Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 1 of 54 PageID #: 241

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1 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 1 of 54 PageID #: 241 UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MISSOURI EASTERN DIVISION FRANK R. O BRIEN JR., ) O BRIEN INDUSTRIAL HOLDINGS, LLC, ) ) PLAINTIFFS, ) CASE NO. 4:12-cv CEJ ) vs. ) ) ) UNITED STATES DEPARTMENT ) OF HEALTH AND HUMAN SERVICES; ) KATHLEEN SEBELIUS, in her official capacity ) as the Secretary of the United States Department ) of Health and Human Services; ) UNITED STATES DEPARTMENT OF ) THE TREASURY; TIMOTHY F. GEITHNER, ) in his official capacity as the Secretary of the ) United States Department of the Treasury; ) UNITED STATES DEPARTMENT OF LABOR; ) and HILDA L. SOLIS, in her official capacity as ) Secretary of the United States Department of Labor, ) ) DEFENDANTS. ) ) PLAINTIFFS MEMORANDUM IN OPPOSITION TO DEFENDANTS MOTION TO DISMISS PLAINTIFFS FIRST AMENDED COMPLAINT

2 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 2 of 54 PageID #: 242 TABLE OF CONTENTS Page INTRODUCTION... 1 ESSENTIAL STATUTORY BACKGROUND... 3 STANDARD OF REVIEW... 6 I. THE FIRST AMENDED COMPLAINT SUFFICIENTLY ALLEGES CLAIMS UNDER THE RELIGIOUS FREEDOM RESTORATION ACTION ( RFRA )... 6 A. Plaintiffs Have Sufficiently Alleged a Substantial Burden on their Religious Exercise under RFRA The First Amended Complaint Sufficiently Alleges a Substantial Burden on the Religious Exercise of OIH The Amended Complaint Sufficiently Alleges a Substantial Burden on the Religious Exercise of Frank O Brien One Retains the Right to Religious Exercise in the Commercial Marketplace B. The Government Cannot Meet the Demanding Standard of Strict Scrutiny under RFRA C. Government Fails to Demonstrate a Compelling Governmental Interest D. The Mandate is not the Least Restrictive Means to Furthering the Government s Alleged Governmental Interests II. THE FIRST AMENDED COMPLAINT SUFFICIENTLY ALLEGES CLAIMS UNDER THE FREE EXERCISE CLAUSE A. The Mandate is not Neutral B. The Mandate is not Generally Applicable i

3 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 3 of 54 PageID #: 243 III. THE FIRST AMENDED COMPLAINT SUFFICIENTLY ALLEGES CLAIMS UNDER THE ESTABLISHMENT CLAUSE IV. THE FIRST AMENDED COMPLAINT SUFFICIENTLY PLEADS CLAIMS UNDER THE FREE SPEECH CLAUSE V. THE FIRST AMENDED COMPLAINT SUFFICIENTLY ALLEGES VIOLATIONS OF THE ADMINISTRATIVE PROCEDURE ACT A. Plaintiffs Have Prudential Standing To Raise Their APA Claim B. Plaintiffs May Proceed On The Merits Of Their APA Claim Plaintiffs Sufficiently Allege that Including Abortifacients in the Mandate Violates the ACA Plaintiffs Sufficiently Allege that the Mandate Was Imposed Arbitrarily And Capriciously With Regard To For-Profit, Secular Employers VI. RESPONSE TO AMICUS CURIAE BRIEF OF AMERICAN CIVIL LIBERTIES UNION CONCLUSION ii

4 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 4 of 54 PageID #: 244 TABLE OF AUTHORITIES CASES Page Agostini v. Felton, 521 U.S. 203 (1997) Anderson v. Celebrezze, 460 U.S. 780 (1983) Ass n of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150 (1970) Braunfeld v. Brown, 366 U.S. 599 (1961)...14, 30 Bray v. Alexandria Women s Health Clinic, 506 U.S. 263 (1993) Brown v. Entm t Merchs. Ass n, 131 S. Ct (2011)...18, 22, 23, 25 Cantwell v. Connecticut, 310 U.S. 296 (1940) Church of the Lukumi Babalu Aye v. City of Hialeah, 508 U.S. 520 (1993)... 17, 26, 27, 29, 30 City of Boerne v. Flores, 521 U.S. 507 (1997) Citizens United v. FEC, 130 S. Ct. 876 (2010)... 8, 10 Commack Self-Service Kosher Meats, Inc. v. Hooker, 800 F. Supp. 2d 405 (E.D. N.Y. 2011) Consol. Edison Co. v. Public Serv. Comm n, 447 U.S. 530 (1980) Corp. of Presiding Bishop v. Amos, 483 U.S. 327 (1987) Cutter v. Wilkinson, 544 U.S. 709 (2005) DeLoss v. Dep t of HUD, 822 F.2d 1460 (8th Cir. 1987) EEOC v. Townley Eng g & Mfg. Co., 859 F.2d 610 (9th Cir. 1988)...13, 15 Employment Div. v. Smith, 494 U.S. 872 (1990)...16, 26, 28, 29 iii

5 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 5 of 54 PageID #: 245 Fraternal Order of Police v. City of Newark, 170 F.3d 359 (3d Cir. 1999) Frazee v. Employment Security Dept., 489 U.S. 829 (1989) Gillette v. United States, 401 U.S. 437 (1971) Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418 (2006)...17, 25 Harrell v. Donahue, 638 F.3d 975 (8th Cir. 2011)... 7 Hernandez v. Comm r of Internal Revenue, U.S. 680 (1989) Johanns v. Livestock Mktg. Ass n., 544 U.S. 550 (2005) Knieriem v. Group Health Plan, Inc., 434 F.3d 1058 (8th Cir. 2006)... 6 Knox v. Serv. Emps. Int l Union, 132 S.Ct (2012) Larson v. Valente, 456 U.S. 228 (1982) Lemon v. Kurtzman, 403 U.S. 602 (1973) McDaniel v. Paty, 435 U.S. 618 (1978) Mitchell v. Helms, 530 U.S. 793 (2000) Mohamad v. Palestinian Auth., 132 S. Ct (2012)... 8 Monell v. New York City Dept. of Social Sers., 436 U.S. 658 (1978)... 8 Motor Vehicle Mfrs. Ass n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) Newland v. Sebelius, 2012 U.S. Dist. LEXIS (D. Colo. July 27, 2012)... 3, 17, 19, 21, 24 Nat l Fed n of Indep. Bus. v. Sebelius, 132 S. Ct (2012)... 3 Olsen v. Mukasey, 541 F.3d 827, 831 (8th Cir. 2008) iv

