As the scope of religious freedom takes on increasing importance in debates over topics ranging from contraception to immunization, religious values are often aligned with conservative opposition to certain civil rights and reproductive freedom (as in Masterpiece Cake Shop and Hobby Lobby, respectively). Could the opposite also be true? Can religious freedom also be used to promote more liberal interests, such as a belief in equality or privacy? How might corporations with more progressive values assert religious freedom claims, and what should the limits of such claims be?
In our recent article, “R Corps: When Should Corporate Values Receive Religious Protection?” (forthcoming, Berkeley Business Law Journal), we address these questions and explain how a corporation might invoke religious freedom to protect corporate values such as diversity, sanctuary, and women’s access to reproductive care – values that are not exclusively associated with a religion and are often held by secular entities.
In order to do so, we take on several important legal questions. First, we consider how to define whether a set of beliefs are “religious” when those beliefs are held not just by a single individual but by a diverse collection of individuals. We also look at how a court should evaluate the sincerity of religious claims of a business entity made up of religiously diverse owners, members, or shareholders. Most importantly, we offer a unique typology for assessing religious freedom claims by diverse and widely-held corporate entities.
Our analysis uses a theoretical anomaly underlying the Hobby Lobby decision. In determining whether the corporations at issue in the case held sincere religious beliefs, Hobby Lobby left unresolved whether corporate religious rights should be based on a real entity or aggregate entity theory. Under the former, the court would consider the corporation to be a separate entity with rights and beliefs independent of its owners. Under the latter, the court would consider the corporation’s beliefs to reflect those of the individual owners. Thus, to assess the sincerity of the religious beliefs (a necessary step to determining religious rights), the opinion allows for a focus on either the sincerity of the individual beliefs of the owners or the sincerity of the beliefs of the corporation itself.
While other scholars have tried to determine which theory is more appropriate, we instead suggest that both approaches can be valid, depending on the particular characteristics of the corporation at issue. For what we call religiously unified corporations (where all owners share a common religion), we suggest an aggregate entity approach that considers the religious beliefs of the owners. In the case of religiously diverse corporations (where owners do not share a common religion), we suggest a real entity theory, which requires that the religious beliefs be evident in objective expressions of commitment and practice by the corporation itself.
This approach, we argue, is necessary to prevent corporations from taking advantage of religious protection to further corporate profiteering. We show that sincerity testing in a case involving a corporation in which all of the owners hold similar beliefs is a radically different prospect than sincerity testing in a corporation – whether closely held or publicly traded – in which the owners hold diverse beliefs.
We were motivated to write this article by three trends: 1) a resurgence and growth of religious activism, liberal and conservative; 2) the surge in the number of corporations taking values-driven, controversial positions since the election of President Trump; and 3) the growth in the profile and strength of the religious freedom movement. Given these trends, we believe the country will see increasing numbers of corporations identifying corporate values as religious beliefs in order to protect those values.
Our research adds to the academic literature in two important ways. If corporations can establish the kind of religious freedom that the Supreme Court recognized in Hobby Lobby, a new kind of corporation may emerge: the religious corporation, or “R Corp.” We suggest that, just as benefit corporations or “B Corps” balance profit and (generally secular) social purposes, R Corps might balance profit and religious beliefs. If they do, courts must develop a comprehensive approach to evaluating claims of corporate religion. Our article furthers the development of that approach. It also fills an important gap in the analysis of corporate religious freedom. Some scholars have considered the definition of religion in an individual context, while others have sought to identify the theoretical basis for the Supreme Court’s finding that a corporation can exercise a religion. The unique contribution of our article is in analyzing these as-yet unresolved issues together in the unique context of how a diverse corporation might be able to claim religious protection for what may be considered liberal values.
At the conclusion of our piece, one must ask if we have made it easier or harder for corporations to establish religious values. The answer is both: On one hand, by using our real entity test, religiously diverse corporations can seek protection for religious values even if not all owners share the same values. Thus, Apple may someday find legal protection for sincerely held beliefs about privacy, if it establishes those beliefs as religious.
On the other hand, religiously diverse corporations using the real entity theory must provide substantial objective evidence, described in more detail in the paper, of the religious values of the corporation – they cannot show that the corporation has a religion simply because one of the owners holds a specific belief.
For religiously unified corporations seeking to apply the aggregate entity theory, we have also created an additional, but we feel necessary, hurdle to establishing corporate religion: Each of the owners must demonstrate that they sincerely hold the religious beliefs for which the company is seeking protection. The court may not gloss over differences among beliefs held by the owners, and majority opinion does not rule. We argue that a corporate belief cannot be sincerely held under the aggregate entity theory if the belief is not sincerely held by each and every owner.
After the Supreme Court opened the door to the possibility that corporations can have a constitutionally protected freedom of religion, they left wide open the future of how that religion can or should be determined and what the scope of that freedom is. In staying true to the purposes of religious freedom, we set forth a framework for corporate religious freedom that is pragmatic and flexible so that courts, and businesses, are able to navigate the new waters of corporate religious freedom.
This post comes to us from professors Liz Brown at Bentley University, Inara Scott at Oregon State University, and Eric D. Yordy at The W. A. Franke College of Business at Northern Arizona University. It is based on their recent paper, “R Corps: When Should Corporate Values Receive Religious Protection?” available here.