William D. GROTE, III, et al., Plaintiffs-Appellants, v. Kathleen SEBELIUS, in her official capacity as the Secretary of the United States Department of Health and Human Services, et al., Defendants-Appellees.
No. 13-1077.
United States Court of Appeals, Seventh Circuit.
Jan. 30, 2013.
Fourth, the district court faulted Yellowbook for providing only the lawyer‘s time detail, not the amount actually paid by Yellowbook. This is a permissible consideration, and a court would not abuse its discretion in putting less weight on evidence of rates that have not necessarily been paid. See United Ass‘n of Journeymen & Apprentices of the Plumbing & Pipe Fitting Indus. v. Jack‘s Heating, Air Conditioning & Plumbing, Inc., 2013-Ohio-144, at ¶ 24, 2013 WL 221651 (Ct. App. 2013) (“Courts have recognized that merely submitting an attorney‘s itemized bill is insufficient to establish the reasonableness of the amount of work billed.“). But requests for more documentation and percentage reductions will generally be the appropriate response, not flat denial.
Finally, the district court referred to the possibility of downward adjustment due to limited results. Such a reduction would not be an abuse of discretion, although here the analysis must be redone in light of the reversal of summary judgment. A downward adjustment might also be possible, as Brandeberry suggests, if the time spent by Yellowbook‘s lawyers was inordinate. See Unick, 2011-Ohio-1342, at ¶ 28 (quoting Hensley, 461 U.S. at 437, 103 S.Ct. 1933) (“The hours worked should be necessary to the action and should not include ‘hours that are excessive, redundant, or otherwise unnecessary.‘“) Our remand does not, moreover, preclude a denial of fees on discretionary grounds. Under Ohio law, the decision to award attorney‘s fees is discretionary; a trial court may decline to award attorney‘s fees if the court determines that punitive damages are adequate to compensate the plaintiff, punish the defendant, and deter similar conduct. Regal Cinemas, Inc. v. W & M Props., 90 Fed.Appx. 824, 834 (6th Cir. 2004) (citing Digital & Analog Design Corp. v. N. Supply Co., 63 Ohio St.3d 657, 590 N.E.2d 737, 743 (1992)). The court may exercise this discretion “even if a jury has determined that such fees should be awarded.” Toole v. Cook, No. 98AP-486, 1999 WL 280804, at *9 (Ohio Ct. App. 1999).
V
For the foregoing reasons, the decision of the district court granting summary judgment for Brandeberry and denying summary judgment for Yellowbook is REVERSED and REMANDED for grant of appropriate injunctive relief and determination of damages for trademark infringement. As damages have already been assessed for tortious interference against American Telephone, additional compensatory damages may be duplicative, unless Brandeberry continues to infringe the AMTEL mark after judgment. The denial of attorney‘s fees is REVERSED and REMANDED.
Jacek Pruski, Department of Justice, Washington, DC, for Defendants-Appellees.
Before JOEL M. FLAUM, Circuit Judge, ILANA DIAMOND ROVNER, Circuit Judge, DIANE S. SYKES, Circuit Judge.
* This order was initially released in typescript.
ORDER
The following are before the court:
- PLAINTIFFS-APPELLANTS’ MOTION FOR AN INJUNCTION PENDING APPEAL, filed on January 11, 2013, by counsel for the appellants.
OPPOSITION TO PLAINTIFFS’ MOTION FOR AN INJUNCTION PENDING APPEAL, filed on January 17, 2013, by counsel for the appellees. - PLAINTIFFS-APPELLANTS’ REPLY IN SUPPORT OF THEIR MOTION FOR AN INJUNCTION PENDING APPEAL, filed January 24, 2013, by counsel for the appellants.
Members of the Grote Family and their company, Grote Industries, appeal the district court‘s order denying their motion for a preliminary injunction against the enforcement of provisions of the Patient Protection and Affordable Care Act (“ACA“) and related regulations that require Grote Industries to provide coverage for contraception and sterilization procedures in its group health-insurance plan.1 They have moved for an injunction pending appeal. See
The Grote Family owns Grote Industries, a privately held, family-run business headquartered in Madison, Indiana. Grote Industries manufactures vehicle safety systems. The company has 1,148 full-time employees working at various locations and provides a group health-insurance plan for the benefit of its employees. The plan is self-insured and renews every year on January 1.
The members of the Grote Family are Catholic and operate their business in accordance with the precepts of their faith, including the Catholic Church‘s teachings regarding the moral wrongfulness of abortifacient drugs, contraception, and sterilization. Consistent with the Grote Family‘s religious commitments, before January 1, 2013, the Grote Industries health-insurance plan did not cover abortifacient drugs, contraception, or sterilization.