6 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 6 of 54 PageID #: 246 Pacific Gas & Electric v. Public Utils. Comm n, 475 U.S. 1 (1986)... 8 Primera Iglesia Bautista Hispana v. Broward Cnty., 450 F.3d 1295 (11th Cir. 2006)... 8 Quaring v. Peterson, 728 F.2d 1121 (8th Cir. 1984) Riley v. Nat l Fed n of Blind, 487 U.S. 781 (1988) Rosebud Sioux Tribe v. McDivitt, 286 F.3d 1031 (8th Cir. 2002) Rumsfeld v. Forum For Academic & Inst. Rights, Inc., 547 U.S. 47 (2006) Rust v. Sullivan, 500 U.S. 173 (1991) Scheuer v. Rhodes, 416 U.S. 232 (1974) Schmedding v. Tnemec Co., Inc., 187 F.3d 862 (8th Cir. 1999)... 6 Seven-Sky v. Holder, 661 F.3d 1 (D.C. Cir. 2011) Sherbert v. Verner, 374 U.S. 398 (1963)...6, 15, 17, 18 Stormans, Inc. v. Selecky, 586 F.3d 1109 (9th Cir. 2009)...13, 14, 15 Texas v. Johnson, 491 U.S. 397 (1989) United States v. Ali, 682 F.3d 705 (8th Cir. 2012)... 7 United States v. Lee, 455 U.S. 252 (1982)...14, 25 United States v. Playboy Entm t Group, Inc., 529 U.S. 803 (2000) United States v. Robel, 389 U.S. 258 (1967)...22, 24 W. Va. State Bd. of Educ. v. Barnette, 319 U.S. 624 (1943) Walz v. Tax Commission of New York, 397 U.S. 664 (1970) Wisconsin v. Yoder, 406 U.S. 205 (1972)...6, , 18 v

7 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 7 of 54 PageID #: 247 STATE CASES Catholic Charities of the Diocese of Albany v. Serio, 859 N.E.2d 459 (N.Y. Ct. App. 2006) Catholic Charities of Sacramento, Inc. v. Superior Court, 85 P.3 67 (Cal. 2004)...32, 37 McClure v. Sports & Health Club, Inc., 370 N.W.2d 844 (Minn. 1985)... 8, 9 Morr-Fitz, Inc. v. Blagojevich, 231 Ill. 2d 474 (2008)...11, 15 Morr-Fitz, Inc. et al. v. Blagojevich, No CH (Ill. Cir. Ct. 7th, Apr. 5, 2011)...11, 15 FEDERAL STATUTES Pub. L. No , 124 Stat. 119 (2010)...3, 37, 40 Pub. L. No , Title VII, Div. C, U.S.C U.S.C. 706(2)(A)-(B) U.S.C. 4980D U.S.C. 4980D(b) U.S.C. 4980H(a)(c)(1)... 5, U.S.C. 4980H(c)(2) U.S.C. 4980H(c)(2)(A) U.S.C. 5000A(d)(2)(a)(i), (ii), (b)(ii)... 5, U.S.C. 300a U.S.C. 300gg-13(a)(4) U.S.C U.S.C (a)(1) vi

8 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 8 of 54 PageID #: U.S.C (b)(1) U.S.C (b)(1)(A) (J) (2012) U.S.C U.S.C (b)(1)(A)(i) U.S.C (b)(3) U.S.C (b)(1) U.S.C (f)(2) U.S.C. 2000bb... 6, 7 42 U.S.C. 2000bb-1(a) U.S.C. 2000bb-1(b)... 7, U.S.C. 2000bb-2(4) U.S.C. 2000cc U.S.C. 2000cc-5(7)(A) U.S.C. 2996f(b)(8) FEDERAL REGULATIONS 26 C.F.R T C.F.R C.F.R C.F.R (a)(iv)(B)... 5, C.F.R Fed. Reg. 34,538 (June 17, 2010) Fed. Reg. 41,726 (July 19, 2010)...4, 5, 20 vii

9 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 9 of 54 PageID #: Fed. Reg. 46,621 (Aug. 3, 2011)...4, 5, Fed. Reg , 5, Fed. Reg. 16, STATE STATUTES 75 Ill. Comp. Stat. Ann. 35/1 et seq Mo. Stat. Ann Mo. Rev. Stat (2) Mo. Rev. Stat , 4(1) MISCELLANEOUS Am. Ass n of Pro-Life Obstetricians & Gynecologists, EC Info, 40 Application of the New Health Reform Provisions of Part A of Title XXVII of the PHS Act to Grandfathered Plans, 5 Elizabeth Anscombe, Contraception and Chastity, The Human World, vol. 7 (1972) at Guttmacher Institute, Fact Sheet: Contraceptive Use in the United States, July 2012, 22 Janet Smith, Why Humanae Vitae Was Right: A Reader, Ignatius Press (1993) Mary Eberstadt, Adam and Eve After the Pill: Paradoxes of the Sexual Revolution, Ignatius Press (2012) Staman & Shimabukuro, Cong. Research Serv., RL , Enforcement of the Preventative Health Care Services Requirements of the Patient Protection and Affordable Care Act (2012)... 6 viii

