operated can be overridden by federal

dictate only where that federal policy satisfies strict

scrutiny.

For example, a corporation formed to foster

“green energy. as part of its ownership’s

commitment to ecological stewardship, should not be

barred for that reason by some sort of federal

common law of corporate responsibility from seeking

19

to earn a profit. The states are fully entitled to

calibrate their laws on corporations to acknowledge

and account for that exercise of corporate citizenship,

and to determine that doing so in no wav

undermines their legal structures. And _ the

government does not go so far as to sugzest that

Pennsylvania or Oklehoma law must constrain

closely-held family companies to be guided bv

principles of social conscience only to the extent that

those guiding principles eschew religion. Cf. Thomas,

450 U.S. at 718-19.

Yet the Conestoga panel majority reasons that to

hold that a for-profit corporation can engage in

religious exercise as defined by RFRA “would

eviscerate the fundamental] principle that a

corporation is a legally distinct entity from its

owners.” 724 F.3d at 389. What the panel majority

does not explain is—why? As the majority notes.

corporations pursue the freedom of speech with some

regularity, id. at 400; the victory achieved in New

York Times Co. v. Sullivan, 376 U.S. 254 (1964). for

example, has not “eviscerate[d]” the principles of

corporate law. An editorial page mav reflect the

views of individual members of its board, and no one

suggests that free speech accommodations in the law

of libel demand surrender of a newspaper company’s

hmited hability as some sort of judicially ordained

fair trade. The Amici States find no provision of

Pennsylvania or Oklahoma law suggesting that

limited liability and operation of a family business

according to religious principles may not go hand-in-

hand.

20

Again, this is not a judgment for federal courts to

be making. The Conestoga majority draws on no

provision of Pennsylvania law in decreeing that

corporations organized for profit cannot-—because

they operate under limited liability rules that extend

also to non-profit corporations—exercise religion in

following guiding religious principles established by

their ownership. Rather, the panel majority appears

to adopt a general common law rule to that effect.

But as this Court has observed, there is no

general federal common law of corporations. Federal

Election Comm’n v. NRWC, 459 U.S. 197, 204 (1982):

Burks v. Lakser, 441 U.S. 471, 478 (1979) (“the first

place one must look to determine the powers of

corporate directors is in the relevant State’s

corporation law... and it is state law which is the

font of corporate’ directors’ powers’). And

Pennsylvania law says that non-profit status—which

the panel majority finds to be compatible with

religious exercise—does not preclude limited liability

treatment for corporate participants. 15 Pa. Cons.

Stat. § 5553 (“A member of a nonprofit corporation

shall not be liable. solely by reason of being a

member ... for a debt. obligation, or liability of the

corporation’). Oklahoma Jaw is much to the same

effect. 18 Ok). St. §§ 865-66, 1124(B) (corporate

directors). See also Korte, 735 F.3d at 675 (“we take

it as both conceded and noncontroversial that the use

of the corporate form and the associated legal

attributes of that status—think separate personhood,

limitations on owners’ liability, special tax

treatment—do not disable an organization from

engaging in the exercise of religion within the

meaning of RFRA”).

21

Moreover, a federal position that corporations

can and should display no corporate conscience is odd

given developments in social organization and state

law regulation of corporations over the last century.

General trends in state law permitting or favoring

good corporate citizenship were well underway by

the 1930s, and it was commonplace by the 1950s for

state courts to observe that “modern conditions

require that corporations acknowledge and discharge

social as well as private responsibilities as members

of the communities within which they operate.” See,

e.g., A.P. Smith Mfg Co. v. Barlow, 98 A.2d 581, 586,

590; 13 N.J. 145 (N.J. 1953) (reviewing trends and

literature, and lauding corporation's “long-visioned

corporate action in recognizing and _ voluntarily

discharging its high obligations as a constituent of

our modern social structure”): cf. Hobby Lobby, 723

F.3d at 1147 (Hartz, J.. concurring) (“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.” citing ALI

Principles of Corporate Governance: Analvsis and

Recommendations § 2.01(b) (2012)).

