Tuesday, March 18, 2014

Beyond Hobby Lobby: Protecting Entities from Discrimination

Ed Whelan at National Review Online (h/t: Prof. Bainbridge) asks, in light of a recent Fourth Circuit opinion, “Will those who (wrongly) think that for-profit corporations are incapable of exercising religion for purposes of RFRA object as vigorously to the concept that for-profit corporations can have a racial identity for purposes of Title VI? If not, why not?”

I have been following the Hobby Lobby case with interest, though I am just delving into its depths now.  After starting through the various amicus briefs, my initial reaction is that the law has not evolved to where it needs to be with respect to protecting those engaging in the widespread use of entities.  As is often the case, my initial reaction is that the answer to Mr. Whelan’s question is somewhere in the middle: I think for-profit corporations are capable of exercising religion under RFRA, but in this case I don’t see the necessary substantial burden, at least when balanced with an individual’s right to make such decisions, to carry the day. (Reasonable minds can disagree on this, but that’s my take). 

Taking a broader look, though, view entities should be able to take on the race, gender, or religion of its primary shareholders (or members) in proper circumstances to protect against discrimination.  The Fourth Circuit opinion states:  “[W]e hold that a corporation can acquire a racial identity and establish standing to seek a remedy for alleged race discrimination under Title VI . . . .”  The opinion notes that seven other circuit courts “have concluded that corporations have standing to assert race discrimination claims.”  This seems proper, because a minority-owned company might be denied a contract or be treated differently in the execution of a contract because of the race of the primary shareholders.  It would be improper to deny protections for the shareholders/members just because they chose to avail themselves of entity protections to conduct their business.

The same should be true in cases of religion and gender.  Suppose, for example, an all-female construction company were denied a bid because the city seeking the project thinks construction is “man’s work to be done by men.”  Similarly, protections should be available if a Catholic-owned company were to lose a bid because the county seeking the bid was run by people who didn’t “trust Catholics to finish anything on time.”  (Disclosure: I was raised Catholic, and while I most certainly don’t speak for any other Catholics, my comfort level leads me to use Catholics in such examples.)

Thus, an entity should be able to take on the race, gender, or religion of the shareholders/members to fight cases where the same discrimination against an individual would stand. Obviously, then, having a member of a certain race, gender, or religion as a shareholder, member, director, or employee would not be sufficient to make the claim.  The entity would also have to demonstrate: (1) that the alleged discrimination was predicated on race, gender, or religion, and (2) the entity (and not just certain individuals) was identified with the group against whom the discrimination was targeted. 

In the Hobby Lobby case, then, under this rubric I think the claim would fail because the entity would not be able to demonstrate they have satisfied the first test.  Regardless of what one thinks of the healthcare law, the law was not designed to discriminate against certain religions (or race or gender).  The law also does not mandate any individual course of action, but merely requires that access be provided to certain healthcare options. (That is, it mandates access, not use.) 

This is not the current state of the law, of course.  Still, it seems to me that the proper way forward is to recognize that entities can often take on identities of those running them, but that protections should only be available where the entity’s identity was targeted for harm because of that identity, and not an arguable result of another non-identity-based decision. 


Business Associations, Corporations, Entrepreneurship, Joshua P. Fershee, LLCs, Religion | Permalink


Not predicated on religion, but is there "disparate impact"? Would a "disparate impact" analysis be relevant to your argument? (My employment law knowledge is admittedly rusty.)

Posted by: Haskell Murray | Mar 18, 2014 9:38:16 AM

My employment knowledge is similarly rusty, but my thought is that it could. I would extend entity protection, in proper cases, to any claim a natural person would have.

Posted by: Joshua Fershee | Mar 18, 2014 10:35:34 AM

Discrimination arguments ought to have been made in Hobby Lobby, and perhaps will at a future stage in the case. It sure seems to me that the Adminsitration's energy and expense in fighting even the temprorary waivers and preliminary injunctions sought by the religious companies is motivated by anti-religious animus. Otherwise, why not grant them at least the delayed enforcement of the Mandate given to a zillion companies and individuals for reasons of convenience? There's enough to that argument to permit discovery, and I bet there'd be some juicy Justice Dept. emails about sticking it to those fundamentalists.

Posted by: Eric Rasmusen | Mar 18, 2014 4:09:05 PM

I think that's a red herring. Congress passed the law, not the Administration. I could see a court saying no exemptions -- it's not clear to me the Administration actually has that power, but I don't see that carrying the day to give it to Hobby Lobby. I see this as an exercise argument, not a discrimination argument in this circumstance, but we shall see.

Posted by: Joshua Fershee | Mar 18, 2014 4:21:57 PM

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