Tuesday, July 15, 2014

Hobby Lobby Post-Mortem Part 8: Will There Now Be a Gold Rush of Corporate Religious Claims?

-- Posted by Neil H. Buchanan

In the final paragraph of my Dorf on Law post this past Friday, referring to the opportunities that the Hobby Lobby decision has created for businesses to challenge minimum wage laws on religious grounds, I wrote: "The gold rush mentality of for-profit firms suddenly seeing a way out of paying the minimum wage would be awesome to behold."  The minimum wage, of course, is merely one category of possible claims that businesses might now litigate, because the Court's decision to impute religious views to corporations allows those "persons" to pursue claims that were never before available, in any area of law that might affect the business (and its sincerely held religious beliefs).  In last Thursday's post, I argued that, "[f]or a variety of obvious reasons, this new group of plaintiffs is especially likely to make insincere religious claims in order to avoid a variety of laws."

Pushing in the opposite direction, as Professor Dorf noted again in yesterday's post, is the possibility that corporations will worry about public relations in ways that prevent them from pushing religious claims.  Here, I want to tease out a few of the factors that might affect corporate boards' decisions about whether to pursue litigation in the aftermath of Hobby Lobby.  Will there be a "gold rush," as I put it, or will this end up being a small, self-limiting phenomenon?

To be clear, the question that I am asking is whether corporate persons are, as a group, more likely than natural persons to pursue religious claims because of Hobby Lobby.  That is, it would be relatively trivial if my point were merely that a larger group of potential litigants (natural persons plus corporate persons) would lead to more litigation than we have seen with a smaller group.  Even that claim would not be entirely meaningless, of course.  If one could claim the opposite, that is, that corporations simply will not pursue religious claims, then that would be worth noting.  And even if the increased litigation is merely proportional to the size of the population, it bears at least passing mention that the five conservative justices have again invited a new category of lawsuits into our supposedly over-litigious society.

Again, however, my point is more aggressive than that.  I am arguing that there will be, on net, more factors pushing corporations to pursue religion-based litigation to invalidate laws, now that Hobby Lobby is on the books, resulting in a large amount of new claims.  (For purposes of my arguments here, I will assume that the "closely held" aspect of corporate religious personhood will be tossed aside before long, or at least that it cannot be justified under the logic of the ruling.)  Before considering the reasons why, it is important first to consider the public relations point that Professor Dorf noted, which undeniably pushes in the opposite direction.

The basic idea is obviously that businesses need to worry about how their decisions are perceived by the public, such that a lawsuit based on a religious claim -- especially one that might seem insincere -- has potential downsides for the bottom line.  (This factor, in turn, is apparently thought to be more potent than individuals' concerns about reputation.  I am not convinced of this, but I will not pursue the point here.)  And surely this will be true of many corporations, maybe even the majority of them.  For example, it would be difficult to imagine that Apple would challenge environmental laws on the basis of a religious objection.  Yes, Apple's profit would rise if it were completely excused from having to clean up its messes, but the company is already in a gray area in the public's mind regarding its environmental practices.  I cannot imagine a discussion at corporate headquarters in Cupertino that would end with a decision to find a religious reason to disobey environmental laws.

Even corporations with clearly right-wing boards (as well as more right-wing clienteles) can be limited by such concerns.  Wal-Mart, for all of its awfulness, spends a lot of time and money trying to walk the line between aggressively fighting unionization, living wage laws, and so on, and convincing the public that it is not a super-predator.  If Wal-Mart were to announce tomorrow that it is not going to pay even the minimum wage, as a matter of religious conviction, it would be risking serious consequences.  (Consider also the small eruption when it was reported that McDonald's advises its employees to supplement their paltry wages by signing up for food stamps and other public assistance.)

Obviously, therefore, there will be companies that would never even consider pursuing religious claims.  Other companies, while willing to contemplate doing so, might be likely to consider but reject the idea.  This, however, is hardly the end of the story.

The most obvious factor weighing on the side of increased business litigation in this area is that the laws of business can generally be challenged by businesses, not individuals.  For example, in my post last Friday, I noted the Supreme Court case (cited in Justice Ginsburg's Hobby Lobby dissent) that challenged the minimum wage on religious grounds (Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U. S. 290, 303 (1985)).  The plaintiffs in that case were a religious foundation that had been ordered to pay its employees the minimum wage.  The "employees," however, were religious converts who were providing work to the foundation as part of being rehabilitated for drug and alcohol abuse.  The plaintiffs claimed that the recipients' religious beliefs were burdened because they did not want to be paid for their work, which they provided as repayment to God for giving them their lives back.

The Court there noted that there was nothing stopping those religious adherents from turning around and simply giving their wages back to the foundation, which meant that they could adhere to their religious principles by not profiting from their work, as a bottom line proposition.  This logic, however, is obviously inapplicable to potential corporate litigants who might wish to challenge the minimum wage.  (I cannot help but note that the Court's logic there might be inconsistent with any forthcoming ruling that would favor Wheaton College or the Little Sisters of the Poor.  If the adherents claim that even accepting money in the first place violates their religion, would that be enough to uphold a claim for substantial burden?)  The new class of potentially-religious corporate persons, therefore, is positioned to argue against having to comply with laws in ways that non-business plaintiffs are not.