10 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 10 of 54 PageID #: 250 INTRODUCTION O Brien Industrial Holdings, LLC, (OIH), is a holding company whose Chairman and Managing Member is St. Louis businessman, Frank R. O Brien, Jr. O Brien holds the sole voting interest in the company and is solely responsible for setting all policies governing the conduct of all phases of the company s business. OIH finds, digs up and processes for various industrial uses refractory (heat resistant) and ceramic materials. The company has 87 employees. The company s website the place where people actually go to learn about OIH states that the company s Mission is to make our labor a pleasing offering to the Lord while enriching our families and society. 1 The site lists a number of the company s Values, the first of which reads: Our conduct is guided by the Golden Rule and the Ten Commandments. 2 The website further explains OIH s Mission and Values by quoting St. Paul s Epistle to the Ephesians (Ephesians 6:1-9). 3 It goes on to describe OIH s goal of seeing that all of its employees be able to own their own home and explains how the company hopes to accomplish that goal through an annual profit sharing plan, a 401(k) plan, a college scholarship plan for employees children, and a charitable fund (named for St. Nicholas) funded through tithing on the earnings of the company. In addition, the company provides and has always provided a policy of group health insurance for its employees. When people enter the offices of OIH on McRee Avenue, they see in the lobby a large statue of the Sacred Heart of Jesus. Frank O Brien and his family are proud Catholics, and O Brien intends to conduct OIH s business in a manner consistent with his Catholic faith. In 1 O Brien Industrial Holdings, LLC, Mission, (last visited Aug. 2, 2012). 2 Id. 3 O Brien Industrial Holdings, LLC, Explanation of Mission & Values, and_values_details.html (last visited Aug. 2, 2012). 1

11 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 11 of 54 PageID #: 251 fact, it is for that reason that, since he took ownership of the company in 1992, O Brien has always sought to avoid paying for things such as contraceptives, sterilization and abortion as part of the company s health insurance policy. OIH has more than once disqualified companies or other insurance arrangements that would not exclude contraceptive coverage. For most of the time since 1992, O Brien succeeded in providing health benefits sans contraceptives although, several years ago, coverage of contraceptives was inadvertently included in the policy against the express request of OIH. Since learning of this, the company has been exploring ways to undo it, something OIH would clearly be permitted to do under Missouri law and even under federal law until now. Now, thanks to the Mandate being challenged in this case, Frank O Brien and OIH will no longer be allowed to conduct their business in a manner consistent with their religious beliefs. For, beginning with a company s first health plan renewal date following August 1, 2012 in OIH s case January 1, 2013 the government will coerce business people like Frank O Brien into paying for services they consider immoral. O Brien will be forced to obey the Mandate, or see his company fined and penalized into oblivion. He brings this lawsuit challenging the government s Mandate because he believes that the First Amendment and the Religious Freedom Restoration Act forbid the government to destroy his livelihood not to mention the livelihoods of his 87 employees unless he agrees to violate his conscience. In bringing its Motion to Dismiss O Brien s challenge, the government attempts to persuade this Court that a regulatory scheme from which the government has already exempted tens of thousands of business owners who employ 100 million employees would be blown to smithereens if a similar exemption were to be granted to a company with 87 employees. Put another way, the government says that its goal of furthering its compelling interest of the 2

12 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 12 of 54 PageID #: 252 highest order in ensuring universal access to no-cost contraception would be hopelessly thwarted by increasing the pool of non-covered employees by a factor of %! However laudatory the government s goal may have been in promulgating the contraceptives Mandate, the stubbornness with which the government defends its refusal to extend to the Frank O Briens of the world the same exemption it provides for the employers of the 100 million people 4 currently unprotected borders on the shockingly absurd. In fact, the first court to address this very issue, on notably similar facts, has already granted a Preliminary Injunction against the Mandate, rejecting the principal arguments being made by the government herein. See Newland v. Sebelius, 2012 U.S. Dist. LEXIS at *23 (D. Colo. July 27, 2012) (noting, inter alia, that the government s massive exemption completely undermines any compelling interest in applying the preventive care coverage mandate to Plaintiffs. ) For the reasons argued herein, Plaintiffs have sufficiently alleged in their First Amended Complaint colorable claims that the Mandate violates O Brien s and OIH s rights under the Religious Freedom Restoration Act, the First Amendment s Free Exercise, Establishment, and Free Speech Clauses, as well as the Administrative Procedure Act. Accordingly, this Court should deny the motion and permit the case to go forward. ESSENTIAL STATUTORY BACKGROUND On March 23, 2010, the Affordable Care Act ( ACA ), Pub. L. No , 124 Stat. 119 (2010), became law. 5 Among its many healthcare reforms, the ACA requires group health 4 The number of employees currently not covered by the mandate is greater than the entire populations of 229 of the planet s 242 countries. 5 In Nat l Fed n of Indep. Bus. v. Sebelius, 132 S. Ct (2012), the Court upheld the so-called individual mandate of the ACA under the Constitution s taxing power. In so doing, the Court did not rule on the constitutionality of the Mandate challenged herein. In fact, as Justice Ginsburg observed, A mandate to purchase a particular product would be unconstitutional if, for example, the edict impermissibly abridged the freedom of speech, interfered with the free exercise of religion, or infringed on a liberty interest protected by the Due Process Clause. Id. at 2624 (Ginsburg, J., concurring in part, dissenting in part). 3

