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Conestoga Wood Specialties Corporation v. Secretary of United States Department of Health & Human Services

United States Court of Appeals, Third Circuit

July 26, 2013


Argued May 30, 2013

On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. 5-12-cv-06744) District Judge: Honorable Mitchell S. Goldberg

Charles W. Proctor, III, Esq. (Argued), Randall L. Wenger, Esq.Counsel for Appellants

Michelle Renee Bennett, Esq., Alisa B. Klein, Esq. (Argued) Mark B. Stern, Esq.Counsel for Appellees

Angela C. Thompson, Esq. Counsel for United States Justice Foundation Amicus on Behalf of Appellants.

Ayesha N. Khan, Esq., Gregory M. Lipper, Esq. Counsel for Americans United for Separation of Church and State; Union for Reform Judaism; Central Conference of American Rabbis; Hindu American Foundation; Women of Reform Judaism Amici on Behalf of Appellees.

Travis S. Weber, Esq. Boyle Counsel for Democrats For Life of America;Bart Stupak Amici on Behalf of Appellants

Mailee R. Smith, Esq. Counsel for Association of American Physicians and Surgeons; American Association of Pro Life Obstetricians and Gynecologists; Christian Medical Association; Catholic Medical Association; Physicians for Life; National Catholic Bioethics; National Association of Pro Life Nurses Amici on Behalf of Appellants.

Bruce H. Schneider, Esq. Counsel for American Society for Reproductive Medicine; Society for Adolescent Health and Medicine; American Medical Women's Association; National Association of Nurse Practitioners in Women's Health; Society of Family Planning; James Trussell; Susan F. Wood; Don Downing; Kathleen Besinque; American Society for Emergency Contraception; Association of Reproductive Health Professionals; American College of Obstetricians and Gynecologists; Physicians for Reproductive Choice and Health Amici on Behalf of Appellees

Lisa S. Blatt, Esq. Counsel for Center for Reproductive Rights; American Public Health Association; Guttmacher Institute; National Family Planning and Reproductive Health Association; National Latina Institute for Reproductive Health; National Womens Health Network; Reproductive Health Technologies Project; R Alta Charo Amici on Behalf of Appellees.

Kimberlee W. Colby, Esq. Counsel for Institutional Religious Freedom Alliance; C12 Group; Christian Legal Society; Ethics and Religious Liberty Commission of the Southern Baptist Convention; Association of Christian Schools; Association for Gospel Rescue Missions; National Association of Evangelicals; Patrick Henry College; Prison Fellowship Ministries Amici on Behalf of Appellants

Sarah Somers, Esq.Counsel for Asian Pacific American Legal Center; Black Women's Health Imperative; Campaign to End Aids; Forward Together; Housing Works; Mexican American Legal Defense and Educational Fund; National Health Program; National Hispanic Medical Association; National Women and AIDS Collective; Sexuality Information & Education Council of the United States; IPAS; HIV Law Project Amici on Behalf of Appellants

Brendan M. Walsh, Esq. Pashman Stein Counsel for Orrin G. Hatch; James M. Inhofe; Daniel R. Coats; Mitch McConnell; Rob Portman; Pat Roberts Amici on Behalf of Appellants.

Deborah J. Dewart, Esq. Counsel for Liberty Life and Law Foundation Amicus on Behalf of Appellants

Jason P. Gosselin, Esq. Richard M. Haggerty, Jr., Esq. Counsel for New Jersey Family Policy Council Amicus on Behalf of Appellants.

Steven W. Fitschen, Esq. Counsel for National Legal Foundation; Bradley P. Jacob; Texas Center for Defense of Life Amici on Behalf of Appellees

Charles E. Davidow, Esq. Counsel for National Organization for Women Foundation; National Women's Law Center; Population Connection; Service Employees International Union; Ibis Reproductive Health; MergerWatch; Naral Pro Choice America; Planned Parenthood Association of the Mercer Area Inc.; Planned Parenthood of Central Pennsylvania; Planned Parenthood of Delaware Inc.; Planned Parenthood of Northeast Middle Pennsylvania and Bucks County; Planned Parenthood of Southeastern Pennsylvania; Planned Parenthood of Western Pennsylvania; Raising Women's Voices for the Health Care We Need; Women's Law Project; American Association University Women Amici on Behalf of Appellees.

