# Does the Hobby Lobby decision undermine the idea of a corporation?
**URL:** https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318
**Category:** Great Debates
**Created:** [July 4, 2014, 2:24am UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318 "2014-07-04T02:24:04Z")
**Posts on this page:** 20
**Page:** 1
### Author:  [@davidm](https://boards.straightdope.com/u/davidm)
#### Post date: [July 4, 2014, 2:24am UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/1 "2014-07-04T02:24:04Z")
> **[How Hobby Lobby undermined the very idea of a corporation](https://www.motherjones.com/politics/2014/07/hobby-lobbys-other-problem/)**
>
> If you think this decision is only about increasing corporate power, think again.
> [@](#):
>
> That separation is what legal and business scholars call the “corporate veil,” and it’s fundamental to the entire operation. Now, thanks to the Hobby Lobby case, it’s in question. By letting Hobby Lobby’s owners assert their personal religious rights over an entire corporation, the Supreme Court has poked a major hole in the veil. In other words, if a company is not truly separate from its owners, the owners could be made responsible for its debts and other burdens.
>
> “If religious shareholders can do it, why can’t creditors and government regulators pierce the corporate veil in the other direction?” Burt Neuborne, a law professor at New York University, asked in an email.
>
> That’s a question raised by 44 other law professors, who filed a [friends-of-the-court brief](http://www.becketfund.org/wp-content/uploads/2014/01/13-35413-356tsacCorporateandCriminalLawProfessors.pdf) that implored the Court to reject Hobby Lobby’s argument and hold the veil in place. Here’s what they argued:
>
> > [@](#):
> >
> > ```
> > Allowing a corporation, through either shareholder vote or board resolution, to take on and assert the religious beliefs of its shareholders in order to avoid having to comply with a generally-applicable law with a secular purpose is fundamentally at odds with the entire concept of incorporation. Creating such an unprecedented and idiosyncratic tear in the corporate veil would also carry with it unintended consequences, many of which are not easily foreseen.
> >
> > ```
The law isn’t my field so I’m not taking a side on this, I just think an interesting conversation can be had.
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### Author:  [@UDS](https://boards.straightdope.com/u/UDS)
#### Post date: [July 4, 2014, 3:16am UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/2 "2014-07-04T03:16:33Z")
Well, “piercing the corporate veil” is a long-running topic of discussion, both academic and judicial. And, yes, it works both ways. If a corporation can’t have a belief, can it have an intention? And, if it can’t have an intention, can it be guilty of any crime with an intentional element (which is most crimes, and certainly most serious crimes)? To solve this problem, the corporate veil is frequently pierced to impute to the corporation the mental state of the individuals who control it. What they intend, the corporation intends, and so the corporation can be convicted of a crime involving intent (or negligence, or recklessness).
It’s just wrong to suggest that any breach in the corporate veil means that the veil disappears entirely. That’s a classic slippery-slope argument. The fact is that corporations are already convicted of crimes, but the assets of their controllers are not seized to pay the fines, and the controllers aren not jailed - unless the controllers have also, independently, been convicted of crimes.
It’s reasonable to ask whether piercing the corporate veil is appropriate in the HL case. From what I’ve read, the fact that HL was a closely-held family-run corporation was a relevant factor in the decision; I doubt that the case is authority for the proposition that _every_ corporation can have a religious belief imputed to it. You can still argue the case over whether it’s right to impute a religious belief to _any_ company, or to HL in particular, but the notion that doing so completely dissolves the separate personality of every corporation, or inexorably leads to that, is not one I take seriously.
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### Author:  [@septimus](https://boards.straightdope.com/u/septimus)
#### Post date: [July 4, 2014, 3:20am UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/3 "2014-07-04T03:20:59Z")
As is so so very often the case, regardless of whether the matter involves human rights, property rights, gun rights, or a disputed election, the Supreme Court split 5-4 with the 5 Justices appointed by Republicans approving the ascendancy of corporations over people, and the four Justices appointed by Democrats dissenting.
