The Hobby Lobby case has some potential problems the media seems to be missing. Yes, the fact that the Supreme Court ruled basically that “closely held” corporations are “people” and can enforce their religious beliefs on their employees is bad enough. But, it may have even more dire consequences for owners of corporations and small businesses. It seems that the curtain or veil between owners of “closely held corporations” and stockholders may have been torn. Rather, shredded by the decision.
There was a short time when I was self-employed. I had a very small consulting business. I had no employees, except myself. I went through all the legal hoops to protect my personal assets from the business. That was part of owning a business. You needed to make sure your personal assets were protected and that is exactly what corporate law is supposed to do. But, as I researched the whole thing, it also meant that if I hired employees, I could not impose any religious beliefs on them. The veil worked both ways.
Now, the Supreme Court has opened the door to totally shred that veil. If a “closely held corporation” is allowed to base insurance coverage on “personal” religious beliefs, what is keeping someone from suing the owner or stockholders and go after their personal assets in liability cases? If I was able, as a business owner, to dictate policies based on religious beliefs, which until now violated basic corporate law, doesn’t that open me up to other law suits?
The Supreme Court has validated this “veil” of corporate law since the founding of the country. There is not a single ruling the history of the court that gives corporations the rights of an individual person, until now. In my layman point of view, that means that the corporate “veil” no longer exists. Individual people, like owners and shareholders, could now be held personally liable in every law suit against the corporation. This ruling says they may be personally liable for their decisions.
For example, let’s say that Hobby Lobby sells a product that turns out to be harmful to the purchaser. Maybe it is a product that contains lead paint. Millions of the product are sold nationwide. People begin to get sick from handling, or small children get sick because they put it in their mouth and ingest the lead paint.
There have already been lots of law suits about this safety hazard, and those suing usually win the case. The question is, since the decision to sell this product was approved by the owners of Hobby Lobby, can they be sued personally? In other cases following basic corporate law, the answer has been no. But, in light of the ruling stating that this corporation is a “person”, I am not so sure anymore.
Since the Hobby Lobby ruling, there are a lot of corporate lawyers who are very nervous right now. In my research, I have seen many discussions by corporate lawyers about this very nature of the case that isn’t getting a lot of press. It is possible that if such a case does happen, the Supreme Court could try to patch the “veil” in corporate law to protect owners and shareholders personal assets. But, wouldn’t that be a blatant disavowing of their writing in this case? How can the court rule that corporations are “people” able to withhold coverage in insurance plans, and not “people” in liability cases?
I know that conservatives don’t have a problem with double standards. But, this involves corporate law! Corporate law has been in existence for hundreds of years. It was intended to protect individuals since a “corporation” is not considered a person. The Hobby Lobby case throws that division out the window.
If I were looking to start a business again, I would think very hard about it. In light of this case, I would be very distrustful that my personal assets would be protected under corporate law anymore. That would probably make me NOT want to open a business. I know a few small business owners who are very nervous right now. They have had to talk with their lawyers about this very possibility.
In an effort to thrust individual beliefs of owners of companies on employees by naming the company a “person”, the court may have done more damage to small businesses and corporations than they think. They may have overturned corporate law in this country.