Third Circuit Denies Motion To Stay In Case Challenging ACA Enforcement Provisions

The motion of a secular, for-profit corporation and five of its shareholders for a stay pending the appeal of their challenge to the contraception mandate of the Patient Protection and Affordable Care Act (ACA) was denied by the Third Circuit U.S. Court of Appeals because the plaintiffs failed to prove a reasonable likelihood of success on the merits. The case is Conestoga Wood Specialties Corp. v. Secretary of HHS (No. 13-1144).

A preliminary injunction is an extraordinary remedy, and to qualify, a party must demonstrate: (1) a likelihood of success on the merits; (2) that it will suffer irreparable harm if the injunction is denied; (3) that granting the preliminary relief will not result in even greater harm to the nonmoving party; and (4) that the public interest favors such relief. The plaintiffs did not demonstrate likelihood of success on the merits because the corporation did not have free exercise rights under the First Amendment and was not a “person” under the Religious Freedom Restoration Act of 2012 (RFRA). In addition, the ACA regulations were generally applicable and rationally related to a legitimate government objective, and the burdens imposed by the regulations did not constitute a “substantial burden” under the RFRA. Therefore, the motion was denied.

Background. The plaintiffs, Conestoga Wood Specialties Corp. and five of its shareholders (collectively, the Hahns), filed a case in federal court claiming that the contraception coverage mandated by ACA would violate their religious beliefs. They filed a motion for preliminary injunction, which the district court denied. On appeal before the Third Circuit, the plaintiffs filed a motion for stay pending appeal.

Third Circuit’s decision. The Third Circuit denied the motion, finding that the plaintiffs did not meet their burden in demonstrating likelihood of success on the merits of their claims under the First Amendment or the RFRA. Conestoga, as a for-profit, secular corporation, had no free exercise rights under the First Amendment, and it was not a “person” under the RFRA.

The Hahns’ claims under the Free Exercise Clause of the First Amendment were not likely to succeed: the ACA regulations were generally applicable because they were not specifically targeted at conduct motivated by religious belief and were neutral because the purpose of the regulations was to promote public health and gender equality. A neutral law of general applicability need only be rationally related to a legitimate government purpose, which the government proved here. The claims under the RFRA were not likely to succeed because the burden imposed by the regulations did not constitute a “substantial burden” under the RFRA. Finally, the ACA’s “religious employer exemption” did not violate the Establishment Clause of the First Amendment because it applied equally to organizations of every faith.

Dissent. Justice Kent Jordan wrote a dissent concluding that a stay pending appeal was warranted. Specifically, the dissent found that in situations like this, where the factors of irreparable harm, interests of third parties, and public considerations strongly favor the moving party, a stay may be appropriate even though the plaintiffs did not demonstrate a strong likelihood of ultimate success.

Visit our News Library to read more news stories.