Hobby Lobby case empowers millions of businesses to sue government, experts say

July 06--WASHINGTON -- Will the religious beliefs of Minnesota business owners enable them to avoid paying for employees' birth control?

More than 200,000 of the state's companies confront that question after last week's Supreme Court ruling that sided with two private businesses with religious objections to the requirement. The 5-4 split among the justices has ignited a heated national debate about how and when principles of personal faith should trump public policies.

Legal scholars say the answer is still unclear. The decision lacked precise guidelines as to which businesses it covers, for example, or what qualifies as a religious belief.

The court's majority opinion "could lead to a lot of litigation and turmoil," said Hamline University law Prof. Carol Swanson. "The decision is generous in opening the door for companies. ... I would be shocked if there were not more suits."

Lawyers involved in the battle over government dictates, women's rights and religious liberty interpret the majority opinion differently.

Minneapolis lawyer Erick Kaardal represents seven faith-based Minnesota companies suing the government to avoid paying for health insurance that includes female birth control. He believes the court's decision is narrow and will only attract a handful of new filings by believers.

"How many people are we talking about who want to work out their faith through their business?" he said.

Too many, countered Gretchen Borchelt, senior counsel at the National Women's Law Center, which is seeking federal legislation to head off the fallout. "We think there will be new lawsuits and a campaign by opponents of birth control to get employers to drop coverage," she said.

Minnesota law professors said the justices' ruling lacks critical details about who gets to sue and what constitutes protected religious beliefs. Those details will have to be worked out case by case in lower courts.

"One might have wished for a little more guidance," said Daniel Kleinberger, a professor at William Mitchell College of Law. "We're probably looking at 10 years of slicing and dicing. That's a very difficult way for the country to move forward."

The biggest uncertainty is that the court said its decision applies only to "closely held" businesses. But in Minnesota and across the country, that description can be applied to well over 90 percent of all businesses, said Hamline University law Prof. Joseph Olsen.

The Supreme Court case involved Hobby Lobby, an arts and crafts store chain with 13,000 employees, and Conestoga Wood Specialties, a cabinet manufacturer with 950 workers.

For general legal purposes, however, a closely held business is defined not by how many people it employs but by the fact that it has a limited number of shareholders, offers no public market for its stock and its owners run day-to-day operations.

"Many closely held businesses are family businesses," said Kleinberger, who teaches a course on the subject and has written a law-review article on it. "But many are not. Nothing in this decision distinguishes."

In Minnesota, the law defines closely held businesses as those with 35 or fewer shareholders.

The last state census of business ownership was 35 years ago. At that time, 98 percent of all the state's businesses were considered closely held, said Bert Black, legal adviser to the secretary of state. Black suspects that all but a few of the state's current 257,000 corporations and limited liability companies still meet the criteria to be called closely held.

It is a flexible standard. The Internal Revenue Service, for instance, defines closely held companies as those with up to 100 owners, said John Matheson, director of the Corporate Institute at the University of Minnesota Law School.

Birth control and beyond

Minnesota-based Cargill, one of the world's biggest private companies with $136 billion in annual revenues and 140,000 employees, is legally considered a closely held business.

In an e-mail to the Star Tribune, company spokesman Tim Loesch said Cargill covers female birth control in employees' health insurance and will continue to do so.

Still, the Supreme Court decision in the Hobby Lobby case could conceivably be applied to millions of businesses, agreed Swanson, Matheson, Kleinberger and Olsen. Its impact will be determined by how many of those companies choose to challenge government mandates.

"A lot more companies with religious beliefs will be able to sue under the decision," Olsen said. But most companies "don't allow personal religious beliefs to get in the way of making money."

Though he expects no flood of new litigation, Kaardal thinks the decision extends beyond birth control to other sincerely held principles of faith that may run counter to law or public policy.

Kleinberger agreed, but said that is only the first step.

"The decision says a small group of closely related people does not have their personal religious beliefs negated by forming a company," Kleinberger said. "Then, the analysis begins."

Expanded meaning

That analysis, carried out in courts, determines if a "compelling state interest" exists to keep the business owners from acting on their beliefs. The Hobby Lobby ruling doesn't say women have no right to contraception, Kleinberger maintained, but "implies that there is not a compelling state interest in requiring individuals [with religious objections] to provide contraceptive coverage."

While Kaardal calls that "the exciting part of the decision," Borchelt sees it as "disturbing."

The court, she said, was "very deferential" in taking people's word about religious beliefs that could shield them from all sorts of government rules.

In dissenting from the 5-4 decision, Justice Ruth Bader Ginsburg wondered if the new legal interpretation would allow businesses to use religious beliefs to choose whom they employ and whom they serve.

She cited a 1985 Minnesota case in which "born-again Christians who owned closely held, for-profit health clubs" believed the Bible forbade them from hiring couples who lived together outside of marriage, women who did not have their father's or husband's permission to work and "fornicators and homosexuals."

The club's owners lost that case when the Minnesota Supreme Court decided public interest outweighed individual rights.

More problematic are religiously rooted beliefs that could have an impact on employees' health. If owners of a closely held business don't believe in vaccinations for religious reasons, would they have to pay for that coverage in employees' health insurance? Ginsburg asked in her dissent.

Hamline's Olsen thought not. The Hobby Lobby decision says the government cannot force businesses to pay for something that violates owners' religious principles.

"If giving you an [intrauterine device] is not required," Olsen reasoned, "giving you a vaccination is not required."

Kleinberger believes companies would have to pay.

"Even a genuine belief against vaccination has to yield to public health," he said. "No one has made an argument that the presence or absence of contraception is life-threatening."

Jim Spencer -- 202-383-6123

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