The Court's Hobby Lobby decision, as noted in post-decision commentary (see, e.g., Sarah Hahn's guest post earlier this week), apparently relies in part on the fact that shareholders (and, potentially, employees and other relevant constituents of the firm) know that the firm has sincerely held religious beliefs and what those beliefs mean for business operations and legal compliance.  The Court does not directly address this in its opinion.  Rather, the opinion includes various references to owner engagement that imply buisness owner awareness.  The Court states:

• For-profit corporations, with ownership approval, support a wide variety of charitable causes . . . . (Op. 23, emphasis added)

• "So long as its owners agree, a for-profit corporation may take costly pollution-control and energy conservation measures that go beyond what the law requires." (Op. 23, emphasis added)

In making these statements and reasoning through this part of the opinion, the Court relies on state corporate law principles and allusions.

Importantly, the Court also indicates its views on how the policy underlying the RFRA favors an interpretation that includes corporations as persons:

An established body of law specifies the rights and obligations of the people (including shareholders, officers, and employees) who are associated with a corporation in one way or another. When rights, whether constitutional or statutory, are extended to corporations, the purpose is to protect the rights of these people. For example, extending Fourth Amendment protection to corporations protects the  privacy interests of employees and others associated with the company. Protecting corporations from government seizure of their property without just compensation protects all those who have a stake in the corporations’ financial well-being. And protecting the free-exercise rights of corporations like Hobby Lobby, Conestoga, and Mardel protects the religious liberty of the humans who own and control those companies.

(Op. 18, emphasis in original)  Note how the last sentence reduces the protected category of persons under the RFRA to those who "own and control" the firm at issue.  This represents an interesting narrowing of constituency groups from the more inclusive treatment in the first sentence of the paragraph.  The reason for this narrowing may be (likely is) a practical one, evidencing judicial restraint.  The plaintiffs in the Hobby Lobby actions were those who owned or controlled the corporation, and the decision likely will be limited in its application accordingly.

Given these breadcrumbs from the Court's opinion, should disclosure to shareholders or other constituencies be required, and if so, where would those disclosure rules reside as a matter of positive law?  A blog post may be the wrong place to begin to address this issue (which is admittedly complex and involves, potentially, areas of law somewhat unfamiliar to me).  But indulge me in a thought experiment here for a minute.

Public companies and others (e.g., those filing registration statements for initial public offerings) have disclosure obligations that implicate materiality standards under federal securities regulation–found in mandatory disclosure (e.g.: Regulation S-K item 103 involving the disclosure of material legal proceedings; Regulation S-K Item 303 requiring, among other things, disclosure of material trends or uncertainties; and the gap-filling rules under the Securities Act of 1933 and the Securities Exchange Act of 1934), antifraud, and other misstatement/omissions liability provisions.  It is possible that, on the facts of a particular challenge to non-disclosure, a court would find that information about a sincerely held religious belief is material (i.e., substantially likely to be important to the reasonable investor or substantially likely, from the vantage point of the reasonable investor, to have a significant effect on the total mix of available public information) under the materiality standards defined in, as applicable, Rule 405 under the 1933 Act, Rule 12b-2 under the 1934 Act, or TSC and Basic.  Given the Hobby Lobby decision, I would think that a finding of materiality may be more likely.  The decision gives new and significant importance to the sincerely held religious beliefs of owners.  However, federal securities law is limited in its application and is geared to investors and shareholders, so federal securities law does not provide a comprehensive answer.

Since the Court points to state law, is the answer there?  Of course, state corporate and other entity laws, unlike federal securities law, do not use disclosure as a key regulatory tool.  They do, however, call for the filing of a charter to constitute the corporation and annual reports to maintain its existence (and the filing of similar chartering and annual report documents for LLPs, LPs, and LLCs).  States could require mandatory disclosure of  sincerely held religious beliefs in their charters or annual filings.  Of course, the coordination required to have all states do that would be nearly impossible, in my view.  My home state of Tennessee would, e.g., be unlikely to sign onto that, imho.  Absent that, fiduciary duty law might require directors and officers to disclose the sincerely held religious beliefs of controlling owners or, as Sarah Hahn suggests (in her post referenced above), a new fiduciary duty among stockholders might require these controlling owners to disclose their sincerely held religious beliefs to their co-owners.  Again, the risk of disparate decisions would be significant.  Moreover, these potential state corporate/entity law disclosures all would focus on shareholder awareness.  Again, no sure or comprehensive answer here.

All of this leaves employees and other constituents out of the picture. Possibilities there?  Given that the Hobby Lobby case involves access to federally mandated employee benefits, federal or state employment or employee benefit laws might step in to inform employees.  (I certainly would want to understand the firm's status in considering employment.)  The government, as an external  force engaged with corporations–and particularly, in the case of Hobby Lobby et al. after this opinion, the HHS–needs disclosure to implement its related regulation and exceptions, and the Court seems to understand that (note here the injunction granted by the Court in favor of Wheaton College later in the week as to the form of disclosure that may be required).  Query whether, however, other external constituents–like suppliers and customers–will want to know about these beliefs for their own purposes–which may be related or unrelated to the matters at issue in Hobby Lobby.  In many cases, the burden will fall, and probably rightly so, on the constituents themselves to seek this information–in conversations, correspondence, and contracts.  Admittedly, that could be awkward for shareholders and employees (for different reasons), in some circumstances.

This analysis does not, of course, answer the question of whether disclosure actually should be required of businesses and their controlling owners, but it does offer some touchstones for further analysis.  I am sure that I have missed things along the way, so please point them out.  This will no doubt be an interesting topic for discussion well into the school year, and I teach business associations in the fall.  I plan to raise issues on the case then.  So, I welcome and encourage your feedback in the interim.