Thus, and contrary to the implication of Chief

Judge Briscoe's dissent in Hobby Lobby. see 723 F.3d

at 1171, these developments in the States were

underway many decades before the enactment of

RFRA. Yes, a century ago it well may have been the

law in Oklahoma that every “corporation must be

organized or incorporated for a particular purpose,”

723 F.3d at 1171 (Briscoe, C.J. dissenting and

quoting from Lankford v. Menefee. 45 Okla. 228, 145

P. 375, 378 [1914]), but today the law of the State is

22

that: “Jt shall be sufficient to state, either alone or

with other businesses or purposes, that the purpose

of the corporation is to engage in any lawful act or

activity for which corporations may be organized

under the general corporation law of Oklahoma, and

by such statement all lawful acts and activities shall

be within the purposes of the corporation, except for

express limitations, if any.” 18 Okl. St. § 1006(A)(3).

The Oklahoma statute—that is, the law as duly

adopted and updated by the _ people’s elected

representatives, pursuant to their authority under

our federalist system—thus seems quite distinct

from Chief Judge Briscoe’s conception (advanced

without citation on that score to current Oklahoma

statute) that a corporation must be organized for a

purpose specified with particularity and that “the

specific purpose for which this new entity is created

matters greatly to how it will be categorized and

treated under the law.” 723 F.3d at 1171. That

unsupported proposition, contrary to the thrust of

written state law. should not be used as the basis for

a new federal common law of restricted, pecuniary

corporate purpose.

In sum, RFRA protects religious organizations,

“but it does not stop there. The remedy is available to

anv sincere religious objector—individuals and

organizations alike—and its organizational

applications are not limited to religiously affiliated

organizations. The exemption is comprehensive in

that it applies across the United States Code .. and

restrains the conduct of all federal officials. But it

can be overridden by a_ sufficiently strong

governmental] interest.” Korte. 735 F.3d at 678-79.

And the parade of horribles the government

23

summons to urge against honest application of the

law both ignores the statute’s compelling interest

provision and expresses a post-enactment policy

disagreement with Congress’s application of RFRA to

rules of general applicability. “The Government’s

argument echoes the classic rejoinder of bureaucrats

throughout history: If I make an exception for you.

Ill have to make an exception for everybody. so no

exceptions. But RFRA operates by mandating

consideration, under the compelling interest test, of

exceptions to ‘rules of general applicability’

Congress determined that the legislated test ‘is a

workable test for striking sensible balances between

religious liberty and competing prior governmental

interests.’ §2000bb(a)(5).” O Centro. 546 U.S. at 436.

And “the government’s shel] game.” see Gilardi-

v. U.S. Dep't of HHS, 733 F.3d 1208, 1214 (D.C. Cir.

2013). in arguing that closely-held, for-profit

companies are precluded from claiming protection

under RFRA while the family ownership is also

unprotected because only the company is penalized

just highlights the flaws in its understanding of

RFRA. Jt may not be much consolation to the Hahn

family that the Conestoga “decision ... is in no wav

intended to marginalize the Hahns’ commitment to

the Mennonite faith,” 724 F.3d at 389, when it leaves

them with little option but to violate their sincere

understanding of that faith (through actions by

which they must direct the company as coerced bv

ruinous fines). It places the Hahns and the Greens

into a Catch-22.

The Conestoga majority—after ballvhooing the

notion that this Court has construed free exercise “to

24

secure religious liberty in the individual by

prehibiting any invasions thereof by civil authority,”

see id. at 385 (emphasis and citation omitted)—says

that RFRA provides no relief because the “family

chose to incorporate and conduct business through

Conestoga. thereby obtaining both the advantages

and disadvantages of the corporate form,” id. at 388.

Coupled with the majority’s emphasis that free

exercise is “an inherently ‘human right,” id. at 385,

such reasoning shows Congress’s wisdom in

extending RFRA protections to “persons,” including

family-owned businesses and other entities operated

according to agreed-upon religious principles.