In post-modern America the debate is increasingly less about
_… What human rights should be extended to corporations?_
and increasingly more about
_… What corporate property rights should be denied to humans?_
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### Author:  [@John\_Mace](https://boards.straightdope.com/u/John_Mace)
#### Post date: [July 4, 2014, 3:26am UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/4 "2014-07-04T03:26:42Z")
> [@UDS](#):
>
> It’s reasonable to ask whether piercing the corporate veil is appropriate in the HL case. From what I’ve read, the fact that HL was a closely-held family-run corporation was a relevant factor in the decision; I doubt that the case is authority for the proposition that _every_ corporation can have a religious belief imputed to it.
Yep. “Closely held” applies to a small subset of corporations.
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### Author:  [@Bricker](https://boards.straightdope.com/u/Bricker)
#### Post date: [July 4, 2014, 3:46am UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/5 "2014-07-04T03:46:45Z")
> [@septimus](#):
>
> As is so so very often the case, regardless of whether the matter involves human rights, property rights, gun rights, or a disputed election, the Supreme Court split 5-4 with the 5 Justices appointed by Republicans approving the ascendancy of corporations over people, and the four Justices appointed by Democrats dissenting.
>
> In post-modern America the debate is increasingly less about
> _… What human rights should be extended to corporations?_
> and increasingly more about
> _… What corporate property rights should be denied to humans?_
How does a ruling that strengthens the PEOPLE’s right to keep and bear arms amount to the ascendency of corporations over people?
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### Author:  [@Princhester](https://boards.straightdope.com/u/Princhester)
#### Post date: [July 4, 2014, 4:09am UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/6 "2014-07-04T04:09:31Z")
> [@UDS](#):
>
> Well, “piercing the corporate veil” is a long-running topic of discussion, both academic and judicial. And, yes, it works both ways. If a corporation can’t have a belief, can it have an intention? And, if it can’t have an intention, can it be guilty of any crime with an intentional element (which is most crimes, and certainly most serious crimes)? To solve this problem, the corporate veil is frequently pierced to impute to the corporation the mental state of the individuals who control it. What they intend, the corporation intends, and so the corporation can be convicted of a crime involving intent (or negligence, or recklessness).
Mileage no doubt varies from jurisdiction to jurisdiction, and from one legal issue to another, but your example is unconvincing and doesn’t obviously evidence an understanding of the corporate veil.
The corporate veil covers _the shareholders_, not the corporation. Companies have long had liability both civil and criminal for the things they do. Corporate intent for criminal purposes is another issue and a \*non sequitur \*in this context.
The issue is why shareholders should in future be permitted (for example) to escape liability for the company’s debts, when those shareholders are are so closely identified with a company that their religious views permit the company to escape what would otherwise be its legal obligations.
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### Author:  [@Odesio](https://boards.straightdope.com/u/Odesio)
#### Post date: [July 4, 2014, 4:37am UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/7 "2014-07-04T04:37:47Z")
Aren’t some churches actually incorporated? I know they’re generally 501©(3) corporations but does that make a difference?
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### Author:  [@UDS](https://boards.straightdope.com/u/UDS)
#### Post date: [July 4, 2014, 4:47am UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/8 "2014-07-04T04:47:28Z")
The corporate veil, as I understand it, is the barrier which the (fictitious, artificial) person of the company puts between the (natural) persons who establish/own/control the company and the rest of the world.
I have a judgment against GE for (say) some breach of contract or act of negligence. I can enforce that judgment against the assets of GE, but not against the assets of the stockholders, even though the profit or gain accruing to GE from the contract concerned ultimately flowed back to them. Why? GE acts as a “corporate veil” between me and them.
Similarly, I obtain a conviction against GE for some crime, and a fine is imposed. GE has to pay the fine, but I cannot chase the assets of any natural person, even though a natural person may be the one who actually perpetrated some or all of the elements of the crime (particularly the mental elements). Why? Again, the corporate veil.
If the latter is not an example of the “corporate veil” at work well, fair enough. Perhaps the term “corporate veil” is only properly used with respect to the shield a company offers to the stockholders personal assets. But, if that’s the case, I don’t see how HL threatens it. The point in HL, I think, is that a corporation - at least, a closely-held family corporation like HL - is treated as capable of having religious belief, and therefore of enjoying first amendment free exercise rights. I can see how that’s problematic; how can a fictitious, artificial person have a belief?