13 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 13 of 54 PageID #: 253 plans to provide no-cost coverage for the preventative care and screening of women. Specifically, [a] group health plan and a health insurance issuer offering group or individual health insurance coverage shall, at a minimum[,] provide coverage for and shall not impose any cost sharing requirements for (4) with respect to women, such additional preventive care and screenings... as provided for in comprehensive guidelines supported by the Health Resources and Services Administration [ HRSA ] for purposes of this paragraph. 42 U.S.C. 300gg- 13(a)(4). On August 1, 2011, HRSA issued guidelines defining the scope of women s preventive services for purposes of the ACA coverage mandate. The HRSA guidelines include, among other things, the full range of Food and Drug Administration-approved contraceptive methods, sterilization procedures, and patient education and counseling for women with reproductive capacity. HRSA, Women s Preventive Services: Required Health Plan Coverage Guidelines available at (last visited August 3, 2012). Also on August 1, 2011, Defendants promulgated an interim final rule ( the Mandate ), requiring all group health plan[s] and... health insurance issuer[s] offering group or individual health insurance coverage to provide all FDA-approved contraceptive methods and sterilization procedures. 76 Fed. Reg , (Aug. 3, 2011); 45 C.F.R This interim rule, along with the religious employer exemption described below, was adopted as final, without change, on February 15, Fed. Reg. 8725, Not all employers are required to comply with the Mandate. Grandfathered health plans, i.e., a plan in existence on March 23, 2010, and that has not undergone any of a defined set of changes, 6 are exempt from compliance with the Mandate. See 75 Fed. Reg. 41,726, 41,731 (July 6 See 26 C.F.R T; 29 C.F.R ; 45 C.F.R

14 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 14 of 54 PageID #: , 2010). 7 HHS estimates that 98 million individuals will be enrolled in grandfathered group health plans in Id. at 41,732. Even though the Mandate does not apply to grandfathered health plans, many provisions of ACA do. 75 Fed. Reg , (June 17, 2010). 8 Also exempted from the Mandate are religious employers, as defined at 45 C.F.R (a)(iv)(B). To be eligible for the exemption, such employers must meet[ ] all of the following criteria: (1) The inculcation of religious values is the purpose of the organization. (2) The organization primarily employs persons who share the religious tenets of the organization. (3) The organization serves primarily persons who share the religious tenets of the organization. (4) The organization is a nonprofit organization as described in section 6033(a)(1) and section 6033(a)(3)(A)(i) or (iii) of the Internal Revenue Code of 1986, as amended. 76 Fed. Reg , (Aug. 3, 2011); see 77 Fed. Reg (Feb. 15, 2012). In addition, because employers with fewer than 50 full-time employees have no obligation to provide health insurance for their employees under the ACA, they have no obligation to comply with the Mandate. 26 U.S.C. 4980H(c)(2)(A). Finally, under the ACA, individuals are exempt from the requirement to obtain health insurance if they are members of a recognized religious sect or division that conscientiously objects to acceptance of public or private insurance funds or are members of a health care sharing ministry. 26 U.S.C. 5000A(d)(2)(Aa)(i), (ii), (B)(ii). Non-exempt employers who fail to provide an employee health insurance plan will be exposed to annual fines of roughly $2,000 per full-time employee. See 26 U.S.C. 4980H(a), (c)(1). Additionally, failure to provide certain required coverage may be subject to an 7 See also 42 U.S.C ; 76 Fed. Reg , ( The requirements to cover recommended preventive services without any cost-sharing do not apply to grandfathered health plans ). 8 A summary of which ACA provisions apply to grandfathered health plans and which do not, can be found here: Application of the New Health Reform Provisions of Part A of Title XXVII of the PHS Act to Grandfathered Plans, available at ebsa/pdf/grandfatherregtable.pdf. (last visited August 3, 2012). 5

15 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 15 of 54 PageID #: 255 assessment of $100 a day per employee. See 26 U.S.C. 4980D(b); see also Staman & Shimabukuro, Cong. Research Serv., RL , Enforcement of the Preventative Health Care Services Requirements of the Patient Protection and Affordable Care Act (2012) (asserting that this tax applies to employers who violate the preventive care provision of the ACA). STANDARD OF REVIEW A motion to dismiss should be granted only if it appears beyond doubt that the plaintiff can prove no set of facts to warrant a grant of relief. Knieriem v. Group Health Plan, Inc., 434 F.3d 1058, 1060 (8th Cir. 2006). All well pleaded factual allegations must be taken as true and all reasonable inferences drawn in favor of the plaintiffs. Id. Further, a dismissal under Rule 12(b)(6) should be granted only in the unusual case in which a plaintiff includes allegations that show on the face of the complaint that there is some insuperable bar to relief. Schmedding v. Tnemec Co., Inc., 187 F.3d 862, 864 (8th Cir. 1999). As discussed herein, Defendants Motion to Dismiss under Rules 12(b)(6) and (b)(1) should be denied. ARGUMENT I. THE FIRST AMENDED COMPLAINT SUFFICIENTLY ALLEGES CLAIMS UNDER THE RELIGIOUS FREEDOM RESTORATION ACTION ( RFRA ). A. Plaintiffs Have Sufficiently Alleged a Substantial Burden on their Religious Exercise under RFRA. The purpose of the Religious Freedom Restoration Act ( RFRA ), 42 U.S.C. 2000bb, et seq., is twofold: (1) to restore the compelling interest test as set forth in Sherbert v. Verner, 374 U.S. 398 (1963) and Wisconsin v. Yoder, 406 U.S. 205 (1972) and to guarantee its application in all cases where free exercise of religion is substantially burdened; and (2) to provide a claim or defense to persons whose religious exercise is substantially burdened by government. 6