The Conestoga panel majority's contrary view

would mean that RFRA scrutiny would not be

triggered if federal regulation required family

businesses—-in violation of their guiding religious

principles, but absent any showing of a compelling

governmental purpose—to be open on their Sabbath,

to distribute materials they deem blasphemous, or to

market meat products antithetical to their religious

observance. Cf. 724 F.3d at 405 (Jordan. J.,

dissenting) (“the Supreme Court's decisions establish

that Free Exercise rights do not evaporate when one

is involved in a for-profit business”). The oddity of

such results under a statute designed to protect

“Religious Freedom” strongly signals the fallacy of

this reasoning. But again, RFRA extends its

protections to “persons” as that term is commonly

employed throughout federal law, and does not in

any way cast out certain businesses based on their

tax status. Cf. Elgin v. Dep't of Treasury, 132 S. Ct.

2126. 2134-35 (2012) (“That Congress declined to

25

include an exemption . .indicates that Congress

intended no such exception’).

In short, and as indicated “as a matter of

statutory interpretation.” “Congress did not exclude

for-profit corporations from RFRA’s protections. Such

corporations can be ‘persons’ exercising religion for

purposes of the statute.” Hobby Lobby. 723 F.3d at

1129. The governments misguided effort to

circumscribe religious liberty to only religious

organizations is similar to confining religious

practice to worship, as if religious principles may not

animate a corporation—or a person—in public and

commercial life. It is akin to suggesting that only

ordained religious officials should express religious

views. But this is a misunderstanding of religion and

religious freedom.

It. The HHS Mandate does not pass muster

under RFRA.

A. The HHS Mandate imposes a substantial

burden on the free exercise of religion

of Conestoga, Hobby Lobby, and Mardel

as family-owned businesses.

The courts are not equipped or empowered to

second-guess an adherent’s own assessment of the

requirements of his religious beliefs. See Thomas v.

Review Bd. of Ind. Emp’t Sec. Div., 450 U.S. 707. 716

(1981) (at is not within the judicial function and

judicial competence to inquire whether the petitioner

or his fellow worker more correctly perceived the

commands of their common faith”); United States v.

Ballard, 322 U.S. 78, 86 (1944) (adherents “may not

26

be put to the proof of their religious doctrines or

behefs. Religious experiences which are as real as

life to some may be incomprehensible to others’).

This deference is not influenced by corporate form.

See O Centro, 546 U.S. at 425 (role of an

hallucinogenic tea in the sacramental system of the a

Brazilian Christian Spiritist sect): Church of the

Lukumi, 508 U.S. at 524-25 (Santeria religion).

Congress passed RFRA to ensure that courts

would apply strict scrutiny to generally applicable

laws that substantially burden religion. “[Llaws

‘neutral toward religion may burden religious

exercise as surely as laws intended to interfere with

religious exercise.” 42 U.S.C. § 2000bb(a)(2).

The two cases that RFRA cites favorably,

Sherbert v. Verner, 374 U.S. 398 (1963), and

Wisconsin v. Yoder, 406 U.S. 205 (1972), each

examined state laws of general applicability and

their effect on the religious exercise of the plaintiffs

at issue. In Sherbert. this Court determined that a

South Carolina law that disqualified from

unemployment benefits a Seventh Day Adventist

who refused to work on Saturdays had to yield to her

free exercise of her religion. 374 U.S. at 410. Even

though this was an “incidental burden,” i1.e., an

unintended effect, the State was required to come

forward with a compelling interest to justify it. Jd. at

403. Similarly, in Yoder, a Wisconsin law obligated

compulsory education through age 16. 406 U.S. at

207. This statute was an unconstitutional burden on

Amish religious exercise, despite its general

applicability. Jd. at 220.

Xe %,

~~

~

to

~]

RFRA’s general standards for determining

whether a law “substantially burdens” a person's

exercise of religion are informed by Sherbert and

Yoder. The “disqualification for benefits” in Sherbert

was a substantial burden on religious exercise:

The ruling forces her to choose between

following the precepts of her religion and

forfeiting benefits. on the one hand, and

abandoning one of the precepts of her

religion in order to accept work. on the other

hand. Governmental imposition of such a

choice puts the same kind of burden upon the

free exercise of religion as would a fine

imposed against appellant for her Saturday

worship. [Sherbert, 374 U.S. at 404.]

