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Jack Ohman | Sacramento Bee

Hobby Lobby case holds potential for surprise

Prognosticators have already declared that, during the Hobby Lobby v. Sebelius oral argument, the Supreme Court looked poised to extend religious liberty protections to for-profit corporations. But two important wrinkles might tell us a lot about the court’s potential holding.

The first and more interesting twist came in an aside by Chief Justice John Roberts. Solicitor General Donald Verrilli was arguing that if Hobby Lobby, a for-profit corporation controlled by a trust, could assert religious liberty rights, then all sorts of for-profit corporations might begin claiming religious exemptions. Roberts responded that if the court restricted its decision to closely held Chapter S corporations, it would “avoid all the problems.” .

The suggestion that only closely held firms could claim they were exercising religious liberty has all the earmarks of classic Roberts jurisprudence: It would be cautious, restricting the decision to only the case before the court. It would minimize drastic headlines about the court repeating its errors in the Citizens United decision because this rights extension would be narrower. And it would potentially open the door for significant extension by lower courts. As some of my religiously inclined students have argued, there may be little difference between a sole proprietor acting in the sphere of his profession and an individual exercising his religious liberty in other spheres of life.

Classical Protestantism of the type associated with John Locke, the English father of modern American religious liberty, recognized a difference between actions that are inherently religious and those that are “indifferent” to salvation. I am confident the founding fathers would have agreed with Locke and the distinction between doing business and doing religion. But times have changed.

If my students are right, then the sole owner of a business – or the employee – perhaps ought to have religious liberty rights. But those rights certainly should not be extended to the shareholders of a publicly traded for-profit corporation.

On the other side of the coin, Justice Sonia Sotomayor made a terrific point that the parties had not raised. Sotomayor noted that both parties assumed that Hobby Lobby would be burdened by having to pay a penalty or fine if it chose not to extend contraceptive coverage to its employees.

However, under the Supreme Court’s holding in the case establishing the constitutionality of the individual mandate of the Affordable Care Act, the court characterized the mandate as a tax, not a penalty.

Justice Elena Kagan then chimed in. If the result of noncoverage is a tax, rather than a penalty, she suggested, then Hobby Lobby faces a choice, not a “burden” as required by the religious freedom act. It can choose to end health care coverage for all its employees and pay the $2,000 per employee tax, or it can provide contraceptive coverage.

Clement had no good answer. Justice Antonin Scalia tried to help him out by saying that Hobby Lobby would have to pay its employees more if it did not offer health care coverage. But as Kennedy immediately asked, “Why is that a problem?” If the $2,000 penalty approximated the cost of providing health-care coverage, Kennedy proposed, Hobby Lobby would not be substantially burdened.

The oral argument actually offered more light than heat. It’s nice when the court does its job.

Noah Feldman, a law professor at Harvard University and the author of “Cool War: The Future of Global Competition,” is a Bloomberg View columnist.