Emily M. Bell, Esq. Counsel for Breast Cancer Prevention Institute Coalition on Abortion Breast Cancer; Polycarp Research Institute; Amici on Behalf of Appellants

Daniel Mach, Esq. Counsel for American Civil Liberties Union; American Civil Liberties Union of Pennsylvania; Anti Defamation League; Catholics for a Free Choice; Hadassah; Women's Zionist Organization of America Inc. Interfaith Alliance Foundation; National Coalition of American Nuns; National Council of Women Inc. Religious Coalition for Reproductive Choice Religious Institute; Unitarian Universalist Association; Unitarian Universalist Women's Federation Amici on Behalf of Appellees

Thomas W. Ude, Esq. Counsel for Lambda Legal Defense & Education Fund Inc. Amicus on Behalf of Appellees



COWEN, Circuit Judge.

Appellants Conestoga Wood Specialties Corporation ("Conestoga"), Norman Hahn, Elizabeth Hahn, Norman Lemar Hahn, Anthony Hahn, and Kevin Hahn (collectively, "the Hahns") appeal from an order of the District Court denying their motion for a preliminary injunction. In their Complaint, Appellants allege that regulations promulgated by the Department of Health and Human Services ("HHS"), which require group health plans and health insurance issuers to provide coverage for contraceptives, violate the Religious Freedom Restoration Act, 42 U.S.C. § 2000bb ("RFRA") and the Free Exercise Clause of the First Amendment of the United States Constitution.[1] The District Court denied a preliminary injunction, concluding that Appellants were unlikely to succeed on the merits of their claims. See Conestoga Wood Specialties Corp. v. Sebelius, No. 12-CV-6744, 2013 WL 140110 (E.D. Pa. Jan. 11, 2013). Appellants then filed an expedited motion for a stay pending appeal with this Court, which was denied. See Conestoga Wood Specialties Corp. v. Sec'y of the United States Dep't of Health & Human Servs., No. 13-1144, 2013 WL 1277419 (3d Cir. Feb. 8, 2013). Now, we consider the fully briefed appeal from the District Court's denial of a preliminary injunction.

Before we can even reach the merits of the First Amendment and RFRA claims, we must consider a threshold issue: whether a for-profit, secular corporation is able to engage in religious exercise under the Free Exercise Clause of the First Amendment and the RFRA. As we conclude that for-profit, secular corporations cannot engage in religious exercise, we will affirm the order of the District Court.


In 2010, Congress passed the Patient Protection and Affordable Care Act, Pub. L. No. 111-148 (March 23, 2010) ("ACA"). The ACA requires employers with fifty or more employees to provide their employees with a minimum level of health insurance. The ACA requires non-exempt group plans to provide coverage without cost-sharing for preventative care and screening for women in accordance with guidelines created by the Health Resources and Services Administration ("HRSA"), a subagency of HHS. See 42 U.S.C. § 300gg-13(a)(4).

The HRSA delegated the creation of guidelines on this issue to the Institute of Medicine ("IOM"). The IOM recommended that the HRSA adopt guidelines that require non-exempt group plans to cover "[a]ll Food and Drug Administration approved contraceptive methods, sterilization procedures, and patient education and counseling for women with reproductive capacity."[2] These recommended guidelines were approved by the HRSA. On February 15, 2012, HHS, the Department of the Treasury, and the Department of Labor published final rules memorializing the guidelines. See 77 Fed. Reg. 8725 (Feb. 15, 2012).[3] Under the regulations, group health plans and health insurance issuers are required to provide coverage consistent with the HRSA guidelines in plan years beginning on or after August 1, 2012, unless the employer or the plan is exempt.[4] Appellants refer to this requirement as the "Mandate, " and we use this term throughout this opinion. Employers who fail to comply with the Mandate face a penalty of $100 per day per offending employee. See 26 U.S.C. § 4980D. The Department of Labor and plan participants may also bring a suit against an employer that fails to comply with the Mandate. See 29 U.S.C. § 1132.


The Hahns own 100 percent of the voting shares of Conestoga. Conestoga is a Pennsylvania for-profit corporation that manufactures wood cabinets and has 950 employees. The Hahns practice the Mennonite religion. According to their Amended Complaint, the Mennonite Church "teaches that taking of life which includes anything that terminates a fertilized embryo is intrinsic evil and a sin against God to which they are held accountable." (Am. Compl. ¶ 30.)[5] Specifically, the Hahns object to two drugs that must be provided by group health plans under the Mandate that "may cause the demise of an already conceived but not yet attached human embryo." (Id. at ¶ 45.) These are "emergency contraception" drugs such as Plan B (the "morning after pill") and ella (the "week after pill"). The Amended Complaint alleges that it is immoral and sinful for Appellants to intentionally participate in, pay for, facilitate, or otherwise support these drugs. (Id. at ¶ 32.) Conestoga has been subject to the Mandate as of January 1, 2013, when its group health plan came up for renewal. As a panel of this Court previously denied an injunction pending appeal, Conestoga is currently subject to the Mandate, and in fact, Appellants' counsel represented during oral argument that Conestoga is currently complying with the Mandate.