The ACA and accompanying regulations mandate that the Grote Industries health-insurance plan provide no-cost coverage for all FDA-approved contraceptives, sterilization procedures, and related services. In brief, the regulatory framework imposing this mandate is as follows: The ACA requires nongrandfathered and nonexempt group health-insurance plans to cover certain preventive health services without cost-sharing, see
The Grote Family and Grote Industries filed suit on October 29, 2012, seeking declaratory and injunctive relief blocking the enforcement of the contraception mandate against them. They assert constitutional claims under the Free Exercise, Establishment, and Free Speech Clauses of the First Amendment, and the Due Process Clause of the Fifth Amendment, as well as claims alleging violations of the Religious Freedom Restoration Act (“RFRA“),
The following day we issued our order in Korte granting the motion for an injunction pending appeal, 2012 WL 6757353, at *1, prompting the Grote Family and Grote Industries to request reconsideration in the district court.2 On January 3, 2013, the district court, aware of our decision in Korte, denied the motion for reconsideration. The court acknowledged the similarities between Korte and this case but declined to follow our order in Korte, emphasizing that it was not a precedential ruling on the merits. Grote Indus., LLC v. Sebelius, 2013 WL 53736, at *1 (S.D. Ind. Jan. 3, 2013). This appeal followed. See
There is no material distinction between the motion in this case and the one we addressed and granted in Korte. There, we considered the likelihood of success of a claim brought by a secular, for-profit corporation owned and operated by a Catholic family in accordance with the teachings of the Catholic faith. Korte, 2012 WL 6757353, at *1. The Kortes, like the Grote Family here, sued for declaratory and injunctive relief in the form of an exemption from the requirements of the contraception mandate. The Kortes’ company, K & L Contractors, provided a group health-insurance plan for its nonunion employees. In August 2012 the Kortes discovered that the plan included coverage for contraception and wanted to replace it with a plan that conforms to the requirements of their faith, but the contraception mandate prevented them from doing so. Id. They sued the HHS Secretary asserting (among other claims for relief) that the mandate violated their rights under RFRA. They moved for a preliminary injunction, but the district court denied the motion. The Kortes and their company (collectively, “the Kortes“) appealed. They asked us for an injunction pending appeal, and we granted the motion. Reserving plenary review for later in the appeal, we held that the Kortes had established a reasonable likelihood of success on their RFRA claim. Id. at *3-4. We also held that the equitable balance tipped in favor of granting the injunction; the harm to the Kortes’ religious-liberty rights outweighed the temporary harm to the government‘s interest in providing greater access to cost-free contraception and related services. Id. at *4-5.
In all important respects, this case is identical to Korte; our analysis there applies with equal force here. If anything, the Grote Family and Grote Industries have a more compelling case for an injunction pending appeal. Unlike the health-insurance plan at issue in Korte, the Grote Industries health plan is self-insured and has never provided contraception coverage. Absent an injunction, the Grote Family and Grote Industries must now cover abortifacient drugs, contraception, and sterilization through the company‘s self-insured health plan. Thus, the only factual distinctions between the two cases actually strengthen the equities in favor of granting an injunction pending appeal.
And the legal analysis has not changed. The Grote Family and Grote Industries make essentially the same arguments as did the Kortes. They maintain that the legal duties imposed on them by the contraception mandate conflict with the religious duties required by their faith, and they cannot comply with both. The mandate, they contend, compels them to materially cooperate in a grave moral wrong contrary to the teachings of their church and levies severe financial penalties if they do not comply. In this way, they argue, the mandate substantially burdens their free-exercise rights, triggering the strict-scrutiny test codified in RFRA. As we noted in Korte, this “is an exacting standard, and the government bears the burden of satisfying it.” Id. at *2.
In response the government advances the same arguments as it did in Korte. To abbreviate, the government maintains that (1) a secular, for-profit corporation cannot assert a claim under RFRA; (2) relatedly, the free-exercise rights of the individual plaintiffs are not affected because their corporation is a separate legal entity; and (3) the mandate‘s burden on their free-exercise rights is too remote and attenuated to qualify as “substantial” under RFRA because the decision to use contraception benefits is made by third parties—individual employees, in consultation with their medical providers. We addressed these arguments in our order in Korte, and nothing presented here requires us to reconsider that prior ruling. Here, as in Korte, the Grote Family‘s use of the corporate form is not dispositive of the claim. See Korte, 2012 WL 6757353, at *3 (citing Citizens United v. Fed. Election Comm‘n, 558 U.S. 310, 130 S.Ct. 876, 175 L.Ed.2d 753 (2010)).
