Hobby Lobby scores another victory against mandate

On July 19, Christian-run craft store Hobby Lobby won what was hailed as “a tremendous victory for religious liberty” when a federal judge ruled that the company, along with its sister company Mardel, will not have to pay fines of up to $1.3 million a day while their case continues against the government’s mandate requiring employers to cover birth control and abortion-inducing drugs.

The decision grants temporary reprieve to Oklahoma City-based Hobby Lobby from fines for refusing to provide four abortion-inducing drugs on the list of mandatory preventive services. The fines would total almost $475 million a year, while the fines for dropping employee heath insurance altogether total around $26 million a year.

Hobby Lobby’s suit is one of more than 60 cases pending against the Department of Health and Human Services mandate, including 34 for-profit lawsuits. Twenty-three have secured exemptions from fines while their cases proceed.

In granting the preliminary injunction, U.S. District Judge Joe Heaton wrote that “there is a substantial public interest in ensuring that no individual or corporation has their legs cut out from under them while these difficult issues are resolved.”

‘A great step’

Steve Green, president of Hobby Lobby, called the injunction “a great step for us” and said the company would have continued to fight for religious freedom even if the fines had been enforced.

“This case is about life,” he said, “To offer prescriptions that take life is just not an option for us.”

Hobby Lobby operates more than 500 stores with approximately 13,000 full-time employees covered under Hobby Lobby’s self-insured plan. Employees of Christian bookstore company Mardel, owned by a member of the Green family, are also covered under Hobby Lobby’s plan.

The five owners of Hobby Lobby, all members of the Green family, are devout Christians who run their business according to biblical principles. Striving to treat their employees fairly, they have raised wages for both full- and part-time employees four years in a row, and full-time hourly workers at Hobby Lobby start at 80 percent above the federal minimum wage.

The company continues its long-standing practice of covering other contraceptives, but it objects to those that can take human life at its earliest stage, such as the “morning-after” and “week-after” pills.

Turning tide

The July 19 decision was the second time in less than a month that the corporation had a favorable ruling in its suit against the mandate. On June 27, the U.S. Court of Appeals for the 10th Circuit in Denver reversed the District Court’s earlier ruling that denied Hobby Lobby an injunction and sent the case back to the lower court.

Green
Green

The most recent decisions are especially noteworthy considering Hobby Lobby’s lawsuit was initially met with defeat. The company first filed suit against the HHS last September in opposition to the mandate that requires employers to pay for four drugs, which act by preventing implantation of a fertilized egg, or face crippling fines.

In November, Heaton ruled that Hobby Lobby does not possess religious liberty rights. He further ruled that the religious liberty rights of the Green family are not “substantially burdened” by the mandate.

Hobby Lobby immediately appealed the decision. Last December, two judges from the 10th Circuit denied the appeal, leaving Hobby Lobby and its lawyers with two uncertain courses of action. First, they petitioned the Supreme Court to take the case, but were refused. Second, they petitioned the 10th Circuit to re-examine the case, this time en banc, which means that all nine judges of the court would hear the case.

The court agreed to this hearing, which took place in May.

On June 27, with the release of the Court of Appeal’s opinion, the tide began to turn in Hobby Lobby’s favor. Though it sent the case back down to the District Court, it did so only after it affirmed that Hobby Lobby had a likelihood of success, stating that religious liberty rights are applicable in the case, and that the fines would impose a substantial burden on the company and its owners.

Understanding the ruling

Kyle Duncan, general counsel at the Becket Fund for Religious Liberty and lead attorney for Hobby Lobby, said, “The en banc 10th Circuit rendered a dramatic decision. This is the first federal decision on merits in any HHS case, and it comes from an en banc federal circuit court, so it’s extremely significant.

“The 10th Circuit settled disputed legal issues in Hobby Lobby’s favor. Hobby Lobby and Mardel are able to exercise freedom of religion under the First Amendment.”

Duncan emphasized the importance of substantial burden in the case. Substantial burden “is the key legal issue in all the for-profit cases. ... If the law forces you to provide objectionable coverage, some courts have found that the government can’t force you to do that without creating a substantial burden, while others have found that it’s not a burden on you. The 10th Circuit resolved that question in Hobby Lobby’s favor. The religious objection is to facilitating or participating in a practice employers find immoral, and forcing you to do that on substantial fines is a substantial burden.”

Thus the case was sent back down to the District Court in Oklahoma City, but with new criteria. The 10th Circuit had ruled that the companies are protected under the Religious Freedom Restoration Act and, furthermore, that they meet two of the four required measures for determining if a company may be exempt from fines while their case proceeds in court — likelihood of success and substantial burden.

On July 19, the court argument pertained only to the two remaining factors: balance of equities, meaning which party is harmed more, and public interest. The District Court concluded both factors in Hobby Lobby’s favor.

In weighing the issues, the court looked at other exemptions to the Affordable Care Act. Currently, close to half the employer-based plans do not have to conform to all provisions under the Affordable Care Act simply because they have not made significant changes to their plans since 2010. In order to make it easier on employers, provisions were made to allow existent plans to continue without significant changes. The court said that these “grandfathered” plans “suggest Congress has made clear that [access to contraception] is not so compelling to tip the balance … the substantial exemptions written into the law that impacts a number of Americans weighs in the interest to access.”

The U.S. government requested that no further proceedings take place in Oklahoma City while they petition the Supreme Court to take jurisdiction over the case. Hobby Lobby agreed, as long as the U.S. government meets the September deadline to petition.

“This is a tremendous victory for religious liberty, that it is acknowledged that you don’t give up your religious beliefs when you make money,” said Emily Hardman, communications director at the Becket Fund. “This is the first definitive issue against the mandate.” 

Anamaria Scaperlanda Biddick writes from Oklahoma City.