We review a district court's denial of a preliminary injunction for abuse of discretion, but review the underlying factual findings for clear error and questions of law de novo. Am. Express Travel Related Servs. v. Sidamon-Eristoff, 669 F.3d 359, 366 (3d Cir. 2012). The District Court had jurisdiction over this case under 28 U.S.C. § 1331. This Court has appellate jurisdiction under 28 U.S.C. § 1292(a)(1).

"A party seeking a preliminary injunction must show: (1) a likelihood of success on the merits; (2) that it will suffer irreparable harm if the injunction is denied; (3) that granting preliminary relief will not result in even greater harm to the nonmoving party; and (4) that the public interest favors such relief." Kos Pharms, Inc. v. Andrx Corp., 369 F.3d 700, 708 (3d Cir. 2004). A plaintiff seeking an injunction must meet all four criteria, as "[a] plaintiff's failure to establish any element in its favor renders a preliminary injunction inappropriate." NutraSweet Co. v. Vit-Mar Enters., Inc., 176 F.3d 151, 153 (3d Cir. 1999). This is the same standard applied in the District Court, and, on appeal, no party has questioned its accuracy.[6] We will first consider whether Appellants are likely to succeed on the merits of their claim, beginning with the claims asserted by Conestoga, a for-profit, secular corporation.



First, we turn to Conestoga's claims under the First Amendment. Under the First Amendment, "Congress shall make no law respecting the establishment of religion or prohibiting the free exercise thereof." The threshold question for this Court is whether Conestoga, a for-profit, secular corporation, can exercise religion. In essence, Appellants offer two theories under which we could conclude that Conestoga can exercise religion: (a) directly, under the Supreme Court's recent decision in Citizens United, and (b) indirectly, under the "passed through" method that has been articulated by the Court of Appeals for the Ninth Circuit. We will discuss each theory in turn.

In Citizens United, the Supreme Court held that "the Government may not suppress political speech on the basis of the speaker's corporate identity, " and it accordingly struck down statutory restrictions on corporate independent expenditure. Citizens United v. Fed Election Comm'n, 558 U.S. 310, 365 (2010). Citizens United recognizes the application of the First Amendment to corporations generally without distinguishing between the Free Exercise Clause and the Free Speech Clause, both which are contained within the First Amendment. Accordingly, whether Citizens United is applicable to the Free Exercise Clause is a question of first impression. See Hobby Lobby Stores, Inc. v. Sebelius, 133 S.Ct. 641, 643 (2012) (Sotomayor, Circuit Justice) ("This court has not previously addressed similar RFRA or free exercise claims brought by closely held for"profit corporations and their controlling shareholders . . . .").

While "a corporation is 'an artificial being, invisible, intangible, and existing only in contemplation of law, ' . . . a wide variety of constitutional rights may be asserted by corporations." Consol. Edison Co. of N.Y., Inc. v. Pataki, 292 F.3d 338, 347 (2d Cir. 2002) (quoting Dartmouth Coll. v. Woodward, 17 U.S. (4 Wheat.) 518, 636 (1819) (Marshall, C.J.)) In analyzing whether constitutional guarantees apply to corporations, the Supreme Court has held that certain guarantees are held by corporations and that certain guarantees are "purely personal" because "the 'historic function' of the particular guarantee has been limited to the protection of individuals." First Nat'l Bank of Boston v. Bellotti, 435 U.S. 765, 778 n.14 (1978) (internal citation omitted). The Bellotti Court observed:

