Media Center

Eric Athey Quoted in Lancaster Online

July 16, 2014

Religious rights for publicly traded firms?

published online by Lancaste Online

By TIM STUHLDREHER | Business Writer

Could a publicly traded company like IBM or Microsoft assert religious rights like those affirmed for “closely held” firms in Monday’s Supreme Court opinion?

It’s “unlikely” they would try, Justice Samuel Alito wrote in his opinion on the case brought by Hobby Lobby and Lancaster County’s Conestoga Wood Specialties Corp.

But he never says they can’t.

That is, Alito’s opinion “never actually forecloses the possibility of a publicly traded corporation expressing a religious objection,” local attorney Eric Athey said.

Athey co-chairs the labor and employment practice at McNees Wallace & Nurick’s Lancaster office.

He agrees with Alito that it’s unlikely a public company would want to assert a religious belief, “but it’s certainly possible,” he said.

Athey’s view is corroborated by a powerful voice: that of Justice Ruth Bader Ginsburg.

In her dissent to Alito’s majority opinion for the court, Ginsburg wrote, “Although the Court attempts to cabin its language to closely held corporations, its logic extends to corporations of any size, public or private.”

Closely held companies are those at least half-owned by five or fewer people, according to the Internal Revenue Service.

In the Hobby Lobby and Conestoga Wood decision, Alito concludes emphatically that the contraception mandate of the Affordable Care Act, “as applied to closely held corporations, violates RFRA,” the Religious Freedom Restoration Act.

About 90 percent of U.S. companies fall into the closely-held category, researchers estimate.

Many closely held companies are small, but they need not be. Some rank among the biggest firms in the U.S.

Hobby Lobby has 573 stores and about 13,000 employees.

Another closely held U.S. firm, the candy maker Mars Inc., has 72,000 employees and $33 billion in annual revenues.

Even the largest closely held firms, however, must fall within the IRS’ definition.

By contrast, publicly traded ones typically have hundreds or thousands of stockholders, including institutional entities such as pension funds.

That, in a nutshell, is why Alito doubts they would assert religious rights under RFRA.

The government lawyers defending the ACA’s mandate offered no examples of a publicly traded company doing so.

On its face, “the idea that unrelated shareholders — with their own set of stakeholders — would agree to run a corporation under the same religious beliefs seems improbable,” Alito wrote.

Perhaps, Ginsburg wrote, but Hobby Lobby’s case shows that large size and a diverse workforce aren’t barriers.

If a public company did assert a religious claim, Alito’s decision “does not even begin to explain” how a court would assess it, she wrote.