The Uneasy Relationship of Hobby Lobby, Conestoga Wood, the Affordable Care Act and the Corporate Person: How a Historical Myth Continues to Bedevil the Legal System

Abstract

On November 26, 2013, the Supreme Court of the United States agreed to hear two cases — Sebelius v. Hobby Lobby Stores, Inc., and Conestoga Wood Specialties v. Sebelius — challenging the validity of the Affordable Care Act’s (“ACA”) mandate that employer-sponsored health plans cover all FDA-approved contraceptives (the “Contraceptive Mandate”). In each case, closely held plaintiff corporations contend that the Contraceptive Mandate illegally infringed upon the corporations’ freedom to exercise religion. The problem confronting the Supreme Court as it takes up the Hobby Lobby and Conestoga Wood cases is that the concept of corporate personhood did not develop gradually or in an evolutionary process in which the meaning of the concept was developed and defined. Instead, the concept of the corporate person was imposed on the law ipse dixit, that is, by judicial fiat and without definition, in a series of late nineteenth century Supreme Court cases decisions. Those opinions were written by the same Supreme Court Justice, Stephen J. Field, who, if not beholden to railroad interests, was certainly a devoted friend of the railroads. Moreover, Field has no occasion to explain the reasons that corporations possessed the rights of natural persons because, in every one of those cases, the Supreme Court held that, person or not, the corporations had no viable claim for relief.

Although corporations have been treated as legal persons capable of exercising at least some of the rights of natural persons since Colonial times, and despite urban legends to the contrary, the Supreme Court has never provided a rationale that explains why, or when, a corporation is allowed to assert the rights of a natural person. As a result, the concept of the corporate person seems to expand, or contract, depending on the circumstances and on the personal predilections of the speaker. The resultant confusion about the meaning of corporate personhood makes application of the concept troublesome in any case, but it is particularly problematic in the context of statutes, like the ACA, which attempt to fundamentally change basic aspects of societal structure and, therefore, implicate divisive questions — here, contraception and abortion — grounded in deeply-held and profoundly personal beliefs. As Conestoga Wood and Hobby Lobby illustrate, the undefined and ubiquitous corporate person provides little guidance to those who must assess the legal viability of statutes like the ACA and, equally problematic, results in polarization and politicization of already difficult matters, thereby preventing or impeding implementation of ground-breaking reforms, like the ACA.

The question whether a corporation is a “person” able to assert the constitutional and statutory rights of natural persons — and, if so, the basis on which it may do so — has been debated for over 150 years. That debate has featured contrived test cases, blatantly false evidence, a facetious Supreme Court argument, the reappearance — and then re-disappearance — of a supposedly secret Journal of the authors of the Fourteenth Amendment, a Supreme Court Reporter who knowingly and falsely stated in a headnote that the existence of the constitutional corporate person had been decided, and a Supreme Court Justice who used the false headnote and the nineteenth century Court’s decision-making process to embed the corporate person in constitutional law at virtually the same time that his brethren asserted that the issue remained undecided. Not surprisingly, all of this led to allegations by respected New Deal and Progressive Age historians that Gilded Age robber barons and their legislative henchmen had successfully conspired to secretly insert protection for corporations into the text of the Fourteenth Amendment.

This article argues that, while it is clear that there was no robber baron-driven corporate conspiracy to highjack the drafting of the Fourteenth Amendment, as was once popularly believed, constitutional protection for the corporate person became settled law because Justice Stephen J. Field, in a series of ipse dixit assertions, made it so. The historical significance of Field’s achievement cannot be gainsaid: If “person,” as used in the Constitution, does not include a corporation, a corporation is not entitled to equal protection of the laws and it is irrelevant whether the due process clauses imposes substantive limits on regulation of corporations. By establishing the constitutional corporate person as settled law, Field erected the foundation for the development of substantive due process and for the Court’s laissez-faire era.

This article begins by reviewing the legal context in which the debate regarding the constitutional person arose. Initially, two decisions of the the Supreme Court of the United States are examined, one of which, County of Santa Clara v. Southern Pacific Railroad Co. has erroneously been viewed by “[m]any scholars, judges, and even U.S. Supreme Court Justices . . . as affirming the concept of corporate personhood because of an inaccurate headnote in the official published version of the opinion written by the Supreme Court Reporter, J.C. Bancroft Davis”. Thereafter, each Supreme Court decision expressly addressing the corporate person question between 1886, when Santa Clara was decided, and Justice Field’s 1897 retirement is examined. This analysis demonstrates that Field unilaterally created a web of cross-corroborating decisions claiming that corporate personhood had been definitively established by Supreme Court precedent. This article then considers the practical implications of Field’s actions, focusing first on whether Field’s corporate person decisions, even if sui generis, nonetheless reflected the position of the Court or were simply one man’s opinion. This article concludes with the argument that the discussion regarding corporate personhood needs to focus on what it means to be a corporate person and on identifying the source of corporate constitutional rights. This is so, notwithstanding general agreement that corporate persons and natural persons share some constitutionally protected rights, the corporate person has never had the benefit of incremental, evolutionary development that tests, validates and clarifies most common law concepts. Instead, the Court has never articulated a consistent, principled rationale for the corporate person, making it largely impossible — other than on a case-by-case basis — to identify the scope, nature or limits of such rights.

The virtually unexplained and unexplainable discordant outcomes in Hobby Lobby and Conestoga Wood are merely among the latest illustrations of the confusion and contradictory precedent resulting from the Supreme Court’s failure to establish a definitive rationale explaining when a corporation may, and may not, assert the rights of a natural person. Failure to define the meaning of corporate personhood exhaults ad hoc judicial decision-making over the structure, predictability and even-handedness that the law ought to provide. The resultant uncertainty impedes meaningful assessment of the legal viability of complex statutes that attempt to restructure important societal programs and promotes divisiveness by creating the impression that the validity of such legislation is dependent on personal predilection rather than on consistently applied standards, both of which forestall effective implementation of such legislation. The Supreme Court can, and should, use Hobby Lobby and Conestoga Wood to eliminate the uncertainties and define the meaning of the corporate person.

Keywords: Hobby Lobby, Conestoga Wood, corporate person, Affordable Care Act, Field, Santa Clara, San Mateo, contraceptive mandate, FRFA, legal person, natural person, railroads, Fourteenth Amendment

JEL Classification: I18, K00, K19, K22, K23, K40, K41