Moreover, the hurdles for natural persons, acting as individuals, can be especially imposing.  Consider a comparison to the Americans with Disabilities Act (ADA).  When it was passed, some conservatives predicted that the ADA would all but invite people to invent faux disabilities in order to shirk on the job.  (The lamentable "King of the Hill" animated sitcom ran an episode using that plotline, with one character saying something like, "I've got obsessive-compulsive disorder.  If I get out of this chair, my mama will die.")

One of the factors that prevented that supposed onslaught from happening was that individuals face the possibility of losing their jobs right away, with a chance much below 100% that they will be reinstated after pursuing the claim legally.  (This, I would argue, is almost certainly more of a realistic possibility for most people than an equally devastating PR disaster would be, for most corporate clients.)  Moreover, as a matter of predicting whether individuals or corporations will pursue claims opportunistically, it is easy to imagine that the corporate legal department will be told to spend some time looking for new religious claims, which would increase the corporation's legal costs only marginally, whereas individuals typically will face much more daunting legal bills (relative to their resources) if they decide to push a legal claim.

So, will there be a "gold rush"?  I am reminded of a job interview that I once had for a staff position with the Joint Committee on Taxation.  I was a newly minted economist, and the staff director asked me, "You're not too much of an economist, are you?"  Asked to elaborate, he told me that he had worked with economists who believed that theory trumped reality; and there is a theory that says that no business will pay corporate taxes, because it is easy to recharacterize income, and so on, in a way that will reduce the corporate tax bill to zero.  The staff director, in response to one such staff economist, pulled out the official revenue figures for the federal government, noting that hundreds of billions of dollars in corporate tax revenues are collected every year.  The economist was not impressed: "Those numbers must be wrong.  No rational corporation would pay the corporate tax, because they don't have to."

Is my argument similarly extreme?  After all, legal slippery slope or "open the floodgates" arguments are close cousins of this kind of economic logic.  The difference here is that one need not believe that every profit-seeking corporation will pursue every imaginable legal claim to become exempt from every law that affects businesses.  Especially taking into account Professor Dorf's discussion in yesterday's post, in which he pointed out that even the "sincerity" analysis is less demanding than it might seem (and is yet less demanding for corporate litigants), one need not argue that this case will bring about the end of all regulatory law.  One need only argue that a significant new opportunity has been created, and that many of the affected potential litigants will have good reasons to pursue it.

Occasionally, Supreme Court cases really do open the floodgates.  (See, e.g., Windsor and same-sex marriage, where Justice Scalia's dissent seems to have been the real floodgate opener.)  But even if it is unlikely that business challenges will completely swamp labor law, or environmental law, or consumer protection law, it is hard to imagine that Hobby Lobby will not lead to a rush of corporate challenges to all of those laws, and more.


Shag from Brookline said...

Compare the dicta in Heller 2008, Scalia) and the similar dicta in McDonald (2010, Alito) with that in HL. While Heller/McDonald triggered many 2nd A lawsuits despite (or in spite of) their dicta, The Court has not taken another 2nd A case as yet. Perhaps similarly any "gold rush" fostered by HL may be similarly ignored by the Court. Of course with Heller/McDonald the lower courts for the most part have followed their dicta. But it may be wilder in the case of HL because its dicta does not seem as restrictive as in Heller/McDonald and the lower courts find religion in many places for closely held corporations.

But the 2nd A yahoos may give inspiration to the RFRA/1st A establishment yahoos, breaking out in song like WW II's "Praise the Lord and Pass the Ammunition and We'll All Stay Free."

Joe said...

spam alert.

Marty Lederman has written tons of posts on this issue. But, even this many at this point seems overkill.

This case seems to fascinate -- is it the novel corporation and other claims? Or something else?

Shag from Brookline said...

In this day and age when many states have broad incorporation laws, perhaps a political/legal entrepreneur might propose that individuals should incorporate whether or not currently operating businesses to be in a position to augment their individual rights by owning/controlling a corporation that may have similar rights. Who knows down the road what rights may be available to both the individual stockholder and his/her corporation? And maybe a chain of subsidiary corporations may add to this. With corporations as people, one may be at a disadvantage without a corporation. Query: How might a corporation have a 2nd A right that cannot be infringed similar to that of its sole stockholder? Now that could be "overkill" literally and figuratively. But it may help provide full employment for attorneys.

Shak Olreal said...

If Wal-Mart were to announce tomorrow that it is not going to pay even the minimum wage, as a matter of religious conviction, it would be risking serious consequences. (Consider also the small eruption when it was reported that McDonald's advises its employees to supplement their paltry wages by signing up for food stamps and other public assistance.)League of Legends Boosting
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