« Ind. Gov't. - Interesting contrast between two auto company stories [Updated] | Main | Ind. Courts. - "Ball State defends sex-discrimination lawsuit" »

Thursday, May 23, 2013

Ind. Decisions - 7th Circuit hears oral argument in Ind company challenge to requirement to include birth control in their employee benefits

The cases of Korte v. Sebelius, 12-3841 and Grote v. Sebelius, 13-1077, were argued before the 7th Circuit yesterday. Per this ILB entry from Jan. 30, 2013, on that date the 7th Circuit 2-1 panel reversed Judge Barker in Grote and consolidated Grote with Korte. From the ruling:

IT IS ORDERED that the motion for an injunction pending appeal is GRANTED. The defendants are enjoined pending resolution of this appeal from enforcing the contraception mandate against the Grote Family and Grote Industries.

IT IS FURTHER ORDERED that this case is consolidated with Korte. Oral argument will be scheduled by separate order when briefing has been completed.

In this long May 22nd argument preview, Andrew Harris of Employee Benefit News writes:
(Bloomberg) - The U.S. law requiring employers to provide health insurance coverage for birth control is set to come before an appeals court in cases brought by two businesses whose owners say they operate according to Catholic doctrine.

The businesses, a construction firm from southwestern Illinois and an auto-parts maker in southeastern Indiana, are scheduled today to ask the U.S. Court of Appeals in Chicago for an order barring enforcement of the measure while they challenge its constitutionality in lawsuits. * * *

The contraception requirement violates the U.S. Constitution's guarantee of freedom of religion and the federal Religious Freedom Restoration Act of 1993, according to Korte & Luitjohan Contractors Inc., based in Highland, Ill., and its controlling owners, Cyril and Jane Korte, and Madison, Ind.- based Grote Industries Inc. and its family owners.

Lower-court judges in each case rejected the businesses' requests for preliminary court orders exempting them from compliance with the law, ruling they weren't likely to prevail on the merits of their claims. The appeals court then ruled that the two businesses will remain exempt from the law until it renders a decision on their request for an injunction.

Congress "has long distinguished between religious organizations and for-profit secular corporations," the U.S. Justice Department said in a March 1 filing opposing the Kortes' request. "No court has ever found a for-profit company to be a religious organization for the purposes of federal law."

The Kortes told the lower court their company would face "ruinous" penalties of about $730,000 a year for failure to obey the mandate. The Grotes, too, said they faced irreparable harm in the form of fines and penalties for abiding their religious beliefs and defying the law.

Neither the Kortes nor the Grotes hire their workers based on their religions, and those employees aren't required to share their beliefs, the government says in its filings.

Federal law bars companies from using religion as a basis for discriminating in the terms or conditions of employment unless they otherwise qualify for a religious exemption from the federal Civil Rights Act of 1964, the U.S. says.

"Plaintiffs cannot circumvent this distinction by asserting that the contraceptive-coverage requirement is a substantial burden," the U.S. says.

The mandate doesn't compel either family, as individuals, to do anything, only their legally separate businesses, according to the U.S.

Here is a report by Manya A. Brachear that appeared late last evening at the Chicago Tribune website. Some quotes:
Lawyers for two Roman Catholic-owned companies in Illinois and Indiana argued before the Seventh Circuit Court of Appeals Wednesday that a law forcing them to include birth control in their employees' benefits would violate their First Amendment rights.

But in an unexpected twist during a hearing on the merits of a preliminary injunction, the lawyer for the U.S. government argued that accommodating the business owners' religious beliefs could violate the First Amendment as well.

Edward L. White III, a lawyer representing Korte & Luitjohan Contractors in the Downstate city of Highland, said the fines imposed for ignoring the contraception mandate would impose a substantial burden on the southern Illinois construction company and therefore violate the U.S. constitution.

“The mandate is depriving my clients of the free exercise of their Catholic faith,” said White, a lawyer for the American Center for Law & Justice based in Ann Arbor, Mich.

“The company is an extension of their beliefs as the two people who control the company,” he told the court.

But Alisa Klein, an attorney for the U.S. Department of Justice, said allowing a company to impose a religious framework on a diverse workforce would amount to fostering or enabling religious practice.

“At bottom, the concern is about establishing religion,” Klein said.

Judge Diane Sykes said the question before the court is not whether the mandate violates religious beliefs, but whether acting on those beliefs imposes a significant burden on a business owner.

“We are not competent to answer religious questions,” she said. * * *

Lawyers for the business owners have relied heavily on the 1993 Religious Freedom Restoration Act, a law that allowed exemptions from certain rules, as long as those exceptions don't harm the welfare of society.

Klein argued that the scope of that act doesn’t apply in this case.

Sykes frequently interrupted Klein’s arguments, leading spectators in the packed courtroom to conclude at least one judge had already made up her mind.

“Corporations have been held to be rights-bearing persons for purposes of all kinds of constitutional rights,” she told Klein. “What’s different about this?”

Lorie Chaiten, director of the Reproductive Rights Project for the American Civil Liberties Union of Illinois, which filed an amicus brief in the case, said that because the same three judges granted the preliminary injunction preventing the government from fining companies that don’t comply with the mandate, their line of questioning came as no surprise.

She agreed with the government’s caution regarding fostering or enabling religious practice.

“Government tries to achieve the appropriate balance of accommodating religion where it’s appropriate,” she said, “where the Supreme Court has said they can go vs. going so far that they’re in fact fostering, advancing and doing things that would run afoul of the establishment clause.”

Grote Industries, a Catholic-owned manufacturer of vehicle safety and lighting systems in Madison, Ind., made similar arguments before the Seventh Circuit on Wednesday, adding that the distinction between a company and its owner or controlling shareholders exists for “some purposes, but not moral purposes.”

“No doubt here the Grote family is being forced to choose,” lawyer Matthew Bowman argued. If they choose to disobey the mandate, they “forfeit the benefits of doing business at all according to their morality.”

Listen to the oral argument in William Grote, III v. Kathleen Sebelius.

Posted by Marcia Oddi on May 23, 2013 09:07 AM
Posted to Ind. (7th Cir.) Decisions