26 Pages Posted: 23 Feb 2014 Last revised: 10 Apr 2014
Date Written: February 21, 2014
The Patient Protection and Affordable Care Act (ACA) effected numerous changes in the legal regime governing health care and health insurance. Among the ACA’s more controversial provisions is the so-called contraceptive mandate, which requires employer-provided health care insurance plans to provide coverage of all FDA approved contraceptive methods.
On March 25, 2014, the Supreme Court will hear oral argument in the Hobby Lobby and Conestoga Wood cases, in which the shareholders of two for-profit family-owned corporations argue that requiring them to comply with the contraception mandate violates the Religious Freedom Restoration Act.
Forty-four law corporate law professors filed an amicus brief in these cases, arguing that the essence of a corporation is its “separateness” from its shareholders and that, on the facts of these cases, there is no reason to disregard the separateness between shareholders and the corporations they control. The Brief is replete with errors, overstated claims, or red herrings, and misdirection.
Contrary to the Brief’s arguments, basic corporate law principles strongly support the position of Hobby Lobby and Conestoga Wood. In particular, the doctrine known as reverse veil piercing provides a clear and practical vehicle for disregarding the legal separateness of those corporations from their shareholders and thus granting those shareholders standing to assert their free exercise rights.
Keywords: Hobby Lobby, contraceptive mandate, free exercise, piercing the corporate veil, reverse veil piercing, amicus brief, corporate law professors, constitution, supreme court, Affordable Care Act, Obamacare, RFRA, Religious Freedom Restoration Act
JEL Classification: K22
Suggested Citation: Suggested Citation
Bainbridge, Stephen M., A Critique of the Corporate Law Professors’ Amicus Brief in Hobby Lobby and Conestoga Wood (February 21, 2014). 100 Virginia Law Review Online 1 (2014); UCLA School of Law, Law-Econ Research Paper No. 14-03. Available at SSRN: https://ssrn.com/abstract=2399638