Friday, January 4, 2013

Citzens United and freedom from Obamacare

One thing that some lawyers like to do is to wreck the weekend of their adversary. For example, a lot of lawyers like to serve motion papers late in the day on a Friday. This is particularly true of expedited motions, like one for a temporary restraining order, that do not follow longer briefing schedules. Apparently the desire to drop bombs on a Friday does not go away when one becomes a judge. 

Last Friday, the Seventh Circuit Court of Appeals issued an order granting an injunction pending appeal. You can read it here. What did the Seventh Circuit enjoin? It prohibited the government from enforcing the contraception mandate in Obamacare against Cryil B. Korte, Jane Korte, and Korte & Luitjohan Contractors, Inc

According to the order, Korte & Luitjohan Contractors, Inc., is a construction company that employs 90 people.  Mr. Korte and Ms. Korte own 88% of the corporation. The Kortes are Roman Catholic and "seek to manage their company in a manner consistent with their Catholic faith."  One imagines that mostly this is pretty easy to do given that Jesus Christ did not say much about the construction industry (although he was a carpenter before he started preaching). However, keeping construction Catholic* got a lot more difficult because Obamacare requires coverage be provided for all FDA-approved contraceptive methods and sterilization procedures. The Roman Catholic church frowns on contraception.

Despite the fact that their current health care plan provides this coverage, the Kortes are unhappy that they may have to pay insurance premiums to that may result in employees getting contraceptives. They believe that the contraception mandate requires them to violate their religious beliefs. So, they filed suit to get an order preventing the government from requiring the company to provide this insurance to their employees.  This district court denied their request for a preliminary injunction and the Seventh Circuit reversed. Judges Diane S. Sykes and Joel M. Flaum voted to grant the injunction while Ilana Diamond Rovner dissented. For those who keep score of such things, all three judges were appointed by Republicans.

To get a preliminary injunction, the Kortes have to show that they are likely to win their lawsuit and that they will suffer an irreparable harm if they were not granted the injunction. 

With respect to the irreparable harm factor, the Seventh Circuit said that without an injunction Mr. and Ms. Korte will be forced to chose between violating their religious beliefs by maintaining insurance coverage in contravention of their faith or paying substantial penalties. Sounds bad right?  But normally money damages are not irreparable harm. If it turns out that they win their lawsuit, Mr. and Ms. Korte would undoubtedly be entitled to get whatever penalties they paid refunded. Moreover, as Judge Rovner notes in the dissent, the Mr. and Ms. Korte are already violating their religious beliefs by providing the contraceptive coverage to their employees. Mr. and Ms. Korte claim that they were unaware of this until shortly before they filed the lawsuit. Yet, it appears that they are still providing the coverage since the lawsuit started.

Regarding the likelihood of success, the Judges agreed with the Kortes that Obamacare burdens their exercise of religion and that the United States' reason for doing so was not compelling enough to survive strict scrutiny. This is where things get weird.

One might think, well Mr. and Ms. Korte do not employ or provide insurance to anyone. The company they own 88% of does those things. One might think, since the corporate form protects liability of the company from passing through to the Kortes, that the corporate form also protects the employees of the company from the whims of Mr. and Ms. Korte's religious beliefs. In the Seventh Circuit, one would be wrong.

Why would one be wrong? If I said that Citizens United was involved, one might think "corporations can have religious beliefs now?" But that isn't the reason.  Instead, according to Judges Sykes and Flaum, Citizens United stands for the proposition that one disregards the corporate form when considering the constitutional rights of shareholders of the company. Notably, the citation to Citizens United is "see generally" and not a citation to any particular quote or even page of the Citizens United decision.

Do we take this to mean that everyone who thinks that Citizens United is about the First Amendment rights of corporations is wrong?  Also, if the constitutional rights of shareholders can be attributed to the corporation how many shareholders have to agree on enforcing the right? Mr. and Ms. Korte own 88% of the company. It is not clear from the decision whether the owner(s) of the other 12% have the same religious views. But what if they did not? Suppose 50.1% of the shareholders in a company want to speak out in favor of candidate A but 49.9% of the shareholders want to speak out in favor of candidate B. The minority shareholders in a publicly traded company can easily sell their shares in such a situation. However, shareholders in a non-publicly traded company cannot easily sell their shares. 

The dissent does not really discuss this. Instead, Judge Rovner focuses on the fact that the company, and not Mr. or Ms. Korte, is paying for insurance. No one knows whether any of the insured employees will use the insurance in a way that Mr. or Ms. Korte finds objectionable (if you look at the "our team" page on the company's website, you might conclude that none of them are using the insurance for contraceptives or sterilization). Even if some do, it is the insurance company and not Mr. and Ms. Korte (or their company) that ultimately pays for contraceptives or sterilization. Addressing the question of whether an employer has the right to presumptively declare that their company need not pay for insurance which covers particular types of medical care to which they object despite the fact that neither the company nor the owners are involved in the decision to use the services and do not directly pay for the services, Judge Rovner writes,
If an employer has this right, it is not clear to me what limits there might be on the ability to limit the insurance coverage the employer provides to its employees, for any number of medical services (or decisions to use particular medical services in particular circumstances) might be inconsistent with an employer's (or its individual owners') individual religious beliefs.
I do not see a limiting principle either. But maybe I am missing something. I am sure Mr. Torvik will tell me if I am.  Note however, that the majority does not provide a limiting principle.

On a side note, Mr. Korte may not be a stranger to civil litigation. According to this story in the Madison-St. Clair Record, a man named Cyril B. Korte sued Hunter’s Manufacturing Company d/b/a Tenpoint Crossbow Technologies and Cabela’s over a crossbow accident that resulted in the loss of Mr. Korte's thumb. What is the value of a lost thumb? According to Mr. Korte's complaint, $600,000 is fair compensation for losing the ability to grab things. 

What do you think Mr. Torvik? Would you give up a thumb for $600,000? Is there a limiting principle?  Does the Seventh Circuit read Citizens United differently than everyone else? Is that reading correct?

*Mr. Torvik, please trademark this phrase ASAP. 

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