My thoughts on the Hobby Lobby decision

It’s been a big day at the Supreme Court of the United States, with the Court handing down a much-anticipated ruling. In Burwell v. Hobby Lobby Stores, Inc., the Court took on a challenge to the Affordable Care Act’s contraception mandate. Predictably, forces on both sides of the issue are making a lot out of the ruling.

First, a little background (in case, you know, you’ve been in orbit or something). The ACA requires employers to include women’s contraception in their insurance plans. Religious entities that have employees (like the Catholic Church) are exempted from this requirement. Religiously affiliated entities (like the University of Notre Dame) can “opt out” of the requirement, but the insurance companies must provide the coverage at no cost to the employee—or the institution.

Hobby Lobby Stores, Inc. is a large, national chain of hobby stores. The corporation is owned by a handful of family members who contend that the contraception mandate burdens their religious freedoms. The government argued that the corporation is an entity totally distinct from its shareholders. Hobby Lobby argued that the corporation is a person for purposes of the Religious Freedom Restoration Act, and therefore is entitled to protection. The Court came down on the side of Hobby Lobby in a 5-4 decision.

Here are my thoughts. First, too many people are getting their information about the ruling from Twitter. The majority opinion, concurring opinion, and dissenting opinions take 95 pages. You can’t possibly get all of the detailed discussion in 140 character tweets. Second, people are jumping to conclusions. The Court did not say that corporations have more rights than people. The Court did say that some corporations could be exempt from the contraception mandate because they are closely held (meaning the corporation has just a few shareholders).

The Court did not say that the “rights” of the corporation trump the rights of female employees. The Court did say that the government did not show that the contraception mandate was the least restrictive means to accomplish its goal (the Court noted that the government itself could pay for the contraception, which would in turn not burden the religious beliefs of the shareholders).

The Court did not say that corporations are free to discriminate or be exempt from other types of health care requirements. The Court specifically held that this ruling was limited to the four specific contraceptive methods that Hobby Lobby’s shareholders found objectionable. Other contraceptive methods (such as the Pill) are not affected by today’s ruling. (Although, one can see that battle coming soon.)

Now, there’s plenty to critique in the opinion. The intellectual validity of the Court’s use of the Dictionary Act to define “person” as used in the Religious Freedom Restoration Act is dubious at best. As Justice Ginsburg noted in her dissent, the Dictionary Act comes into play when a term’s meaning is not clear from its context in a statute. The RFRA refers to “persons who exercise religious beliefs.” That qualifier would seem to indicate that the drafters did not mean to include corporations. Historically, the courts have distinguished between for-profit, non-profit, and religiously-based non-profit corporations. Today’s decision blurs those lines.

In my view, the Court’s majority opinion has significant flaws in reasoning. We can spend lots of time questioning the motives behind the five-member majority, but that doesn’t accomplish anything. The Court’s ruling today may lead to unintended consequences in the future, but that won’t be the first time. What we can best do for our nation is to have a rational discussion about the ruling, its strengths and weaknesses, and not engage in partisan screeching.

$675K damages for downloading 30 songs, really?

Somehow I missed this week that the Supreme Court of the United States has declined to review the damages award of $675,000 for downloading 30 songs. Plenty of non-lawyers don’t understand what factors the Supreme Court uses to decide whether to review a case, but lawyers should recall that this decision does not necessarily mean the Supreme Court liked the lower court’s ruling.

From what I understand, the jury in the case awarded the $675K award, and the trial judge reduced it. The plaintiff record companies appealed, and the federal appellate court reinstated the award, but told the trial court judge to use a different method to decide whether the damages should be reduced. The defendant sought review from the Supreme Court, but the Court opted not to take up the issue. So, the defendant is headed back to the trial court.

The damages award was apparently based on the Copyright Code’s statutory damages provision. The Copyright Code allows a plaintiff to recover damages of $22,500 for each act of willful copyright infringement (unless the plaintiff wants to pursue actual losses as its damages).

Although the jury’s decision on the amount of damages may be legally correct, it seems to me that the damages provisions of the Copyright Code are out of whack. They do not take into consideration, for example, the question of whether the defendant had any intent to profit from the infringement. A reasonable approach would be to increase the damages if there is a finding that the defendant acted with certain motives, including the goal of making money. It would also be reasonable to decrease the damages if the act of infringement was relatively minor. Keep in mind that this defendant today could download the songs from iTunes for roughly 30 bucks. A damages award of 50 times the iTunes price, or $1,500 (plus possible attorney fee recovery by the plaintiffs) ought to serve as a sufficient deterrent. A damages award of 22,500 times the actual cost seems to be grossly unfair.

I am no fan of piracy, but there needs to be some real balance in the copyright laws when it comes to statutory damages.