And as in Korte, the government has not, at this juncture, made an effort to satisfy strict scrutiny. In particular, it has not demonstrated that requiring religious objectors to provide cost-free contraception coverage is the least restrictive means of increasing access to contraception. Although we again reserve plenary review of the merits for later in this appeal, for the reasons explained more thoroughly in our order in Korte, at *2-5, we conclude that the Grote Family and Grote Industries have established a reasonable likelihood of success on the merits of their RFRA claim. We also conclude that they will suffer irreparable harm absent an injunction pending appeal, and the balance of harms tips in their favor.
IT IS ORDERED that the motion for an injunction pending appeal is GRANTED. The defendants are enjoined pending resolution of this appeal from enforcing the contraception mandate against the Grote Family and Grote Industries.
IT IS FURTHER ORDERED that this case is consolidated with Korte. Oral argument will be scheduled by separate order when briefing has been completed.
ROVNER, Circuit Judge, dissenting.
As a result of the court‘s decision to consolidate this appeal with Korte v. Sebelius, No. 12-3841, the Grote appellants’ request for an injunction pending appeal comes before the same panel that ordered preliminary relief in Korte. See Korte v. Sebelius, 2012 WL 6757353 (7th Cir. Dec. 28, 2012) (unpublished order). I recognize that the arguments in favor of preliminary relief in Grote are in some ways stronger than those in Korte (for example, the Grotes’ company was not already covering contraceptive care when the new federal mandate took effect, whereas the Kortes’ company was). Despite the differences between the two appeals, I am no more persuaded that preliminary injunctive relief is warranted in Grote than I was in Korte. Specifically, the appellants have not, in my view, shown that they are reasonably likely to prevail on the merits of their claims. See Cavel Int‘l, Inc. v. Madigan, 500 F.3d 544, 547-48 (7th Cir. 2007). With the benefit of the memoranda submitted by the parties in Grote and additional time to contemplate some of the issues presented by these appeals, I write separately here to expand on the doubts I expressed in Korte.
Of the multiple theories of relief that the Grote plaintiffs have so far articulated in this litigation (and which were given thorough treatment in the district court‘s orders below), the only one invoked in this court as a basis for preliminary relief pending appeal is their claim under the Religious Freedom Restoration Act of 1993,
I begin my analysis with a threshold point: on the record before us, it is only the Grotes, and not the corporate entities, which can claim to have a right to exercise religious freedoms. Grote Industries (by which I mean to include both Grote Industries, LLC and Grote Industries, Inc.) is a secular, for-profit business engaged in the manufacture of vehicle safety systems. So far as the limited record before us reveals, it has stated no religious goals as part of its mission, it does not select its employees, vendors, or customers on the basis of their religious beliefs, and it does not require its employees to conform their behavior to any particular religious precepts. As such, I cannot imagine that the company, as distinct from the Grotes, has any religious interests or rights to assert here.1
To be sure, a secular corporation does have some types of First Amendment rights: it has the right to engage in commercial speech in the promotion of its products, for example, see generally Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm‘n of N.Y., 447 U.S. 557, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980), and in pursuit of its interests as a corporate citizen, it has the right to articulate what government policies it supports or opposes and to spend money in the political arena in pursuit of its commercial agenda, see Citizens United v. Fed. Election Comm‘n, 558 U.S. 310, 130 S.Ct. 876, 175 L.Ed.2d 753 (2010). Moreover, there do exist some corporate entities which are organized expressly to pursue religious ends, and I think it fair to assume that such entities may have cognizable religious liberties independent of the people who animate them, even if they are profit-seeking. See, e.g., Tyndale House Publishers, Inc. v. Sebelius, — F.Supp.2d —, 2012 WL 5817323, at *6-*7 (D.D.C. Nov. 16, 2012) (for-profit publisher of Christian texts, owned by not-for-profit religious foundation and related trusts which directed publisher‘s profits to religious charity and educational work); see also Corp. of Presiding Bishop of Church of Jesus Christ of Latter-day Saints v. Amos, 483 U.S. 327, 345 n. 6, 107 S.Ct. 2862, 2873, 97 L.Ed.2d 273 (1987) (Brennan, J., concurring in the judgment) (“it is ... conceivable that some for-profit activities could have a religious character“).1 Indeed, there is a regulatory ex-
