In this opinion piece, Wharton professor of legal studies and business ethics Eric W. Orts looks at the issues raised in the Sebelius v. Hobby Lobby Stores, Inc. case argued before the U.S. Supreme Court last Tuesday. Orts is the author of a recent book titled, Business Persons: A Legal Theory of the Firm. (Watch a video interview with Orts about his book here.)

The Hobby Lobby case that the U.S. Supreme Court has agreed to decide will be as important as Citizens United. It will significantly expand or constrain the influence that business corporations and those that own and control them have on American life. The Court heard oral arguments on Tuesday, March 25, and will issue its opinion this term.

In Citizens United v. Federal Election Commission, the Court held that business corporations were “persons” with constitutional rights of freedom of political speech. Business firms can now exert greater influence in political elections as a result. In Sebelius v. Hobby Lobby Stores, Inc., the Court will consider whether business corporations are correctly considered to be “persons” who have rights to the free exercise of religion. Because both “free speech” and “free exercise” are rights enumerated in the First Amendment, a strong argument in favor of recognizing corporate persons to have “freedom of religion” relies on the precedent of Citizens United.

This time around, it would be helpful for the Court and public discourse about the case to dig deeper into a discussion of the nature and purposes of business corporations (and other kinds of firms) than when Citizens United was decided.

It would be helpful for the Court and public discourse … to dig deeper into a discussion of the nature and purposes of business corporations (and other kinds of firms) than when Citizens United was decided.

The majority and minority opinions in Citizens United, as well as the public debate surrounding the case, adopted extreme characterizations. On one side, it was argued that corporations were “people, too” (to quote now almost forgotten presidential candidate Mitt Romney), and so political rights to free speech should extend to cover them. At least, corporations represented real people and therefore deserved a recognition of rights derivatively. On the other side, corporations were said to be merely artificial constructions allowed by government to exist, and they should therefore be regulated by government in the public interest without limits. However, as I have recently argued in my book, Business Persons: A Legal Theory of the Firm, the reality of business corporations and other organized “persons” in our modern world is much more complex than these simple characterizations.

Business firms are composed of both people and creations of government. This reality means that constitutional law applied to organizations should recognize this complexity and adopt a more nuanced approach than either saying, “corporations have rights” or “corporations don’t have rights.” Although this answer is satisfying to those who like black-and-white answers, the real world of organizations is inevitably gray.

In the past, Supreme Court opinions have recognized the need for differing approaches to the recognition (or not) of constitutional rights of business corporations in various settings. For example, the Court has decided that the constitutional protection against “double jeopardy” for an alleged crime covers organizational persons (such as a corporation), but the right protecting against forcible “self-incrimination” does not.

Similarly, the Court has recognized a right of political free speech for organizations in Citizens United, but not “rights to privacy” which have been reserved for individual human beings. In other words, the Court finds some constitutional rights make sense to extend to organizational persons, and it leaves others to cover only individual people.

Other relatively uncontroversial examples include the right of a business corporation to assert a constitutional claim to protect its property (such as from a government “taking”) and the fact that rights to vote in political elections belong only to citizens who are individual people.

Tough cases fall into a controversial intermediate zone, and the Hobby Lobby case is the most recent iteration of various legal problems that arise about how to protect rights in a world of organizations. Easier cases in the religious context involve protecting organizations that are specifically organized to advance religious objectives and, explicitly, are “not-for-profit.”

Hobby Lobby presents a harder case because the owners of this business corporation overtly and clearly express religious views with respect to moral principles which they believe they should follow when doing business. If they were acting alone – without other business participants – then their case may seem particularly strong.

The Hobby Lobby case is the most recent iteration of various legal problems that arise about how to protect rights in a world of organizations.

Even here, though, some jurisdictions have followed a rule that doing public business prevents one from asserting religious rights that may result in discrimination against the rights of others. Recently, for example, the highest court in the U.K. required bed-and-breakfast owners to treat gay couples the same as others, even in the face of the owners’ religious objections that this imposed an unreasonable constraint in the use of their own home.

On closer examination of the business firms involved in the Hobby Lobby case, this argument for an identification of rights-bearing individuals and business owners weakens. Hobby Lobby operates a chain of different stores and employs more than 15,000 people. (The other company in a companion case employs just under 1,000.) All of these employees do not share the same Christian beliefs as the corporation’s owners. For purposes of the “free exercise of religion,” these employees deserve to have their rights protected, too.

Arriving at this answer will require the Justices to consider in greater depth than they did in Citizens United the nature and structure of modern business corporations: what they are and what purposes they serve. It is insufficient to say that business corporations are amoral “money-making” machines and therefore can be regulated however a legislature may wish. It is also incorrect to equate a business corporation with its owners and extend to these entities rights as “persons” without further analysis of the complexity of relationships involved within modern business firms.

Opening up the black box of the business firm reveals intricate human relationships composed of legal contracts, property ownership and hierarchical authority – as well as expectations of everyday trust and mutual respect. Deciding how the foundational American principle of freedom of religion fits into the context of business firms requires an appreciation of these intricacies – and a respect for the rights of everyone who participates in firms as owners and employees (which means most of us). Let’s hope that the Court takes these complexities seriously in Hobby Lobby in a manner that protects the constitutional rights of all citizens.