But if (as the OP suggests) you’re going to see that has having implications for the corporate veil, then it seems to me you must be invoking a concept of “corporate veil” which involves more than simply the distinction between corporate assets and the stockholders’ personal assets. It seems to me that you’re suggesting that it also embraces the distinction between the stockholders beliefs and the company’s beliefs. And, if belief, why not other states of mind?
In short, if imputing belief to a company is seen as piercing the corporate veil, then imputing any other state of mind must be seen in the same way. Or am I missing something?
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### Author:  [@UDS](https://boards.straightdope.com/u/UDS)
#### Post date: [July 4, 2014, 4:48am UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/9 "2014-07-04T04:48:56Z")
> [@Odesio](#):
>
> Aren’t some churches actually incorporated? I know they’re generally 501(c)(3) corporations but does that make a difference?
I’m open to correction by someone better informed, but I think the legislation contained exemptions which would benefit primarily religious employers like churches, diocese, etc but which didn’t extent to HL.
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### Author:  [@hansel](https://boards.straightdope.com/u/hansel)
#### Post date: [July 4, 2014, 6:10am UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/10 "2014-07-04T06:10:07Z")
> [@John\_Mace](#):
>
> Yep. “Closely held” applies to a small subset of corporations.
if by “small” you mean [url=]90%, based on the IRS’ definition of “closely held”, which was apparently operative in the decision.
> [@The Wall St. Journal](#):
>
> The Internal Revenue Service defines a closely held company as a corporation that has more than 50% of the value of its outstanding stock directly or indirectly owned by five or fewer individuals at any time during the last half of the tax year. It also cannot be a personal-service corporation.
>
> Closely held companies are owned by a relatively small number of investors, typically including their founding families and management. Roughly 90% of all companies in the U.S. are closely held, according to a 2000 study by the Copenhagen Business School.
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### Author:  [@UDS](https://boards.straightdope.com/u/UDS)
#### Post date: [July 4, 2014, 6:14am UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/11 "2014-07-04T06:14:48Z")
Though, possibly, closely-held companies are the employers of only a small subset of the workers within the scope of the Obamacare regime.
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### Author:  [@Princhester](https://boards.straightdope.com/u/Princhester)
#### Post date: [July 4, 2014, 6:18am UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/12 "2014-07-04T06:18:58Z")
> [@UDS](#):
>
> Similarly, I obtain a conviction against GE for some crime, and a fine is imposed. GE has to pay the fine, but I cannot chase the assets of any natural person, even though a natural person may be the one who actually perpetrated some or all of the elements of the crime (particularly the mental elements). Why? Again, the corporate veil.
The corporate veil is what prevents the fine being payable by the shareholders. That’s true.
However, after that, what you are saying gets confused. If any natural person (shareholder or whoever) committed all the elements of a crime they will probably be charged with it: the fact that they carried out this crime in concert with or for a company won’t protect them. There is no corporate veil in that respect.
The usual reason natural persons who had some involvement in a corporate crime are not charged is because they didn’t commit every element of the offence, or because it is an offence that only applies to a company.
> [@](#):
>
> In short, if imputing belief to a company is seen as piercing the corporate veil, then imputing any other state of mind must be seen in the same way. Or am I missing something?
I can’t speak for the OP but for my part I don’t think there is any firm necessary logical path that leads inevitably from from this decision to a decision that stockholders in closely held companies should no longer get the benefit of the corporate veil.
Rather it is a philosophical or policy question: is it appropriate to allow stockholders to have a company that is in effect their alter ego when it suits them, but a seperate legal entity for which they are not responsible when it does not?
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### Author:  [@UDS](https://boards.straightdope.com/u/UDS)
#### Post date: [July 4, 2014, 6:40am UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/13 "2014-07-04T06:40:04Z")
> [@Princhester](#):
>
> I can’t speak for the OP but for my part I don’t think there is any firm necessary logical path that leads inevitably from from this decision to a decision that stockholders in closely held companies should no longer get the benefit of the corporate veil.
Right, so. We use the terminology differently, but I think we’re agreed on this point.