This brings me back to a point that I made in Korte, namely that it is the corporation, rather than its owners, which is obligated to provide the contraceptive coverage to which the owners are objecting. Korte v. Sebelius, 2012 WL 6757353, at *5 (Rovner, J., dissenting). Grote Industries is a closely-held, family-owned firm, and I suspect there is a natural inclination for the owners of such companies to elide the distinction between themselves and the companies they own.2 But there is a distinction, and it matters in important respects. See Korte v. U.S. Dep‘t of Health & Human Servs., — F.Supp.2d —, —, 2012 WL 6553996, at *9 (S.D. Ill. Dec. 14, 2012) (“business forms and so-called ‘legal fictions’ cannot be entirely ignored” in assessing the relationship between corporate entity and owners for purposes of RFRA). Both Grote Industries, Inc., and its subsidiary, Grote Industries, LLC, have legal identities that are separate from those of the Grotes. “[I]ncorporation‘s basic purpose is to create a distinct legal entity, with legal rights, obligations, powers, and privileges different from those of the natural individuals who created it, who own it, or whom it employs.” Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 163, 121 S.Ct. 2087, 2091, 150 L.Ed.2d 198 (2001). Although the corporations’ income flows to the Grotes, the corporate form significantly limits the Grotes’ liability; the corporations, unlike the Grotes, have potentially unlimited life spans; and ownership of the corporations may be transferred from the Grotes to others. More to the point, it is Grote Industries that employs over 1,100 people around the world, not the Grotes themselves; it is Grote Industries which, as the employer, sponsors a health care plan for the company‘s employees; and it is that health plan which is now obligated by the Affordable Care Act and resulting regulations to provide contraceptive coverage to the 464 employees who work in the UnitedStates. Indeed, as the government points out, the health plan itself is a distinct legal entity. See
I recognize that the Grote Industries health plan is self-funded, so the additional level of separation provided by an insurance company, which was present in Korte, is missing here. See Tyndale House Publishers, 2012 WL 5817323, at *13 (finding this to be a “crucial distinction“). My fundamental point remains the same, however: the obligation to cover contraceptives falls not on the Grotes personally but on Grote Industries’ health care plan. Furthermore, the money used to fund that plan belongs to the company, not to the Grotes. The owners of an LLC or corporation, even a closely-held one, have an obligation to respect the corporate form, on pain of losing the benefits of that form should they fail to do so. See, e.g., Wachovia Sec., LLC v. Banco Panamericano, Inc., 674 F.3d 743 (7th Cir. 2012); Laborers’ Pension Fund v. Lay-Com, Inc., 580 F.3d 602 (7th Cir. 2009). The Grotes are not at liberty to treat the company‘s bank accounts as their own; co-mingling personal and corporate funds is a classic sign that a company owner is disregarding the corporate form and treating the business as his alter ego. See, e.g., Van Dorn Co. v. Future Chem. & Oil Corp., 753 F.2d 565, 570 (7th Cir. 1985) (Illinois law); Aronson v. Price, 644 N.E.2d 864, 867 (Ind. 1994). So long as the business‘s liabilities are not the Grotes’ liabilities—which is the primary and “invaluable privilege” conferred by the corporate form, Torco Oil Co. v. Innovative Thermal Corp., 763 F.Supp. 1445, 1451 (N.D. Ill. 1991) (Posner, J., sitting by designation)—neither are the business‘s expenditures the Grotes’ own expenditures. To suggest, for purposes of the RFRA, that monies used to fund the Grote Industries health plan—including, in particular, any monies spent paying for employee contraceptive care—ought to be treated as monies from the Grotes’ own pockets would be to make an argument for piercing the corporate veil. I do not understand the Grotes to be making such an argument.
The Grotes consequently are, in both law and fact, separated by multiple steps from both the coverage that the company health plan provides and from the decisions that individual employees make in consultation with their physicians as to what covered services they will use. Any burden imposed on the Grotes individually by the contraception mandate is, as Judge Barker reasoned, “likely too remote and attenuated to be considered substantial” for purposes of the RFRA. Grote Indus., LLC v. Sebelius, — F.Supp.2d —, —, 2012 WL 6725905, at *5 (S.D. Ind. Dec. 27, 2012) (citing O‘Brien v. U.S. Dep‘t of Health & Human Servs., 894 F.Supp.2d 1149, 1158-59, 2012 WL 4481208, at *5 (E.D. Mo. Sept. 28, 2012), and Hobby Lobby, 870 F.Supp.2d at 1294); see also Conestoga Wood Specialties Corp. v. Sebelius, — F.Supp.2d —, —, 2013 WL 140110, at *14 (E.D. Pa. Jan. 11, 2013) (“whatever burden the Hahns may feel from being involved with a for-profit corporation that provides health insurance that could possibly be used for contraceptives, that burden is simply too indirect to be considered substantial under the RFRA“).
I understand the Grotes’ concern—the closely-held corporation of which they are controlling shareholders is funding a plan that must now cover contraceptive services, which are inconsistent with their Catholic beliefs. Although Grote Industries is not a religious employer, the Grotes aver, albeit without elaboration, that they seek to run the company in a manner that reflects their religious beliefs. Whatever else that may mean, I assume that it explains why, to date, Grote Industries’ self-funded health plan has not included coverage for contraceptives. Requiring the company to include coverage for contraceptives forces the Grotes to operate the business in a way that deviates from the Catholic values that they otherwise endeavor as business owners to observe.
