Wednesday, July 9, 2014

Hobby Lobby Horror

There is a problem with people who use their political leanings rather than legal doctrine and procedure being judges, that is they come up with piss poor legal decisions.

Burwell v. Hobby Lobby, 573 U.S. ___ (2014) will turn out to be yet another of the US Supreme Court's recent blunders because it used political leanings rather than legal method.

The concept that a corporation is a distinct entity with its own rights and obligations separate from those of its shareholders is the foundational principle of corporate law.

This concept means that people can invest in a company without risking personal assets beyond their investment (i.e., shares in the corporation). For example, the victim can only sue the corporation, not the individual shareholders if a corporation fails to observe proper safety precautions in manufacturing a product. This benefit is especially important for closely held corporations, like Hobby Lobby, because any liability would otherwise be shared by a small number of family members or other controlling shareholders. In exchange for this protection, individual owners are not supposed to treat a corporation as a mere extension of themselves.

Under the new decision, religious owners of closely-held, for-profit companies try to have it both ways. They get to assert their personal religious identity to exclude legally mandated birth-control benefits from their company’s health insurance plan. Yet they hope they also will still enjoy the insulation against personal economic liability that comes from doing business as a corporation.

The problem with this is that is that one cannot really have things both ways: one must either function as a corporate entity which is separate from the personal interests of the shareholder or accept full liability for the corporation.  In other words, this decision will “pierce of the corporate veil”, which is where the the rights or duties of a corporation switch to the rights or liabilities of its shareholders.  In other words, Plaintiffs may seek to have owners personally cover a corporate debt when a business goes bust, for example, or to hold a corporation responsible when an owner doesn’t have the money to pay their personal bills.

While I understand that the chickens have begun to come home to roost with this decision, this aspect has yet to rear its ugly face.  I have a feeling that when it does, the reality challenged right wing will find yet another aspect of its ideology influenced policy making will prove to be another golem for them to have to address.


  1. When Laci told me the title of this new post, I misheard him. I thought he said 'Hobby Lobby WHORE', and that this was some new gun porn incident from Holly "Hobby Lobotomy" Fisher.

    "Pierced the corporate veil" -- something we should all remember as a legal principle.

    1. Even I have heard about the Hobby Lobby decision. And I deliberately stay away from the media.