The same is true here. The HHS Mandate

requires these family-owned businesses either to

abandon their commitment to their guiding religious

principles or face ruinous fines. For Conestoga and

the Hahns, the yearly fine approaches $35 mullion.

while for Mardel and Hobby Lobby and the Green

family, the fine would be almost $475 million each

vear. These costs obviously dwarf the $5 fine at issue

in Yoder.

The record below in each case shows religious

belief sincerely held. In such circumstances. courts

applying RFRA should acknowledge the religious

claims of the family businesses and defer to their

understanding of their own religious doctrine. Such

deference is consistent with the Court's precedent.

Thomas, 450 U.S. at 716.

28

In contrast, in Conestoga, the district court

engaged in its own assessment of religious doctrine

to determine whether the mandate is a substantial

burden. It erred in investigating the Hahns’ under-

standing of their Mennonite faith as Christians. The

district court determined that the Mandate did not

impose a real burden on Conestoga or on the Hahns:

[AJny burden imposed by the regulations is

too attenuated to be considered substantial.

A series of events must first occur before the

actual use of an abortifacient would come

into play. These events include: the payment

for insurance to a group health insurance

plan that will cover contraceptive services

...; the abortifacients must be made avail-

able to Conestoga employees through a

pharmacy |: and a decision must be made by

a Conestoga employee and her doctor][.] [Pet.

App. 35b-36b.]

Likewise in Hobby Lobby, the district court reached

the same conclusion:

[T]he particular burden of which plaintiffs

complain is that funds ... might, after a

series of independent decisions by health

care providers and patients covered by

[Hobby Lobby’s} plan, subsidize someone

else's participation in an activity that is

condemned{[.] [Pet. App. 80a-81a.]

The courts adopted these positions at the

invitation of the government. which claims that any

burden here is “too attenuated” to qualify. But such

analysis misapprehends the religious objection to

29

providing the mandated insurance in the first

instance. The family businesses object here not to the

use of the insurance by others, but to themselves

being compelled to provide it. See Korte. 735 F.3d at

685. (“The religious-libertv violation at issue here

inheres in the coerced coverage .... not—or perhaps

more precisely. not only—in the later purchase or

use’.”) (emphasis omitted). 4

As an example, consider a Quaker business's

commitment to pacifism and its owner’s objection to

handguns. If a mandate required the business either

to provide handguns to employees for self-defense or

to contract with a weapons suppher to provide a

handgun, that would be understood as something

different from paying the emplovees’ wages. To put it

another way, it is one thing for employees to use

their paycheck to buy alcohol. It is an entirely

different matter to compel the employer to provide

the beer.

14 Indeed. the government seems to have understood while

arguing in other contexts that the religious liberty interest here

relates to religious objections to provision of the specifically

mandated insurance coverage at issue. Consider. for example,

the government's memorandum to this Court from earher this

year opposing the emergency application for injunction sought

by the Little Sisters of the Poor in Little Sisters of the Pooor v.

Sebelius, (No. 13A691) (memo at 2, emphasizing government's

view that “[a]pplicants are not, however. situated like the for-

profit corporations that brought suit in Hobby Lobby Stores,

Inc. v. Sebelius .... [because applicants] are eligible for religious

accomodations [sic] set out in the regulations that exempt them

from any requirement ‘to contract, arrange. pay, or refer for ...

coverage’ ).

30

Regardless, a federal court should not even have

engaged in the weighing of religious doctrine.

Rather, the courts should have accepted the good-

faith belief of these family businesses that the

religious principles on which they operate prohibited

them not simply from using abortion-inducing drugs

but also from including those drugs in their health

plans under the HHS Mandate. Thomas, 450 U.S. at

715 (courts could not inquire into whether “the line

[plaintiff] drew was an _ unreasonable _ one’);

Hernandez v. Comm’ of Internal Revenue, 490 U.S.

680. 699 (1989) (“It is not within the judicial ken to

question .. . the validity of particular litigants’

interpretations of [the] creeds [of their faith].”). See

also, e.g.. Roman Catholic Archdiocese of N.Y. v.

