DENVER — An appeals court said Thursday that Hobby Lobby and a sister company that sells Christian books and supplies can fight the nation's new health care law on religious grounds, ruling the portion of the law that requires them to offer certain kinds of birth control to their employees is particularly onerous, and suggesting the companies shouldn't have to pay millions of dollars in fines while their claims are considered.
The 10th Circuit Court of Appeals in Denver said the Oklahoma City-based arts and crafts chain, along with Mardel bookstores, not only can proceed with their lawsuit seeking to overturn a portion of the Affordable Care Act, but can probably win.
The judges unanimously sent the case back to a lower court in Oklahoma, which had rejected the companies' request for an injunction to prevent full enforcement of the new law.
"Hobby Lobby and Mardel have drawn a line at providing coverage for drugs or devices they consider to induce abortions, and it is not for us to question whether the line is reasonable," the judges wrote. "The question here is not whether the reasonable observer would consider the plaintiffs complicit in an immoral act, but rather how the plaintiffs themselves measure their degree of complicity."
Hobby Lobby Stores Inc., Mardel Inc. and their owners, the Green family, argue for-profit businesses — not just religious groups — should be allowed to seek an exception if the law violates their religious beliefs. The owners approve of most forms of artificial birth control, but not those that prevent implantation of a fertilized egg — such as an IUD or the morning-after pill.
Hobby Lobby is the largest and best-known of more than 30 businesses in several states that have challenged the contraception mandate. A number of Catholic-affiliated institutions have filed separate lawsuits, and the court suggested faith-based organizations can follow for-profit objectives in the secular world.
"A religious individual may enter the for-profit realm intending to demonstrate to the marketplace that a corporation can succeed financially while adhering to religious values. As a court, we do not see how we can distinguish this form of evangelism from any other," they wrote.
A majority of judges couldn't decide whether the Oklahoma court had sufficiently addressed two parts of Hobby Lobby's initial complaint and sent them back for further review at the local level.
Throughout a ruling that covered more than 160 pages, the judges noted Hobby Lobby faced a difficult choice — violate its religious beliefs, pay $475 million in fines for failing to comply with the law (a $100 fine per day for each of its 13,000 workers), or pay $26 million to the government if it dropped its health care plan altogether.
Hobby Lobby and Mardel won expedited federal review because the stores would have faced fines starting Monday for not covering the required forms of contraception. The 10th Circuit judges said the Oklahoma court was wrong to not grant the companies an injunction in the face of serious financial penalties.
Hobby Lobby and other companies challenging the contraception mandate say the morning-after pill is tantamount to abortion because it can prevent a fertilized egg from becoming implanted in a woman's womb. The 10th Circuit heard the case before eight active judges instead of the typical three-judge panel, indicating the case's importance.
The U.S. Department of Justice argued that allowing for-profit corporations to exempt themselves from requirements that violate their religious beliefs would be in effect allowing the business to impose its religious beliefs on employees. In its ruling, the 10th Circuit cited a 2010 U.S. Supreme Court conclusion that for-profit corporations have rights to political expression.
"We see no reason the Supreme Court would recognize constitutional protection for a corporation's political expression but not its religious expression," the judges wrote.
One judge went even further in a concurring opinion.
"No one suggests that organizations, in contrast to their members, have souls," Judge Harris Hartz wrote. "But it does not follow that people must sacrifice their souls to engage in group activities through an organization."
Hobby Lobby calls itself a "biblically founded business" and is closed on Sundays. Founded in 1972, the company now operates more than 500 stores in 41 states and employs more than 13,000 full-time employees who are eligible for health insurance.
Emily Hardman, spokeswoman for the Washington-based Becket Fund for Religious Liberty, which represents Hobby Lobby, called the ruling a "resounding victory for religious freedom."
But Americans United for Separation of Church and State said the judges were wrong.
"This isn't religious freedom; it's the worst kind of religious oppression," executive director Barry Lynn said in a statement.