Catherine Hardee (California Western School of Law) has posted Contracting My Religion on SSRN. Here is the abstract:
Permissive private ordering has been a traditional feature of state corporate law to provide maximum flexibility to business interests. Shareholders and management may devise a virtually unlimited array of contractual structures to finance, manage, and operate business entities based on the specific needs and desires of corporate participants. This flexibility has largely been praised on the grounds that it allows for economic efficiency and gives management the ability – and incentive – to compete for investment dollars. As scholars have noted, however, the Supreme Court has intruded on the states’ dominance in corporate law by granting speech and religious rights to corporations and, perhaps more troubling, by expecting state law to flesh out the exercise of these new corporate rights.
While this constitutionalization of corporate law has been widely criticized, there has been little discussion of the various ways that shareholders and management could attempt to contract for the ability to exercise a corporation’s speech or religious rights. It is clear from the Court’s holdings that a small number of shareholders who also have a controlling role in corporate governance may bestow their religious rights upon a corporation. It is less clear, however, whether a corporation’s ability to exercise religion is merely another business feature that may be contracted for by various participants. For example, may a minority shareholder with sincere religious beliefs negotiate with agnostic majority shareholders for the right to determine the corporation’s religion, and with it the ability to claim exemptions to neutrally applicable regulations designed to protect third parties? Given the paucity of guidance from the Court as to what circumstances permit a corporation to claim a religion exemption, there are serious questions regarding whether any such contracts will or should be honored and whether states or the federal courts will be the final arbiter of what constitutes a valid exercise of a corporation’s religion.
Exploring the question of contracting for corporate religion forces a re-examination of not just the exercise of religion, but also the rationale behind corporate law’s widespread support for private ordering. Justifying contractual freedom on the grounds of promoting economic efficiency creates an inherent tension between the market setting a price on the ability to wield the corporation’s religion and the notion that profit motives taint the sincerity of religious exercise. Alternatively, if private ordering is justified on the grounds of personal self-fulfillment for corporate participants, rather than a purely economic rationale, it may be necessary to consider whether corporate law should take more seriously the ability of all corporate actors – including employees – to engage in such self-actualization through their relationship with the corporation.