Corporate identity has been determinative in several decisions denying corporations certain constitutional rights, such as the privilege against compulsory self-incrimination, Wilson v. United States, 221 U.S. 361, 382-386, 31 S.Ct. 538, 545-546, 55 L.Ed. 771 (1911), or equality with individuals in the enjoyment of a right to privacy, California Bankers Assn. v. Shultz, 416 U.S. 21, 65-67, 94 S.Ct. 1494, 1519-1520, 39 L.Ed.2d 812 (1974); United States v. Morton Salt Co., 338 U.S. 632, 651-652, 70 S.Ct. 357, 368-369, 94 L.Ed. 401 (1950), but this is not because the States are free to define the rights of their creatures without constitutional limit. Otherwise, corporations could be denied the protection of all constitutional guarantees, including due process and the equal protection of the laws. Certain "purely personal" guarantees, such as the privilege against compulsory self-incrimination, are unavailable to corporations and other organizations because the "historic function"of the particular guarantee has been limited to the protection of individuals. United States v. White, 322 U.S. 694, 698-701, 64 S.Ct. 1248, 1251-1252, 88 L.Ed. 1542 (1944). Whether or not a particular guarantee is "purely personal" or is unavailable to corporations for some other reason depends on the nature, history, and purpose of the particular constitutional provision.

Id. Thus, we must consider whether the Free Exercise Clause has historically protected corporations, or whether the "guarantee is 'purely personal' or is unavailable to corporations" based on the "nature, history, and purpose of [this] particular constitutional provision." Id.

In Citizens United, the Supreme Court pointed out that it has "recognized that First Amendment protection extends to corporations." Citizens United, 558 U.S. at 342. It then cited to more than twenty cases, from as early as the 1950's, including landmark cases such as New York Times Co. v. Sullivan, 376 U.S. 254 (1964), in which the Court recognized that First Amendment free speech rights apply to corporations. See id The Citizens United Court particularly relied on Bellotti, which struck down a state"law prohibition on corporate independent expenditures related to referenda issues. Bellotti held:

We thus find no support in the First or Fourteenth Amendment, or in the decisions of this Court, for the proposition that speech that otherwise would be within the protection of the First Amendment loses that protection simply because its source is a corporation that cannot prove, to the satisfaction of a court, a material effect on its business or property. [That proposition] amounts to an impermissible legislative prohibition of speech based on the identity of the interests that spokesmen may represent in public debate over controversial issues and a requirement that the speaker have a sufficiently great interest in the subject to justify communication.

Bellotti, 435 U.S. at 784. Discussing Bellotti's rationale, Citizens United stated that the case "rested on the principle that the Government lacks the power to ban corporations from speaking." Citizens United, 558 U.S. at 347; see also Pac. Gas & Elec. Co. v. Pub. Utils. Comm'n of Cal., 475 U.S. 1, 8 (1986) ("The identity of the speaker is not decisive in determining whether speech is protected" as "[c]orporations and other associations, like individuals, contribute to the 'discussion, debate, and the dissemination of information and ideas' that the First Amendment seeks to foster.") (quoting Bellotti, 435 U.S. at 795).

Citizens United is thus grounded in the notion that the Court has a long history of protecting corporations' rights to free speech. Citizens United overruled Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990), a case in which the Court had "uph[eld] a direct restriction on the independent expenditure of funds for political speech for the first time in [this Court's] history." Citizens United, 558 U.S. at 347 (quoting Austin, 494 U.S. at 695 (Kennedy, J., dissenting)). The Citizens United Court found that it was "confronted with conflicting lines of precedent: a pre-Austin line that forbids restrictions on political speech based on the speaker's corporate identify and a post-Austin line that permits them." Id. at 348. Faced with this conflict, the Court decided that Austin was wrongly decided, based on the otherwise consistent line of cases in which corporations were found to have free speech rights.

We must consider the history of the Free Exercise Clause and determine whether there is a similar history of courts providing free exercise protection to corporations. We conclude that there is not. In fact, we are not aware of any case preceding the commencement of litigation about the Mandate, in which a for-profit, secular corporation was itself found to have free exercise rights.[7] Such a total absence of caselaw takes on even greater significance when compared to the extensive list of Supreme Court cases addressing the free speech rights of corporations.

After all, as the Supreme Court observed in Schempp, the purpose of the Free Exercise Clause "is to secure religious liberty in the individual by prohibiting any invasions thereof by civil authority." Sch. Dist. of Abington Twp. v. Schempp, 374 U.S. 203, 223 (1963) (emphasis added). And as the District Court aptly noted in its opinion, "[r]eligious belief takes shape within the minds and hearts of individuals, and its protection is one of the more uniquely 'human' rights provided by the Constitution." Conestoga, 2013 WL 140110, at *7. We do not see how a for-profit "artificial being, invisible, intangible, and existing only in contemplation of law, " Consol. Edison Co., 292 F.3d at 346 ...

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