Can For-Profit Corporations Have Religious Purposes?

Expanding on Will’s post from Wednesday (and his prior post here), it seems to me the argument that corporations, as such, cannot press religious liberty claims (or, to put it another way, cannot “exercise” religion) is wholly unsustainable.  As Will notes, a consequence of this position would be the denial of religious liberty claims made by churches.  Yet the Supreme Court has already recognized religious liberty claims made by churches, as in the O Centro RFRA case and many other institutions are clearly religious in purpose, including charities and schools.

Okay, some may respond (e.g., here), churches and other organizations have free exercise rights, but for-profit corporations do not.  But why would this be?  An individual sole proprietor — of, say, a kosher deli, to use Will’s example — would clearly be able to press a religious liberty claim, whether or not she hopes the deli will make her rich (and whether or not she commits to donate her earnings to a religious charity).   Does this individual lose such rights if she incorporated?   Does that somehow make her religious motivations any less sincere? Any less judicially cognizable?  I can’t see how.   What, then, if the deli owner formed a partnership with her equally devout brother?  Would that matter?  And, again, if an informal partnership would be okay, why would the adoption of a corporate form and limited liability matter?

The consequence of the “no religious liberty for corporations” position is that individuals who would like to go into business are penalized if they seek to go into business without any potential recourse, under RFRA or otherwise.  The choice presented by the state is go into business or stay true to your religious beliefs.  Although I suggested otherwise before, it seems to me this approach imposes a substantial burden on the exercise of religion.  Whether this burden can be justified in a given case is a separate question, but the burden is there.

In the various contraception mandate cases the government has had a difficult time drawing a line to identify which corporate entities can advance free exercise claims.  The government wants to claim that companies like Hobby Lobby cannot press free exercise claims, but is reluctant to take this position to its logical conclusion and deny the free exercise claim of the sole proprietor.  One way to approach this question could be to look at whether a given corporation does, in fact, have a religious purpose.  For churches and the like, this would be easy.  But what about other corporate entities?  Contrary to David Gans’ claim, I do not think it is the case that business corporations cannot have religious purposes.  It depends on the corporation.  Some corporations are founded solely to make money, but others are created with other purposes in mind — and some of those purposes might be religious.  A company like Hobby Lobby — which is privately held is run in accord with express religious principles — would seem to qualify.  General Motors would not.  So I accept Gans argument (quoting John Marshall) that “the rights of a corporation depend on ‘the object for which it was created.’” My point is that some corporations with religious purposes in mind.

A possible objection to this approach would be too difficult to apply and could  make it too easy for corporations to evade regulatory requirements through insincere religious claims.  Perhaps, but I don’t think evaluating whether a corporation has a religious purpose would be particularly difficult.  Indeed, it would likely be easier than determining whether an individual is advancing a sincere free exercise claim (just ask a prison warden).  This is because corporate entities have founding documents, by-laws, and other instruments that provide clear indicia of whether a given entity is, in fact, religiously oriented.  So, for instance, a company that references its religious purpose in its by-laws or incorporation documents could be recognized as having a true religious purpose, where as a company that does not would not.

I also think it is unlikely that many corporations would advance insincere religious liberty claims under this test.  Insofar as a corporation would be obligated to publicly attest to its religious principles in an indelible way, this is not a course owners or corporate officers would undertake lightly.  In the case of publicly traded companies, some current and potential shareholders could be put off by any statement of religious purpose in the corporate by-laws.  The same is true for potential investors or purchasers of privately held firms.  Thus the owner who puts profit above religious principle is unlikely to make such claims.  It also seems to me that the risk of successful-yet-insincere religious liberty claims would be less here than with individuals.   It’s easier to test the sincerity of the conviction in the corporate context insofar as the inquiry can focus on documentary evidence.

Accepting that for-profit corporations may have religious purposes does not, in itself, mean that specific regulatory requirements, such as the contraception mandate, run afoul of RFRA. One must also conclude that the mandate imposes a substantial burden that cannot satisfy RFRA’s requirements. The point here is simply that I do not believe that a rule barring religious exercise claims by for-profit corporations can be sustained.