But in this respect the Grotes are no different from any number of business people who must, in compliance with a variety of statutory mandates, take actions that may be inconsistent with their individual religious convictions. The Grotes have voluntarily elected to engage in a large-scale, secular, for-profit enterprise. As the Supreme Court observed in United States v. Lee, “When followers of a particular sect enter into commercial activity as a matter of choice, the limits they accept on their own conduct as a matter of conscience and faith are not to be superimposed on the statutory schemes which are binding on others in that activity.” 455 U.S. 252, 261, 102 S.Ct. 1051, 1057, 71 L.Ed.2d 127 (1982) (declining to relieve Amish employer of obligation to pay Social Security taxes, despite acceptance of contention that both receipt and payment of Social Security benefits violates Amish faith); see also Braunfeld v. Brown, 366 U.S. 599, 605, 81 S.Ct. 1144, 1147, 6 L.Ed.2d 563 (1961) (statute that criminally proscribed sale of various retail goods on Sunday did not impermissibly interfere with free exercise rights of Jewish shopkeepers, although statute imposed extra cost on Jewish shopkeepers in particular because their religious faith compelled them to close shops on Saturday: “the statute at bar does not make unlawful any religious practices of appellants; the Sunday law simply regulates a secular activity and, as applied to appellants, operates so as to make the practice of their religious beliefs more expensive“).
State nondiscrimination statutes, for example, may require a landlord to rent housing to an unmarried couple despite the landlord‘s belief that cohabitation outside of marriage is a sin. See Thomas v. Anchorage Equal Rights Comm‘n, 102 P.3d 937 (Alaska 2004) (declining to overrule Swanner v. Anchorage Equal Rights Comm‘n, 874 P.2d 274 (Alaska 1994)); Smith v. Fair Emp‘t & Hous. Comm‘n, 12 Cal.4th 1143, 51 Cal.Rptr.2d 700, 913 P.2d 909 (1996); contra, Attorney Gen. v. Desilets, 418 Mass. 316, 636 N.E.2d 233 (1994). They may obligate a church-affiliated school—which could have sought the protection of a statutory exemption but had not—to retain a schoolteacher in its employ after she gives birth to a child, notwithstanding a religious belief that a woman with preschool-aged children belongs in the home and not the workplace. See McLeod v. Providence Christian Sch., 160 Mich.App. 333, 408 N.W.2d 146 (1987). They may forbid the evangelical owners of a closely-held, for-profit company from making hiring, promotion, and discharge decisions based on the marital status and religion of prospective and current employees, despite the owners’ belief that they must observe the teachings of God in the conduct of their business, including a Biblical mandate not to work with “unbelievers.” State by McClure v. Sports & Health Club, Inc., 370 N.W.2d 844 (Minn. 1985). They may require a photography business to photograph a same-sex commitment ceremony, notwithstanding the owners’ belief that marriage is a sacred union between members of the opposite sex. See Elane Photography, LLC v. Willock, 284 P.3d 428 (N.M. App. 2012), cert. granted, 2012-NMCERT-8, — N.M. —, 296 P.3d 491 (N.M. Aug. 16, 2012). They may oblige a medical practice to provide fertility services to a lesbian couple, notwithstanding the religious objections of one or more of its physicians to doing so. See N. Coast Women‘s Care Med. Grp., Inc. v. San Diego Cnty. Superior Court, 44 Cal.4th 1145, 81 Cal.Rptr.3d 708, 189 P.3d 959 (2008).
In these ways and many others, a business owner complying with statutes of general application may be compelled to employ, transact business with, and otherwise provide goods, services, and benefits to people whose status, beliefs, or conduct are inconsistent with the owner‘s religious beliefs and practices. In evaluating the burden that such requirements impose on a business owner‘s religious liberties, one must distinguish between an owner‘s commercial conduct and his religious beliefs and conduct. Requiring a secular business over the religious objection of its owner to do something in the commercial sphere that is required of nearly all such businesses ordinarily does not require the owner to abandon his religious tenets, to endorse conduct or express an opinion that is contrary to his religious beliefs, or to modify his private conduct as a religious observant. See Swanner, 874 P.2d at 283 (“It is important to note that any burden placed on Swanner‘s religion by the state and municipal interest in eliminating discrimination in housing falls on his conduct and not his beliefs. Here, the burden on his conduct affects his commercial activities.“); McClure, 370 N.W.2d at 853 (finding that the burden on business owners’ religious interests was justified by State‘s interest in eradicating discrimination: “Sports and Health is not a religious corporation—it is a Minnesota business corporation engaged in business for profit. By engaging in this secular endeavor, appellants have passed over the line that affords them absolute freedom to exercise their religious beliefs.“).4
The contraception mandate, as applied to Grote Industries, does not compel the Grotes to personally engage in or endorse conduct of which they disapprove on religious grounds: they need not use contraception, speak approvingly of it, or refrain from discouraging the use of contraception by others. See Conestoga Wood Specialties, — F.Supp.2d at —, 2013 WL 140110, at *14; Grote Indus., — F.Supp.2d at —, 2012 WL 6725905, at *5-*6; O‘Brien, 894 F.Supp.2d at 1159-60, 2012 WL 4481208, at *6. All that the mandate requires is that the Grote Industries health plan permit individual employees, in consultation with their physicians, to decide to use FDA-approved contraceptives and pay for the use of those contraceptives. The Grotes know that their company‘s health plan must cover contraception, and that one or more of their employees may decide to take advantage of that coverage, and that the health plan is therefore subsidizing a practice, by others, of which they disapprove.
