07 July 2014

Hobby Lobby for Corporate Law Types

I've previously commented on my former colleague David Wagner's thoughtful analysis of the Hobby Lobby case from the constitutional law perspective. If you missed it, go here. But Hobby Lobby is also important from the perspective of corporate law according to fellow Virginian Lyman Johnson. You can read his post (HT another former colleague, Haskell Murray) here.

I stay as far away from constitutional law as possible because, frankly, it's neither (constitutional or lawful, that is). But I brush up against corporate law on a regular basis. While I don't teach the subject, I teach the substantive law of what most corporations do most of the time (enter into contracts, sell goods, grant security interests to lenders, and--at least sometimes--file bankruptcy) and thus need to be able to comment cogently on some aspects of corporate law.

I've also used this blog as a forum to discuss the nature and extent of corporate personhood. Beginning with philosophy and working through political theory, I've argued that corporations are in some respects "persons" because, after all, they operate at the behest of persons and through persons. Go here, here, and here for some representative examples

Yet I've also challenged the view of some libertarian-leaning scholars of corporate law (Stephen Bainbridge, for example) on the end or purpose of corporations. Is it to make a profit or something else/more? Go here and here to read about my Aristotelian causal analysis of the question. (The very short version is that profits are not the final cause of corporate existence but its efficient cause.) As I wrote,
An entity without a final cause or goal is like a powerful chainsaw spinning out of control; it can do a lot of damage. Corporate profitability alone, like breathing alone, is not good. Only profit directed toward an end that is good is profit worth earning. (Emphasis added.)
According to Professor Johnson, the Supreme Court (at least those who joined Justice Alito's opinion) agree. Quoting from the linked post,
Justice Alito, for the Court, rejected the view that business corporations must (and do) singularly act to make money, even as he acknowledged making profits to be “a” (not “the” or “sole”) objective and one that is “central.”  ... [M]odern corporate law does not require for-profit corporations to pursue profit at the expense of everything else and many do not do so.
So what, you ask? Again quoting Johnson: "Readily concluding that corporations clearly do have the liberty not to maximize profits, the Court concluded that, as a legal matter, they were necessarily 'free' to exercise religion." In other words, were maximizing profits the telos of corporate existence, corporations could not, even derivatively of their shareholders, exercise religion. And, if corporations cannot exercise religion, they cannot claim to be free from the burden of providing insurance for all forms of contraceptive medical services on the ground that it limits the corporation's free exercise of religion.

Quite bracing, if you ask me.

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