> [@Princhester](#):
>
> Rather it is a philosophical or policy question: is it appropriate to allow stockholders to have a company that is in effect their alter ego when it suits them, but a seperate legal entity for which they are not responsible when it does not?
Didn’t we answer that long ago? Once society took the decision that I could incorporate a limited liablity corporation, with myself as the dominant or sole stockholder, to carry on a trade, business or enterprise controlled and directed (and quite possiby performed) wholly by me, with the profits coming back to me in the form of dividends, with the benefit of limited liablity, does that not mean that your question has been answered, “yes”?
The corporation is my alter ego, in the sense that it is in substance me who is founded and is carrying on the corporation’s enterprise and I can carry it on as I wish, and close it down or transfer it back to myself whenever I like. But my financial exposure is limited to what I have invested or committed to invest in the corporation.
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### Author:  [@Princhester](https://boards.straightdope.com/u/Princhester)
#### Post date: [July 4, 2014, 7:50am UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/14 "2014-07-04T07:50:47Z")
It is not merely terminology; as I’ve said, the corporate veil has previously been something that protects the shareholders from financial liability, but this decision is one in which the company is being protected by the beliefs of its shareholders. These two things are not even close to being the same.
> [@UDS](#):
>
> Didn’t we answer that long ago? Once society took the decision that I could incorporate a limited liablity corporation, with myself as the dominant or sole stockholder, to carry on a trade, business or enterprise controlled and directed (and quite possiby performed) wholly by me, with the profits coming back to me in the form of dividends, with the benefit of limited liablity, does that not mean that your question has been answered, “yes”?
No, not at all. Protection of shareholders in return for fostering a willingness to invest in potentially risky enterprises is a compromise that seems to have been agreed upon. Agreeing to this compromise does not imply that further compromise has been or should be agreed. It’s open for debate.
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### Author:  [@UDS](https://boards.straightdope.com/u/UDS)
#### Post date: [July 4, 2014, 8:16am UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/15 "2014-07-04T08:16:31Z")
Oh, sure. I take your point.
But the limited liability corporation is not confined to being a vehicle through which people invest in an enterprise with which they have no other connection but the investment. The great majority of corporations, in fact, do not serve this function. And closely-held corporations, in particular, do not typically serve this function. As pointed out, a corporation can also be used by someone who has established, and is running, an enterprise as a structure for limiting his personal exposure to the financial risks attendant upon the enterprise without sacrificing his involvement in or control of the enterprise. (And that would be a fairly common function for a closely-held corporation.) We have long accepted that as a proper function of a corporation (and I think there are good arguments for saying that this is a reasonable and socially beneficial thing to do).
if you phrase the question as you did in post #12:
> [@Princhester](#):
>
> . . . is it appropriate to allow stockholders to have a company that is in effect their alter ego when it suits them, but a separate legal entity for which they are not responsible when it does not?
. . . I think the only honest the answer is that we have been doing that for a long time, and it’s probably too late to ask if it’s appropriate. The real question is not whether we should allow people to have it both ways, but to what extent should we allow this. Where, exactly, do we draw the line?
Maybe the question is this. If a corporation is sufficiently the alter ego of an individual (or a small group of individuals) that we can impute their mental state to the company for the purposes of the criminal law, is it appropriate to _refuse_ to impute their mental state to the company for other legally relevant purposes?
Or, if a corporation can have an intention, why can’t it have a belief?
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### Author:  [@septimus](https://boards.straightdope.com/u/septimus)
#### Post date: [July 4, 2014, 10:12am UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/16 "2014-07-04T10:12:39Z")
> [@Bricker](#):
>
> How does a ruling that strengthens the PEOPLE’s right to keep and bear arms amount to the ascendency of corporations over people?
You’re joking right?
One of the few human rights not _yet_ granted to corporations is the right to vote. Thus the vested interests depend on the votes of the _particularly ignorant_ voters. And, no matter what your personal feelings about guns are, few if any rational observers would argue that the many MANY American voters who choose candidates based almost solely on gun rights are well informed.
Hope this helps.
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### Author:  [@hansel](https://boards.straightdope.com/u/hansel)
#### Post date: [July 4, 2014, 4:31pm UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/17 "2014-07-04T16:31:35Z")
> [@UDS](#):
>
> Though, possibly, closely-held companies are the employers of only a small subset of the workers within the scope of the Obamacare regime.