To the extent this burdens the Grotes’ religious interests, it is worth considering whether the burden is different in kind from the burden of knowing that an employee might be using his or her Grote Industries paycheck (or money in a health care reimbursement account) to pay for contraception him or herself. See Conestoga Wood Specialties, — F.Supp.2d at —, 2013 WL 140110, at *13; Autocam Corp. v. Sebelius, 2012 WL 6845677, at *6 (W.D. Mich. Dec. 24, 2012). The likely response is that in the latter scenario, once a paycheck is handed over to the employee, the money is his or hers to use as desired, and any connection to the Grotes—and thus any burden on their religious interests—is severed. But consider that health insurance is an element of employee compensation. See
The situation may seem different when the employer chooses instead to self-fund the health care plan, in that the employer rather than an insurer is paying the bills and there is thus a more direct monetary link between the employer and whatever medical care that the employee is choosing for herself. But is the difference material? Either way, the employee is making wholly independent decisions about how to use an element of her compensation. Conestoga Wood Specialties, — F.Supp.2d at —, 2013 WL 140110, at *13-*14; Autocam, 2012 WL 6845677, at *6. And either way, although the employer knows that certain services to which it has religious objections are covered by the plan, it plays no role in an employee‘s decision whether or not to use those services, it is not the provider of those services (as it might be if it were providing health care through a company-owned clinic), and it is not endorsing those services. See Cedric Kushner Promotions, supra, 533 U.S. at 163, 121 S.Ct. at 2091 (“linguistically speaking, the employee and the corporation are different persons, even where the employee is the corporation‘s sole owner“).
The Supreme Court‘s decision in Zelman v. Simmons-Harris, 536 U.S. 639, 652, 122 S.Ct. 2460, 2467, 153 L.Ed.2d 604 (2002), is, as one academic has pointed out, a helpful reference point in evaluating the nexus between an employer‘s funding of a health plan and the health care decisions an employee makes pursuant to that plan. See Caroline Mala Corbin, The Contraception Mandate, 107 NW. UNIV. L. REV. COLLOQUY 151, 158-59 (Nov. 27, 2012). Zelman dealt with an Establishment Clause challenge to a pilot school “scholarship” or voucher program in Ohio. Of the more than 3,700 students who participated in the program during one school year, 96 percent of them used the vouchers to enroll at religious-affiliated schools. 536 U.S. at 647, 122 S.Ct. at 2464. Among other arguments, Ohio taxpayers contended that the program violated the Establishment Clause for two reasons: (1) notwithstanding the private choices made by voucher recipients, the flow of voucher funds to religious schools was properly attributable to the State, such that even if the program had a legitimate secular purpose, it nonetheless had the impermissible effect of advancing religion; and (2) the program gave rise to a public perception that the State was endorsing religious practices and beliefs. Brief for Respondents Simmons-Harris et al., 2001 WL 1636772, at *12, *37-*38. The Court rejected these arguments, emphasizing that the voucher program was one of “true private choice.” 536 U.S. at 653, 122 S.Ct. at 2467.
[W]here a government aid program is neutral with respect to religion, and provides assistance directly to a broad class of citizens who, in turn, direct government aid to religious schools wholly as a result of their own genuine and independent private choice, the program is not readily subject to challenge under the Establishment Clause. A program that shares these features permits government aid to reach religious institutions only by way of the deliberate choices of numerous individual recipients. The incidental advancement of a religious mission, or the perceived endorsement of a religious message, is reasonably attributable to the individual recipient, not to the government, whose role ends with the disbursement of benefits.
