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Media Alerts - Eden Foods, Inc. v. Sebelius - Sixth Circuit
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December 2, 2013
  Eden Foods, Inc. v. Sebelius - Sixth Circuit
Headline: The Sixth Circuit holds that a secular, for-profit corporation cannot "exercise" religion; thus, if the corporation is governed by the Affordable Care Act, the corporation's health-insurance policy must provide female employees with no-cost contraceptive coverage.

Area of Law: Affordable Care Act; Religious Freedom Restoration Act.

Issue Presented: Did the district court abuse its discretion when it denied the plaintiffs' requests for injunctive relief under the Religious Freedom Restoration Act, 42 U.S.C. §§ 2000bb - 2000bb-4 (RFRA)?

Brief Summary: The plaintiffs, a secular, for-profit corporation and its Roman Catholic sole shareholder, filed a complaint in federal district court, challenging the legality of the Affordable Care Act's contraceptive mandate and seeking a motion for issuance of a temporary restraining order and a preliminary injunction. The district court denied the plaintiffs' motion for injunctive relief, noting that the plaintiffs failed to satisfy their RFRA burden of showing that the contraceptive mandate substantially burdened their exercise of religion. The Sixth Circuit affirmed the district court's denial of the corporate plaintiff's motion for injunctive relief and remanded the case with instructions to dismiss the sole shareholder plaintiff's claims for lack of jurisdiction.

Significance: If a corporation is governed by the Affordable Care Act, the corporation's health-insurance policy must provide female employees with no-cost contraceptive coverage because a secular, for-profit corporation cannot "exercise" religion and an individual's rights under RFRA do not extend to a secular, for-profit corporation that is not the alter ego of its owner.

Extended Summary: The individual plaintiff is the founder, chairperson, president, and sole shareholder of the corporate plaintiff, a secular, for-profit corporation. Because the corporate plaintiff employs more than 50 full-time employees, it is subject to the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010) and the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 (2010), collectively known as the Affordable Care Act. According to the Affordable Care Act, non-exempt, non-grandfathered employers of 50 or more individuals must provide their full-time employees with a minimum level of health insurance.

This minimal level of health insurance mandates employers to provide female employees with health-insurance coverage that complies with the guidelines supported by the Health Resources and Services Administration (HRSA). 42 U.S.C. § 300gg-13(a)(4). HRSA's guidelines require insurance plans to provide female employees with preventative services that include contraceptive methods and contraceptive counseling. But the contraceptive methods and contraceptive counseling guidelines "do not apply to women who are participants or beneficiaries in group health insurance plans sponsored by [non-profit] religious employers."

If a non-exempt employer fails to provide any health-insurance coverage, the non-exempt employer will be imposed an "assessable payment." And if a non-exempt employer fails to provide the required insurance coverage, the non-exempt employer will be imposed significant taxes.

After President Obama signed the Affordable Care Act, the plaintiffs filed a complaint in federal court, challenging the legality of the contraceptive mandate and requesting a temporary restraining order and a preliminary injunction. According to the individual plaintiff, a practicing Roman Catholic, compliance with the contraceptive mandate would substantially burden the plaintiffs' exercise of religion in contravention of the protections afforded by the RFRA.

The district court denied the plaintiffs' request for injunctive relief, noting that the plaintiffs failed to satisfy their RFRA burden of showing that the contraceptive mandate substantially burdened their exercise of religion. And the district court concluded that the plaintiffs did not establish a likelihood of success on their First Amendment free-exercise claim, noting that free-exercise-of-religion rights have never been extended to secular, for-profit corporations that are not the alter egos of their owners. The district court further concluded that the mandate did not infringe on the individual plaintiff's First Amendment rights because the regulation did "not seek to burden religion, but rather to promote public health and gender equality."

The corporate and individual plaintiff appealed to the Sixth Circuit, claiming that they were likely to succeed on their RFRA claims. And pending resolution of the appeal, the plaintiffs sought an injunction that would restore them to the positions they were in before the Affordable Care Act was implemented. The Sixth Circuit denied the plaintiffs' request for an injunction, finding that the plaintiffs had no likelihood of success on the merits. In reaching its conclusion, the Sixth Circuit looked to Autocam Corp. v. Sebelius, 730 F.3d 618 (6th Cir. 2013), a case involving a similar challenge to the Affordable Care Act's contraceptive mandate.

First, the Sixth Circuit dismissed the individual plaintiff's claims for lack of jurisdiction, reasoning that an individual has no standing to challenge obligations placed only upon the corporation. The Court based this decision on basic, well-established principles of corporate law - incorporation "create[s] a distinct legal entity, with legal rights, obligations, powers, and privileges different from those of the natural individuals who created it."

Second, the Sixth Circuit held that the for-profit, secular corporation is not a "person" capable of engaging in religious exercise under the RFRA. Because the corporate plaintiff could not establish a likelihood of success on the merits, the Sixth Circuit held that the district court did not abuse its discretion when it denied the corporate plaintiff's request for injunctive relief.

Thus, the Sixth Circuit affirmed the district court's denial of the corporate plaintiff's motion for a preliminary injunction and remanded the case to the district court with instructions to dismiss the individual plaintiff's claims for lack of jurisdiction.

Link to Full Opinion: http://www.ca6.uscourts.gov/op...13a0304p-06.pdf


Panel: Daughtrey, Cole, and White

Argument: October 24, 2013

Date of Issued Opinion: October 24, 2013

Docket Number: 13-1677

Decided: Affirmed in part, and remanded in part with instructions to dismiss the individual plaintiff's claims for lack of jurisdiction.

Case Alert Author: Sandra Reizen

Counsel: Erin Elizabeth Mersino, THOMAS MORE LAW CENTER, Ann Arbor, Michigan, for Appellants. Mark B. Stern, Alisa B. Klein, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellees. Mailee R. Smith, AMERICANS UNITED FOR LIFE, Washington, D.C., Kimberlee Wood Colby, CENTER FOR LAW AND RELIGIOUS FREEDOM CHRISTIAN LEGAL SOCIETY, Springfield, Virginia, Deborah J. Dewart, LIBERTY, LIFE, AND LAW FOUNDATION, Swansboro, North Carolina, Thomas W. Ude, Jr., LAMBDA LEGAL AND DEFENSE AND EDUCATION FUND, INC., New York, New York, Camilla B. Taylor, LAMBDA LEGAL DEFENSE AND EDUCATION FUND, INC., Chicago, Illinois, Jennifer C. Pizer, LAMBDA LEGAL DEFENSE AND EDUCATION FUND, INC., Los Angeles, California, Charles E. Davidow, PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP, Washington, D.C., Bruce H. Schneider, STROOCK & STROOCK & LAVAN LLP, New York, New York, Daniel Mach, AMERICAN CIVIL LIBERTIES UNION FOUNDATION, Washington, D.C., Ayesha N. Khan, Gregory M. Lipper, Caitlin E. O'Connell, AMERICANS UNITED FOR SEPARATION OF CHURCH AND STATE, Washington, D.C., Jessica Ellsworth, HOGAN LOVELLS
US LLP, Washington, D.C., for Amici Curiae.

Author of Opinion: Circuit Judge Martha Craig Daughtrey

Case Alert Circuit Supervisor: Professor Tammy Asher

    Posted By: Mark Cooney @ 12/02/2013 09:52 AM     6th Circuit  

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