THE CORPORATE VEIL

When the United States Supreme Court decided (5-4), in Burwell v. Hobby Lobby (2014) that a for-profit corporation can, pursuant to the Religious Freedom Restoration Act of 1993 (RFRA), exercise religious freedom to exclude itself from the requirements stipulated within the Affordable Care Act (ACA), the majority bent over backwards to the point of breaking in order to establish some rationale for allowing corporate owners to ignore federal law because of their personal beliefs. They cite cases, make arguments, and even refer to the Dictionary Act to define a “person.” Their arguments are, however, neither persuasive nor relevant and serve only to impose religion into a non-religious area, perhaps to satisfy some personal beliefs of the Majority justices.

In her dissent, Justice Ginsberg, speaking for the minority (of the Court, not the population) picks the majority opinion apart piece by piece, but like the majority opinion itself, her arguments, with a single exception, are largely irrelevant. She successfully (in my opinion) refutes Justice Alito’s arguments that impose the Majority’s beliefs on a (now) vulnerable minority. But again, largely ignores the most central issue.

Corporations may be “persons,” but they are not “people.” A corporation is a legal fiction created for only two purposes. First, it shields the owners and directors of the corporation from personal liability for the acts of the corporation and, secondly, it provides certain financial advantages that are not available to an individual or “Sole Proprietorship” (tax advantages, benefits, etc.). Moreover, under U.S. law, all acts of the corporation must be at “arm’s length” or, in other words, totally separated from the owners and directors, or it will lose its corporate tax status and even allow a court to “pierce the corporate veil” in litigation against it, to reach the assets of the owners.

By ruling, in Citizens United and now in Hobby Lobby that the owners and directors of corporations can express their own opinions and beliefs through their corporations, the Court has created a unity of identity between the owners/directors, and their corporations that makes them merely alter egos. By law, corporations are intended to be separate “persons” from their owners and directors. It is their sole purpose.  As separate “persons,” those same owners and directors have no more right to impose their own religious beliefs upon them than they would if it were another human (“natural person”). It is now time for such corporations, so integrally related to their owners that transactions are no longer “at arm’s length,” to lose their corporate protection and be treated as the sole proprietorships they are.