Id. at 652, 122 S.Ct. at 2467. The Court added that “no reasonable observer would think a neutral program of private choice, where state aid reaches religious schools solely as a result of the numerous independent decisions of private individuals, carries with it the imprimatur of government endorsement.” Id. at 655, 122 S.Ct. at 2468.5
The Zelman decision supports an argument that independent decisionmaking by an insured employee and her physician severs the connection between the employer‘s funding of a health care plan and the use of plan money to pay for contraceptives. I recognize, of course, that because Zelman was an Establishment Clause case, it was addressing concerns different from those that the Grotes, as private citizens with protected religious interests, are asserting here. Nonetheless, I think Zelman is relevant to the extent it recognizes that the purchase of a good or service is not necessarily attributable to the person who supplies the purchase money, when the decision to make the purchase belongs entirely to another individual. See Korte, — F.Supp.2d at —, 2012 WL 6553996, at *10 (“Any inference of support for contraception stemming from complying with the neutral and generally applicable mandate is a de minimus burden.“).
Again, the Grotes can and do argue that because Grote Industries’ health plan is self-funded, they—through their businesses—are paying directly for contraceptive care rather than handing employees a voucher that they can use as they wish. I would simply add that the decision whether to self-fund a health plan rather than to purchase coverage from an insurance carrier (which would be closer to a voucher) is a decision made by the employer, likely in part or in whole for economic reasons. One effect of that arrangement, voluntarily undertaken by the employer, is that it places the employer financially closer to the employee‘s health care choices. Thus, to the extent the self-funded nature of a health plan is a “crucial” factor in determining whether the plan‘s mandated coverage of contraceptive care burdens an employer‘s religious liberties, see Tyndale House Publishers, — F.Supp.2d at —, 2012 WL 5817323, at *13, one ought to acknowledge that the self-funding arrangement is one of the employer‘s making—and possibly one having little or nothing to do with the employer‘s religious beliefs—rather than the government‘s. See Autocam, 2012 WL 6845677, at *6 & n. 1.
Board of Regents of Univ. of Wis. Sys. v. Southworth, 529 U.S. 217, 120 S.Ct. 1346, 146 L.Ed.2d 193 (2000), is a second precedent that should be considered on the subject of funding. At issue in Southworth was a segregated activity fee that all students at the University of Wisconsin were required to pay to support various campus services and activities. One portion of that fee was allocated to support the activities of more than 600 registered student organizations, some of which engaged in political and ideological expression. Organizations primarily obtained funding by applying to one of two funds administered by the student government, which reviewed such applications on a viewpoint-neutral basis. Students who objected to this arrangement filed suit contending that funding the student organizations by means of a dedicated, mandatory fee violated their First Amendment right to free speech; they argued that the university was obligated to give them the choice not to fund student organizations which engaged in political and ideological expression that was contrary to their personal beliefs.
In Southworth v. Grebe, 151 F.3d 717 (7th Cir. 1998), this court agreed that the fee system violated the students’ free speech rights, relying on such compelled-speech precedents as Abood v. Detroit Bd. of Educ., 431 U.S. 209, 97 S.Ct. 1782, 52 L.Ed.2d 261 (1977) (union member cannot be compelled to pay service fee used by union to support political candidates and express political views unrelated to its duties as bargaining representative of employees), and Keller v. State Bar of Cal., 496 U.S. 1, 110 S.Ct. 2228, 110 L.Ed.2d 1 (1990) (although lawyer could be compelled to join state bar association and fund activities germane to association‘s regulatory mission, he could not be required to fund association‘s political expression). We observed:
The students, like the objecting union members in Abood, have a First Amendment interest in not being compelled to contribute to an organization whose expressive activities conflict with one‘s “freedom of belief.” Glickman [v. Wileman Bros. & Elliott, Inc.], 521 U.S. [457] at [471], 117 S.Ct. [2130] at 2139 [(1997)]. And here, unlike Glickman, requiring the students to pay the mandatory student activity fees does engender a crisis of conscience. Glickman, 117 S.Ct. at 2130. Finally, in the words of the Glickman Court: “compelled contributions for political purposes ... implicated First Amendment interests because they interfere with the values lying at the ‘heart of the First Amendment[-]the notion that an individual should be free to believe as he will, and that in a free society one‘s beliefs should be shaped by his mind and his conscience rather than coerced by the State.‘” Id. at 2139 (quoting Abood, 431 U.S. at 234-35, 97 S.Ct. 1782). In essence, allowing the compelled funding in this case would undermine any right to “freedom of belief.” We would be saying that students like the plaintiffs are free to believe what they wish, but they still must fund organizations espousing beliefs they reject. Thus, while they have the right to believe what they choose, they nevertheless must fund what they don‘t believe.