Sebelius, ___ F. Supp.2d ___: 2013 WL 6579764 at

*14 (ED NY, December 16, 2013) (“The Government

feels that the accommodation sufficiently insulates

plaintiffs from the objectionable services, but

plaintiffs disagree. Again, it is not the Court's role to

say that plaintiffs are wrong about their religious

beliefs”).

The effort at this kind of line drawing was also

rejected by this Court in United States v. Lee, 455

U.S. 252 (1982). In Lee, the issue was whether the

Social Security tax imposed an _ unconstitutional

burden on the Amish, and the Court concluded that

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.” Jd. at 257. The

United States had argued that the taxes did “not

threaten the integrity” of their religious system. Id.

at 257. But this Court held that such an argument

31

was outside the court's “competence.” and the Court

deferred to the community’s judgment on the

question. Jd. See also Hobby Lobby, 723 F.3d at 1139

(“Lee similarly demonstrates that the burden

analysis does not turn on whether the government

mandate operates directly or indirectly”).

As the Seventh Circuit spells out, the

“sovernment’s ‘attenuation’ argument... .. purports

to resolve the religious question underlying these

cases: Does providing this coverage impermissibly

assist the commission of a wrongful act in violation

of the moral doctrines of the [plaintiffs’ faith]. No

civil authority can decide that question.” Korte, 735

F.3d at 685.

Once the actual religious free exercise right at

stake is credited. the “substantial burden” imposed

on that religious exercise is apparent—to exercise

their religion by refusing to follow the HHS Mandate

costs them heavy fines. See Yoder, 406 U.S. at 208,

218. There is no suggestion that the claim here is so

“bizarre” or “clearly nonreligious in motivation’ to be

a spurious claim. Thomas, 450 U.S. at 715. Instead,

these cases are hike Yoder, where the Supreme Court

determined that the requirement for Amish children

to attend compulsory second education would

“contravene| J] the basic religious tenets and practices

of the Amish faith.” Yoder, 406 U.S. at 218. Likewise,

the provision of the products at issue here would

contradict the religious tenets of the Hahns and

Greens as reflected in their businesses’ formal

policies.

In these cases. just as in Korte. “the federal

government has placed enormous pressure on the

32

plaintiffs to violate their religious belhefs and

conform to its regulatory mandate. Refusing to

comply means ruinous fines.” 735 F.3d at 683-84.

And it is no answer to suggest that the companies

can lower their fines to some extent by dropping

emplovee health coverage altogether. Cf. Hobby

Lobby, 723 F.3d at 1125 (penalties then would be

some $26 million per year). Not only would the

penalties still be astronomical (at millions of times

the amount of the fine involved in Yoder), but the

companies further would be forced to surrender the

ability to provide a competitive benefit package for

their emplovees. The government cannot insist upon

this sort of trade-off. See, e.g., Thomas, 450 U.S. at

717-18 (conditioning receipt of important benefit on

conduct contrary to religious faith substantially

burdens religious exercise: “While the compulsion

mav be indirect, the infringement upon free exercise

is nonetheless substantial”); Hobby Lobby, 723 F.3d

at 1141 (coerced surrender of insuring ability is a

“Hobson's choice” and _ therefore imposes. a

substantial burden).

B. The United States has exempted others

and does not have a compelling interest

in applying this mandate to the family

businesses here.

In O Centro, this Court outlined the proper

framework for determining whether a compelling

governmental interest justifies a substantial burden

on a person's religious lhbertv. 546 U.S. at 424-31.

The Court was careful to note that this examination

requires an inquiry into whether there is a

compelling interest to apply the government

33

mandate to the “particular claimant whose sincere

exercise of religion is being substantially burdened.”

Id. at 430-31 (emphasis added).

This focusing of the inquiry undercuts the

government's claim here, where the Mandate already

contains multiple categories of emplovers to which

the mandate does not apply, including emplovers

with fewer than 50 emplovees and “grandfathered”

plans with millions of plan participants. See

Newland v. Sebelius, 881 F Supp.2d 1287, 1298 (D.

Colo., 2012) (“this massive exemption [for

grandfathered plans] completely undermines any

compelling interest in applying the preventive care

coverage mandate to Plaintiffs”). See also Legatus v.