Around 52% of the workforce, so a literal majority of them, if that percentage is accurate.
> [@](#):
>
> [Still, according to studies from Columbia University and New York University, closely held corporations employed 52 percent of the American workforce and accounted for slightly more than half – 51 percent – of economic output from the private sector.](http://www.washingtonpost.com/blogs/the-fix/wp/2014/06/30/a-lot-of-people-could-be-affected-by-the-supreme-courts-birth-control-decision/)
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### Author:  [@Bricker](https://boards.straightdope.com/u/Bricker)
#### Post date: [July 4, 2014, 4:54pm UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/18 "2014-07-04T16:54:18Z")
> [@UDS](#):
>
> I’m open to correction by someone better informed, but I think the legislation contained exemptions which would benefit primarily religious employers like churches, diocese, etc but which didn’t extent to HL.
The RFRA? No, it didn’t.
Here is a relevant part of the Dictionary Act, 1 USC § 1, whose purpose is to define words used in any Act of Congress:
> [@](#):
>
> the words “person” and “whoever” include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals…
And here is the RFRA, 42 USC § 2000bb:
> [@](#):
>
> (a) In general
> Government shall not substantially burden a person’s exercise of religion even if the burden results from a rule of general applicability, except as provided in subsection (b) of this section.
> (b) Exception
> Government may substantially burden a person’s exercise of religion only if it demonstrates that application of the burden to the person—
> (1) is in furtherance of a compelling governmental interest; and
> (2) is the least restrictive means of furthering that compelling governmental interest.
> (c) Judicial relief
> A person whose religious exercise has been burdened in violation of this section may assert that violation as a claim or defense in a judicial proceeding and obtain appropriate relief against a government. Standing to assert a claim or defense under this section shall be governed by the general rules of standing under article III of the Constitution.
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### Author:  [@Bricker](https://boards.straightdope.com/u/Bricker)
#### Post date: [July 4, 2014, 5:03pm UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/19 "2014-07-04T17:03:30Z")
> [@septimus](#):
>
> As is so so very often the case, regardless of whether the matter involves human rights, property rights, gun rights, or a disputed election, the Supreme Court split 5-4 with the 5 Justices appointed by Republicans approving the ascendancy of corporations over people, and the four Justices appointed by Democrats dissenting.
>
> In post-modern America the debate is increasingly less about
> _… What human rights should be extended to corporations?_
> and increasingly more about
> _… What corporate property rights should be denied to humans?_
> [@Bricker](#):
>
> How does a ruling that strengthens the PEOPLE’s right to keep and bear arms amount to the ascendency of corporations over people?
> [@septimus](#):
>
> You’re joking right?
>
> One of the few human rights not _yet_ granted to corporations is the right to vote. Thus the vested interests depend on the votes of the _particularly ignorant_ voters. And, no matter what your personal feelings about guns are, few if any rational observers would argue that the many MANY American voters who choose candidates based almost solely on gun rights are well informed.
>
> Hope this helps.
Wow.
No, that doesn’t help. So – if I follow your logic here – you’re saying that a court ruling that strengthens the people’s right to keep and bear arms is, in fact, strengthening the ascendancy of corporations over people.
But I don’t quite get the “because” part. According to you, the many voters who are single-issue gun voters are not well-informed, and corporations don’t have the right to vote, so… um… that?
I’m sorry, but this seems to be a pretty good example of a non sequiter. Could you break it out more simply, or syllogisticaly, so I can follow the steps of reasoning? Or if someone else gets the point, could you step in and give it a try?
Because I am lost.
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### Author:  [@davidm](https://boards.straightdope.com/u/davidm)
#### Post date: [July 4, 2014, 5:52pm UTC](https://boards.straightdope.com/t/does-the-hobby-lobby-decision-undermine-the-idea-of-a-corporation/692318/20 "2014-07-04T17:52:19Z")
**Bricker** , I think that **septimus** is looking at it as court rulings strengthening the ascendancy of gun manufacturers over people who want less guns on the streets. Obviously you see things differently, but I think that’s what he’s saying.
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