16 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 16 of 54 PageID #: U.S.C. 2000bb(b); see Harrell v. Donahue, 638 F.3d 975, 984 (8th Cir. 2011) (explaining that RFRA restored the pre-smith status quo of requiring the Government to show a compelling interest for any law that substantially burdened the free exercise of religion ). Under RFRA, the term exercise of religion includes any exercise of religion, whether or not compelled by, or central to, a system of religious belief. 42 U.S.C. s 2000cc-5(7)(A), incorporated by 42 U.S.C. s 2000bb-2(4). Under RFRA, the [g]overnment shall not substantially burden a person s exercise of religion even if the burden results from a rule of general applicability. 42 U.S.C. 2000bb-1(a). 9 The only time the federal government may substantially burden a person s exercise of religion is 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. 42 U.S.C. 2000bb-1(b) (emphasis added). Defendants assert that because OIH is a secular for-profit entity it does not have any religious exercise to be burdened, and because the Mandate does not apply to individuals, Frank O Brien s religious exercise cannot burdened. The underlying theme of Defendants arguments on these points is the insupportable notion that a business or business owner has no right to assert a religious claim at all. As to all points, Defendants are wrong. 1. The First Amended Complaint Sufficiently Alleges a Substantial Burden on the Religious Exercise of OIH. RFRA does not define person within the statute and therefore does not exclude a forprofit corporation, like OIH, as being a person under the statute. Indeed, there can be little 9 Under the Free Exercise Clause, [s]ubstantially burdening one s free exercise of religion means that the regulation must significantly inhibit or constrain conduct or expression that manifests some central tenet of a person s individual religious beliefs; must meaningfully curtail a person s ability to express adherence to his or her faith; or must deny a person reasonable opportunity to engage in those activities that are fundamental to a person s religion. United States v. Ali, 682 F.3d 705, (8th Cir. 2012) (citations and internal marks omitted). 7

17 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 17 of 54 PageID #: 257 doubt that a corporation such as OIH is a person under RFRA. According to 1 U.S.C. 1, [i]n determining the meaning of any Act of Congress, unless the context indicates otherwise... person... include[s] corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals. See also Mohamad v. Palestinian Auth., 132 S. Ct. 1702, 1707 (2012) (explaining the word person often includes corporations, and Congress and the Supreme Court often use the word individual to distinguish between a natural person and a corporation ); Monell v. New York City Dept. of Social Sers., 436 U.S. 658, 687 (1978) ( by 1871, it was well understood that corporations should be treated as natural persons for virtually all purposes of constitutional and statutory analysis ). There can also be little doubt that OIH can assert rights under the U.S. Constitution. The Supreme Court has long recognized that First Amendment protection extends to corporations. Citizens United v. FEC, 130 S.Ct. 876, 899 (2010). See also, Pacific Gas & Electric v. Pub. Utils. Comm n, 475 U.S. 1, 16 (1986) ( For corporations as for individuals, the choice to speak includes within it the choice of what not to say ). In fact, the Court has rejected the argument that political speech of corporations or other associations should be treated differently under the First Amendment simply because such associations are not natural persons. Id. at 900 (citations omitted). In addition, according to the Eleventh Circuit, adjudicating a claim under the Religious Land Use and Institutionalized Act, 42 U.S.C. 2000cc et seq., corporations possess Fourteenth Amendment rights of equal protection, due process, and, through the doctrine of incorporation, the free exercise of religion. Primera Iglesia Bautista Hispana v. Broward Cnty., 450 F.3d 1295, 1305 (11th Cir. 2006), 450 F.3d 1295, 1305 (11th Cir. 2006) (citations omitted and emphasis added). See also, McClure v. Sports & Health Club, Inc., 370 N.W.2d 844, 850 8

18 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 18 of 54 PageID #: 258 (Minn. 1985) (the conclusory assertion that a corporation has no constitutional right to free exercise of religion is unsupported by any cited authority ). While Defendants are correct that OIH is a distinct legal entity under Missouri s Limited Liability Company Act, Mo. Ann. Stat et seq., 10 Defendants fail to appreciate the reality that a corporation does not think, act, and establish business values and practices but through human agency. It is the human agency of the corporation that defines the purposes of the corporation, gives it its character, and gives shape to its ethos in addition to maximizing profits and fulfilling the commercial mission of the business. As with any corporation, OIH is run, maintained, and operated by human agency, in this case, ultimately by Frank O Brien. Mr. O Brien is the Chairman and Managing Member of OIH. He is responsible for setting all policies governing the conduct of all phases of the business of OIH and the Christy family of companies. Doc. 19 at 10. Under O Brien s ownership and management, OIH s mission is to make our labor a pleasing offering to the Lord while enriching our families and society. Id. at 20. The conduct of OIH is guided by the Golden Rule and the Ten Commandments. Id. at 21. OIH and its subsidiaries pledge to tithe on the earnings of the Companies, part of which is accomplished through the St. Nicholas Fund. Id. at 23. The Explanation of Mission and Values of OIH has its source in the New Testament book, Ephesians, chapter 6: Work hard and willingly but do it for the Lord and not for the sake of men. You can be sure that everyone, whether slave or 10 The government reads too much into the phrase for-profit secular employer from the First Amended Complaint. All that means here is that the primary business of OIH is not religious education, teaching, or charitable work. The primary business of OIH is the mining and processing of refractory and ceramic materials. As explained herein, however, this does not mean that OIH cannot operate its business according to religious principles and with a religious mission pursuant to the one authorized for establishing such policies and mission. It also does not mean that OIH cannot have a religious-based policy regarding abortion-inducing drugs, sterilization, and contraception services and products dictated by the Mandate. 9