Sebclius, 901 F.Supp.2d 980. 993 (E.D. Mich. 2012).

The particular businesses here have fewer than

15,000 emplovees total. Conestoga with

approximately 1.000 emplovees and Hobby Lobby

and Mardel with some 13,000.

In O Centro, 546 U.S. at 423. the government

urged as a compelling interest “the uniform

application of the Controlled Substances Act, such

that no exception to the ban on use of the

hallucinogen can be made to accommodate the sect’s

sincere religious practice.” /d. (emphasis in original).

This Court rebuffed the attempted uniformity

justification because the Act itself contemplated

exceptions since the Attorney General was

authorized to grant “waiviers]” where consistent

with the public health and safety. Id. at 432.

Likewise here, the government claims that the

Mandate must be “comprehensive,” even while

exempting or excluding huge numbers of businesses.

34

As for businesses with fewer than 50 employees,

the 2007 economic census (compiled every five years)

indicates that there were more than 20 million paid

employees at firms nationwide with fewer than 20

emplovees. See Table 2b “Employment Size of

Employer and Nonemplover Firms, 2007.”° In other

words, there are tens of millions of U.S. emplovees

whose emplovers are not required to comply with the

Mandate. not even considering the broad

“srandfathering” provision. And the government “has

not offered contrary estimates of individuals covered

by exempt health plans” to counter the estimates

based on governmental sources that some 50 million

to more than 100 million people are covered by

exempt health plans. Hobby Lobby, 723 F.3d at 1124.

“Since the government grants so many

exceptions already. it can hardly argue against

exempting these plaintiffs.” Korte, 735 F.3d at 686.

The fact that small emplovers that account for

millions of employees are not subject to the ruinous

penalty provisions is fatal to the government's claim

that the federal mandate must be imposed on all

other businesses. including the family-owned

businesses here. The assertion that there can be no

exceptions to this rule—even where it burdens the

free exercise of religion— rings hollow. O Centro, 546

U.S. at 431. Even considering other businesses that

are similarly-situated with the businesses here who

may raise these claims, the number of businesses

° This United States Census Bureau document may be found at:

http://www.census.gov/econ/smallbus.html (last visited on

January 17. 2014).

35

operated according to such religious principles pales

in comparison with the other groups that are beyond

the reach of the penalties.

Equally important, other less restrictive means

are available to the government. The Seventh Circuit

explained in Korte that the government can provide a

“public option” for the insurance. it can provide tax

incentives for suppliers to provide these medications

and services at no cost to consumers, and it can

provide tax incentives to consumers. 735 F.3d at 686.

“No doubt there are other options.” /d.

Thus. the genius of RFRA is to safeguard

religious liberty, protecting persons from substantial

burdens except when the government has a

compelling justification that can be achieved by no

other practical means. That justification has not

been demonstrated here for these family-owned bus-

inesses and for others like them. This Court should

vindicate their religious freedom and grant rclief.

36

CONCLUSION

State Amici respectfully ask that this Court

affirm the decision of the en banc Tenth Circuit in

Hobby Lobby and reverse the decision of the Third

Circuit panel in Conestoga on the basis of the federal

Religious Freedom Restoration Act.

Michael DeWine

Ohio Attorney General

Eric E. Murphy

Ohio State Solicitor

30 East Broad Street

17th Floor

Columbus, Ohio 43215

eric.murphy@

ohioattornevgeneral.gov

(614) 466-8980

Frederick D. Nelson

Senior Advisor to the

Ohio Attorney General

Attorneys for Amicus Curiae

State of Ohio

Dated: JANUARY 2014

Respectfully submitted,

Bill Schuette

Michigan Attorney General

Aaron D. Lindstrom

Michigan Solicitor General

Counsel of Record

P.O. Box 30212

Lansing, Michigan 48909

Lindstroma@michigan.gov

(517) 373-1124

B. Eric Restuccia

Deputy Solicitor General

Dep't of Attorney General

Attorneys for Amicus Curiae

State of Michigan

ADDITIONAL COUNSEL

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38

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