151 F.3d at 731 (footnote omitted).
The Supreme Court unanimously reversed our holding. The Court recognized at the start “that the complaining students are being required to pay fees which are subsidies for speech they find objectionable, even offensive.” 529 U.S. at 230, 120 S.Ct. at 1354. It further acknowledged that the students’ First Amendment objection to funding such speech followed logically from cases such as Abood and Keller. Id. at 231, 120 S.Ct. at 1355. Yet, the Court was unwilling to require the university to permit students to opt out of funding organizations whose speech they found objectionable. A university could voluntarily elect to grant students such an op-
Although Southworth, too, may be distinguished from this case, which concerns a religious objection to funding a particular category of medical care, it nonetheless has some relevance to the Grotes’ claims. Southworth recognizes that the compulsion to fund speech by others that an individual finds objectionable does not invariably constitute a violation of his own right to free speech; rather, so long as one is paying into a fund from which the expression of a variety of viewpoints is funded on a neutral basis, the rights of the individual paying into that fund are sufficiently protected. The Grotes, of course, are objecting to funding contraception, not speech; but what their company is actually required to fund is a health insurance plan that covers many medical services, not just contraception. The obligation to fund a health plan is generally applicable and neutral in the sense that the services that must be covered by the plan have not been chosen on the basis of religion. Moreover, the decision as to what services will be used is left to the employee and her doctor. To the extent the Grotes themselves are funding anything at all—and as I have discussed, one must disregard the corporate form to say that they are—they are paying for a plan that insures a comprehensive range of medical care that will be used in countless ways by the hundreds of U.S.-based employees participating in the Grote Industries health plan. No individual decision by an employee and her physician—be it to use contraception, treat an infection, or
The significance of private decisionmaking by the insured employee is worth discussing in one last respect. Heretofore, there has been a general understanding that an employer, by virtue of paying (whether in part or in whole) for an employee‘s health care, does not become a party to the employee‘s health care decisions: the employer acquires no right to intrude upon the employee‘s relationship with her physician and participate in her medical decisions, nor, conversely, does it incur responsibility for the quality and results of an employee‘s health care if it is not actually delivering that care to the employee. This litigation seeks in a sense to upend that traditional understanding, by postulating that when a company insures its employees’ health care, a company owner indeed is a party to that care, with a cognizable religious interest in what services are made available to the employee.
The obligation to pay for contraceptive coverage is the current hot topic in federal litigation,7 because the federal contraception mandate is new.8 But contraceptive care is by no means the sole form of health care that implicates religious concerns. To cite a few examples: artificial insemination and other reproductive technologies; genetic screening, counseling, and gene therapy; preventative and remedial treatment for sexually-transmitted diseases; sex reassignment; vaccination; organ transplantation from deceased donors; blood transfusions; stem cell therapies; end-of-life care, including the initiation and termination of life support; and, for some religions, virtually all conventional medical treatments. If the RFRA entitles the controlling shareholder of a corporation to exclude coverage for contraceptive care from the company‘s health plan on the basis of his religious beliefs, then, as I noted in Korte v. Sebelius, 2012 WL 6757353, at *5, and as Judge Barker noted below, see Grote Indus., — F.Supp.2d at —, 2012 WL 6725905, at *6, I can see no reason why coverage for any number of medical services could not also be excluded from a workplace health plan on the same basis. In part, this is a point that addresses a separate consideration under the RFRA—whether there are reasonable alternatives to requiring employer-sponsored coverage of the objected-to form of care, and thus whether the insurance mandate is the least restrictive means of ensuring access to that care. See
But I think it also helps to place in context the nature of the burden that is being asserted in this litigation. Medical decisions are made in private on an individual basis. Any given medical decision, depending on the nature of the patient‘s condition, the available treatments, and the circumstances confronted by doctor and patient, might be inconsistent with the religious beliefs of one or more owners of the company that sponsors the patient‘s workplace insurance. Holding that a company shareholder‘s religious beliefs and practices are implicated by the autonomous health care decisions of company employees, such that the obligation to insure those decisions, when objected to by a shareholder, represents a substantial burden on that shareholder‘s religious liberties, strikes me as an unusually expansive understanding of what acts in the commercial sphere meaningfully interfere with an individual‘s religious beliefs and practices.
These and other issues will be fleshed out as the merits of this appeal are briefed. But the Grotes have not yet convinced me that whatever burden the contraception mandate imposes on the exercise of their religious freedom is a substantial burden, in the sense that it directly affects the exercise of their Catholic faith. See Conestoga Wood Specialties, — F.Supp.2d at —, 2013 WL 140110, at *14; Annex Med., Inc. v. Sebelius, 2013 WL 101927, at *4-*5 (D. Minn. Jan. 8, 2013); Grote Indus., — F.Supp.2d at —, 2012 WL 6725905, at *5-*6; Autocam, 2012 WL 6845677, at *6-*8; Korte, — F.Supp.2d at —, 2012 WL 6553996, at *10-*11; Hobby Lobby, 870 F.Supp.2d at 1294-96. I therefore do not believe that they are entitled to preliminary injunctive relief pending the resolution of their appeal.
I respectfully dissent.
Hans J. RAPOLD
Plaintiff-Appellant