19 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 19 of 54 PageID #: 259 free man, will be properly rewarded by the Lord for whatever work he has done well. Id. at 22. These are the stated religious positions and policies of OIH; they are the beliefs of its chairman and manager, Frank O Brien; they are posted on the company s website for the world to see. Id. at 22. As a Catholic who objects to contraceptive services, O Brien has made it the policy of OIH to exclude contraceptive services from employee health plans since at least Id. at 27. And during most this time, OIH health plan descriptions have indicated that the company does not provide coverage for contraceptive services and OIH has disqualified companies or other insurance schemes that would not exclude contraceptive coverage. Id. 11 In sum, OIH has a religious-based opposition to including contraceptive services in its employee health plans per its sole shareholder, chairman, and manager, Frank O Brien. The fact that OIH was not principally organized to carry out a religious purpose or is not specifically affiliated with a religious entity, as Defendants assert, Doc. 26 at 14, is of no moment. A for-profit business may not be organized for the purpose of engaging in political speech, but it nonetheless has the right to engage in such speech. See Citizens United, 130 S.Ct. at 913 ( No sufficient governmental interest justifies limits on the political speech of nonprofit or for-profit corporations ). Similarly, a for-profit business, such as OIH, may not be organized for purposes of religious exercise, but it nonetheless has a right to engage in religious exercise free from substantial burdens imposed by the government. Just as OIH would be permitted to 11 Several years ago, when OIH switched from a self-insured plan to a fully insured plan, contraceptive services was inadvertently included contrary to the company s longstanding practice and intentions, as well as the actual coverage request and without OIH s knowledge. Doc. 19, at 28. Defendants argue that this fact undermines OIH s claim to a substantial burden on its religious exercise. It does no such thing. Since discovering the inadvertence, OIH has been investigating ways to return to its longstanding policy of not providing contraceptive services in employee health plans. Id. If OIH were not sincere in its religious position on this issue, it would not be seek to correct the inadvertence, much less undertake to sue the federal government in requiring that contraceptive services be included in its employee health plan. 10

20 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 20 of 54 PageID #: 260 challenge a law or regulation forbidding for-profit companies from displaying political signs on their property, OIH has the right to challenge, as it is doing here, a government mandate that substantially burdens its religious exercise. The Supreme Court has never held that while a commercial corporation can engage in political speech it cannot engage in religious exercise. Indeed, there would be no principled basis to hold that the First Amendment protection extends to corporations, id. at 899 except for the Free Exercise Clause. In Morr-Fitz, Inc. v. Blagojevich, 231 Ill. 2d 474 (2008), the Illinois Supreme Court held that plaintiffs had standing to challenge a state regulation requiring that a pharmacy dispense emergency contraception without delay upon receipt of a valid prescription. The plaintiffs included three corporations that own and operate pharmacies in Illinois who asserted claims under, inter alia, the Illinois Religious Freedom Restoration Act, 775 Ill. Comp. Stat. Ann. 35/1 et seq. and the federal Free Exercise Clause. On remand, the Seventh Illinois Circuit Court ruled in favor of the plaintiffs. Morr-Fitz, Inc. et al. v. Blagojevich, No CH (Ill. Cir. Ct. 7th, Apr. 5, 2011); see also Commack Self-Service Kosher Meats, Inc. v. Hooker, 800 F. Supp. 2d 405 (E.D.N.Y. 2011) (adjudicating a corporation s free exercise challenge to a New York statute regulating the labeling and marketing of food sold as kosher ). Missouri law, under which OIH is incorporated, recognizes that a corporate, for-profit, entity, such as OIH, can have religious, moral, or ethical beliefs even with respect to contraceptive services. Missouri s own contraception mandate, for example, includes a complete exemption not limited to religious or non-profit employers for any employer for whom the use or provision of such contraceptives is contrary to the moral, ethical or religious beliefs or tenets of such person or entity. Mo. Rev. Stat , 4(1). Missouri law also provides that No... hospital... shall be required to treat or admit for treatment any woman for the 11

21 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 21 of 54 PageID #: 261 purpose of abortion if such treatment or admission for treatment is contrary to the established policy of, or the moral, ethical or religious beliefs of, such... hospital. Mo. Rev. Stat (2). Again, the statute makes no distinction between religious or secular hospitals, or for-profit or non-profit hospitals. Numerous federal laws, including ACA itself, prohibit discrimination against entities for their position on abortion whether or not they are commercial, for-profit entities. See, e.g., 42 U.S.C ; 42 U.S.C. 300a-7; 42 U.S.C. 2996f(b)(8). In fact, the federal government exempts religious health plans from a contraceptive coverage mandate in the federal employees health benefits program, if the carrier for the plan objects to such coverage on the basis of religious beliefs. Consolidated Appropriations Act of 2012, Pub. L. No , Title VII, Div. C, 727. Finally, defendants acknowledge that an accommodation for religious employers affected by the Mandate may be forthcoming to forprofit entities under certain circumstances, Doc , n.16, thereby implicitly recognizing that for-profit entities can be burdened under the Mandate. The conclusion is clear: The corporate status of OIH, which religiously objects to providing, paying for, or subsidizing contraceptive services, does not preclude it from asserting a claim under RFRA. To the contrary, mandating OIH to include religiously objectionable products and services in its employee health plan substantially burdens its exercise of religion. 2. The Amended Complaint Sufficiently Alleges a Substantial Burden on the Religious Exercise of Frank O Brien. In addition to asserting that OIH has no religious exercise to be burdened, Defendants argue that Frank O Brien himself has no religious exercise to be burdened because the Mandate does not apply to individuals. As previously discussed, OIH does not act independently of human agency. Frank O Brien is the sole shareholder, chairman, and manager of OIH and O Brien has shaped OIH to reflect his religious beliefs and values. While OIH is technically 12

22 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 22 of 54 PageID #: 262 independent of O Brien, it is absurd to suggest that what happens to OIH does not affect, in a direct and immediate way, O Brien himself. All financial penalties paid by OIH for refusing to comply with the Mandate will have a direct financial impact on O Brien solely on account of his Catholic beliefs with respect to abortion and contraception. The Mandate that imposes a substantial burden on OIH therefore imposes a substantial burden on O Brien himself. In Stormans, Inc. v. Selecky, 586 F.3d 1109 (9th Cir. 2009), a for-profit corporation doing business as Ralph s Thriftway, a grocery store with a pharmacy, challenged on free exercise grounds a Washington rule requiring pharmacies to fill prescriptions for emergency contraception. Intervenors in the case argued that Stormans lacked standing to assert a claim under the Free Exercise Clause. Stormans asserted that Ralph s is an extension of the beliefs of members of the Stormans family, and that the beliefs of the Stormans family are the beliefs of Ralph s. Id. at While the court declined to decide whether a for-profit corporation can assert its own rights under the Free Exercise Clause, it held that the corporation had standing to assert the free exercise rights of its owners. Id. at In a prior Ninth Circuit case, EEOC v. Townley Eng g & Mfg. Co., 859 F.2d 610 (9th Cir. 1988), the owners of a company required employees to attend weekly devotional services in the company s plant. In response to an employee s complaint of religious discrimination under Title VII, the EEOC sued and obtained an injunction against the mandatory devotional services. The company appealed, claiming an infringement of the Free Exercise Clause. Noting that Townley presents no rights of its own different from or greater than its owners rights, the Ninth Circuit held that the for-profit corporation could assert the free exercise rights of its owners. Id. at 620, n.15. Moreover, Townley illustrates that an organization, which asserts its owner s free exercise 13

