Sixth Circuit Court of Appeals Upholds Contraceptive Mandate of the PPACA

Sixth Circuit Court of Appeals Upholds Contraceptive Mandate of the PPACA

and Holds That Corporations Do Not Have Religious Rights

      On September 17 the Sixth Circuit Court of Appeals issued its decision in Autocam v. Sibelius, there addressing a challenge to the contraceptive mandate brought by a for-profit business venture.  Essentially, the company and its shareholders argued that they should be exempt from the requirement under the PPACA that insurance plans cover contraceptives (the “Mandate”) on the basis that they, the shareholders, as Catholics, has religious objections thereto.  Consistent with the holding of the Third Circuit Court of Appeals in Conestoga, but in contrast to the ruling of the Tenth Circuit in Hobby Lobby, the Sixth Circuit held that no religious rights were being violated.

      The opinion begins with a short discussion of the Anti-Injunction Act, which, if applied, would preclude the Court from hearing the dispute.  The Sixth Circuit determined that the limitations of the Anti-Injunction Act are not applicable.

      Turning to Autocam, the corporation, it was determined that it had Article 3 standing under the Constitution to challenge the Mandate.  In contrast, the shareholders of Autocam do not have Article 3 standing to assert a claim either under the Free Exercise Clause of the First Amendment or under the Religious Freedom Restoration Act (“RFRA”).  The obligation of the Mandate is upon the Corporation, and no burden is imposed upon the shareholders.  They bearing no burden, they have no standing to object to the Mandate.

       With respect to the suggestion that any actions taken by the Corporation to comply with the Mandate will require the shareholders to act against their religious beliefs, the Court noted that when they act on behalf of the Corporation they do so as officers and directors of the Corporation, fiduciary roles obligating them to act on behalf of that distinct legal entity.  Those actions do not of themselves give rise to a distinct injury suffered by the shareholders that would otherwise allow them to pursue an individual, as contrasted with a corporate, claim against the Mandate.

      Acknowledging that there are two decisions of the Ninth Circuit Court of Appeals allowing a for-profit corporation to assert the Free Exercise rights of the owners, the Sixth Circuit noted that those decisions “seem[] to abandon corporate law doctrine at the point that matters most,” namely the legal existence of the corporation as a person distinct from the shareholders.  “For this reason, the Kennedys cannot bring claims in their individual capacities under RFRA, nor can Autocam assert the Kennedys’ claims on their behalf.”  Turning then to the substance of Autocam’s argument that the Mandate violates its rights under RFRA, the Court held that a corporation is not a “person” capable of a “religious exercise” as contemplated by RFRA.