23 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 23 of 54 PageID #: 263 rights, need not be primarily religious; its main function may be a secular activity. Stormans, 586 F.3d at 1120, n.9. In light of these cases, O Brien does not face a mere trickle-down harm, as Defendants suggest. Doc. 26 at 16. As far as the religious exercise at issue in this case is concerned, OIH is an extension of the religious beliefs of O Brien and the religious beliefs of O Brien are the religious beliefs of OIH. The financial penalties imposed on OIH for not complying with the Mandate or dropping insurance coverage entirely will not just impact OIH, but will also impact O Brien himself. In short, O Brien s exercise of his Catholic beliefs with respect to abortion and contraception are substantially burdened by the Mandate and the Amended Complaint so alleges. 3. One Retains the Right to Religious Exercise in the Commercial Marketplace. Defendants cite various cases in an attempt to argue that one abandons the right to religious exercise when one enters the commercial marketplace. This is simply not true. In United States v. Lee, 455 U.S. 252 (1982), for example, the Court did not hold that the mere fact that a person enters the commercial world deprives him of his right to religious exercise. On the contrary, the Court found that the obligation to comply with the social security system was a burden on the free exercise rights of Lee, an Amish farmer and carpenter. Id. at 257. The Court ultimately held that there was a compelling governmental interest that overrode Lee s free exercise claim, but this is a far cry from saying that Lee had no right to religious exercise in the commercial marketplace or that his religious exercise could not be substantially burdened by the government by virtue of his being engaged in business activity. Braunfeld v. Brown, 366 U.S. 599 (1961), was a case brought by for-profit, secular business owners on free exercise, among other, grounds. While the Supreme Court held that a law prohibiting Sunday retail sales did not substantially burden the religious exercise of the 14

24 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 24 of 54 PageID #: 264 Orthodox Jewish business owner plaintiffs, the Court did not question that a for-profit retail business owner could bring a free exercise challenge to the law at issue. Stormans, Townley, and Morr-Fitz, also support the proposition that when an individual or corporation enters the commercial marketplace, they do so without abandoning all rights to the exercise of religion. And it is not difficult to think of other cases where a for-profit entity could have religious beliefs and practices impacted by the government. A grocery store owned by Orthodox Jewish merchants religiously compelled to sell only kosher products would have the right to challenge, on religious grounds, a law mandating that groceries sell non-kosher foods. A bookstore run by Quakers would have the religious right not to sell books advocating armed conflict. A physicians practice run by evangelical pro-life doctors could assert a free exercise right not to be coerced by a government decree requiring all doctors to perform abortion services. The list of examples could easily be lengthened, but the point is sufficiently clear: a corporate entity, owned and managed by religious individuals, and committed to religious principles can have its religious exercise substantially burdened by the government. In this case, we have no hypothetical. It is the religious belief of O Brien that the contraceptive services required by the Mandate are immoral and wrong on religious grounds, and it has been a longstanding religious-based policy of OIH to exclude such services in employee health plans. In Sherbert, the compelling test of which is codified by RFRA, the Supreme Court described the substantial burden thus: The [agency] ruling forces her to choose between following the precepts of her religion and forfeiting benefits, on the one hand, and abandoning one of the precepts of her religion in order to accept work, on the other hand. Governmental imposition of such a choice puts the same kind of burden upon the free exercise of religion as would a fine imposed against appellant for her Saturday worship. Sherbert, 374 U.S. at

25 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 25 of 54 PageID #: 265 Here, the Mandate forces Plaintiffs to choose between following their religious-based principles and facing substantial monetary penalties, on the one hand, and abandoning one of their religious principles in order to remain in business, on the other. Defendants imposition of such a choice puts the same kind of burden upon the free exercise of religion as would a fine imposed against Plaintiffs for their religious opposition to contraceptive services. Indeed, should OIH not include the contraceptive services in its employee health plan that it believes religiously objectionable, OIH will face a monetary penalty of $100 per day for every employee. See 26 U.S.C. 4980D. OIH, which currently has 87 employees, Doc. 19 at 24, will thus face a daily penalty of $8,700, equaling a staggering $3,175,500 a year. Should OIH drop all insurance coverage for its employees, it will face annual fines of $2,000 per full-time employee. See 26 U.S.C. 4980H(a), (c)(1). Compared to the successful religious claimants in Yoder, who were fined the sum of $5 each, 406 U.S. at 207 n.2, 208, Plaintiffs easily demonstrate that the Mandate imposes a substantial burden. Seven-Sky v. Holder, 661 F.3d 1 (D.C. Cir. 2011), cited by Defendants, does not alter this conclusion. Doc. 26 at 19. Taxes that are paid to the government and then distributed to various governmental agencies according to decisions by the government are far more removed and indirect than requiring OIH to contract with a private insurance company to pay directly for services O Brien and OIH oppose on religious grounds. It is therefore absurd to suggest, as Defendants do, that paying taxes that end up supporting services to which O Brien or OIH might object is similar in kind to the direct payment and subsidization of contraceptive services required by the Mandate. More importantly, it is not the business of the court, let alone the government, to judge the centrality of one s beliefs. Employment Div. v. Smith, 494 U.S. 872, (1990) ( Judging the centrality of different religious practices is akin to the unacceptable 16

26 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 26 of 54 PageID #: 266 business of evaluating the relative merits of differing religious claims. ). In response to the Defendants argument on this point in Newland v. Sebelius, i.e., that because challengers routinely pay for objectionable services through their taxes, they could not show a demonstrate a substantial burden under the Mandate, Judge Kane wrote, This argument requires impermissible line drawing, and I reject it out of hand. Newland, 2012 U.S. Dist. LEXIS at *19 n.9. It is the religious, specifically Catholic, beliefs of O Brien and OIH that the contraceptive services required by the Mandate are wrong. The Mandate, which imposes a financial penalty on a company that fails to include these services in an employee health plan, therefore substantially burdens the religious exercise of O Brien and OIH under both RFRA and the Free Exercise Clause. B. The Government Cannot Meet the Demanding Standard of Strict Scrutiny under RFRA. RFRA requires application of the strict scrutiny test. Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 430 (2006). Under this test, which requires the most rigorous of scrutiny, Church of the Lukumi Babalu Aye v. City of Hialeah, 508 U.S. 520, 546 (1993), and is the most demanding test known to constitutional law, City of Boerne v. Flores, 521 U.S. 507, 534 (1997), the government must demonstrate that the challenged law serves a compelling governmental interest and is the least restrictive means of furthering that compelling governmental interest. 42 U.S.C. 2000bb-1(b). It is critical to note that, under RFRA, the test can only be satisfied through application of the challenged law to the person the particular claimant whose sincere exercise of religion is being substantially burdened. O Centro Espirita, 546 U.S. at Indeed, in both Sherbert and Yoder the Court looked beyond broadly formulated interests justifying the general applicability of government mandates and scrutinized the asserted harm of granting specific exemptions to particular religious 17

27 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 27 of 54 PageID #: 267 claimants. Id. at 431. It is therefore not enough for the government to describe a compelling interest in the abstract or in a categorical fashion; the government must demonstrate that the interest would be adversely affected by granting an exemption to the religious claimant. Id.; see also Olsen v. Mukasey, 541 F.3d 827, 831 (8th Cir. 2008) (under RFRA, the compelling interest of a challenged law must be evaluated with respect to the particular claimant whose religious exercise is substantially burdened ). C. Government Fails to Demonstrate a Compelling Governmental Interest. A compelling governmental interest involves only those interests of the highest order. Quaring v. Peterson, 728 F.2d 1121, 1126 (8th Cir. 1984). In fact, in this context, only the gravest abuses, endangering paramount interests, give occasion for permissible limitation. Sherbert, 374 U.S. at 406. The government must demonstrate some substantial threat to public safety, peace, or order from exempting the claimant. Yoder, 406 U.S. at 230. Here, the government alleges two compelling governmental interests: (1) increased access to FDA-approved contraceptive services serves the health and well-being of women, and (2) the equalization of health care between men and women. As explained below, while health and equality are important interests, they are not compelling under RFRA or the facts of this case. 12 Just last term, the Supreme Court described a compelling state interest as a high degree of necessity, Brown v. Entm t Merchs. Ass n, 131 S. Ct. 2729, 2741 (2011), noting that [t]he State must specifically identify an actual problem in need of solving, and the curtailment of free speech must be actually necessary to the solution. Id. at 2738 (citations omitted). The 12 Plaintiffs do not respond to the alleged scientific findings and analysis of the IOM Report relied upon by the government in creating the Mandate; nor do they need to do so in their response to Defendants Motion to Dismiss. A motion to dismiss is not the appropriate venue for the weighing of scientific evidence. Moreover, and as explained herein, even if the findings and analysis of the IOM Report are accurate and sound, Defendants fail to demonstrate a compelling governmental interest served by the Mandate. 18

28 Case: 4:12-cv CEJ Doc. #: 31 Filed: 08/06/12 Page: 28 of 54 PageID #: 268 [m]ere speculation of harm does not constitute a compelling state interest. Consol. Edison Co. v. Public Serv. Comm n, 447 U.S. 530, 543 (1980). As such, the government s invocation of the promotion of health and equality as compelling interests, without more, is insufficient to meet the demands of strict scrutiny. In O Centro Espirita, the most recent RFRA claim adjudicated by the Supreme Court, the Court looked beyond broadly formulated interests, 546 U.S. at 431, and, while recognizing the general interest in promoting public health and safety, held that invocation of such general interests, standing alone, is not enough. Id. at 438. In other words, the government has the burden of compiling a compelling evidentiary record to justify coercing the religious exercise of plaintiffs to combat the alleged threat to women s health and equality. What radically undermines the government s claims of compelling interests is the massive number of employees, millions in fact, whose health and equality are completely unaffected by the Mandate and therefore not served by the government s alleged interests. See Newland v. Sebelius, 2012 U.S. Dist. LEXIS at *23 (D. Colo. July 27, 2012). For example, the government does not explain how its alleged interests can be compelling when employers with fewer than 50 employees 13 have no obligation to provide health insurance for their employees and thus no obligation to comply with the Mandate. 14 With respect to Plaintiffs, it does not sufficiently explain how there is a compelling interest in coercing OIH and O Brien, with their 87 employees, into violating their religious principles when businesses with fewer than 50 employees can avoid the Mandate entirely by not providing any insurance at all. Are not the 20 million-plus employees of businesses with fewer than 50 employees as susceptible to the alleged harms identified by the government as employees of businesses with more than According to the United States census, more than 20 million individuals are employed by firms with fewer than 20 employees. Statistics about Business Size (including Small Business) from the U.S. Census Bureau, available at (last visited August 3, 2012). 14 Under 26 U.S.C. 4980H(c)(2), employers are not subject to penalties for not providing health insurance coverage if they have fewer than 50 full-time employees. 19