The 10th Circuit Court of Appeals in Denver decided the Oklahoma City-based arts and crafts chain can proceed with its case and won't be subject to fines in the meantime.
The reprieve gives Hobby Lobby Stores Inc. more time to argue in a lower court that for-profit businesses — not just currently exempted religious groups — should be allowed to seek an exception if the law violates their religious beliefs. The company had sued to overturn the mandate on grounds that it violates the faith of founder and CEO David Green and his family.
The appeals court remanded the case for more argument, but the judges indicated Hobby Lobby had a reasonable chance of success.
"Sincerely religious persons could find a connection between the exercise of religion and the pursuit of profit," the judges wrote. "Would an incorporated kosher butcher really have no claim to challenge a regulation mandating non-kosher butchering practices?"
More than 30 businesses in several states have challenged the contraception mandate. Hobby Lobby and a sister store — Christian booksellers Mardel Inc. — won expedited federal review because the chain would have faced fines Monday for not covering the required forms of contraception.
The U.S. Department of Justice has argued that allowing for-profit corporations to exempt themselves from requirements that violate their religious beliefs would be in effect allowing the business to impose its religious beliefs on employees.
Lawyers for the Green family called the ruling a "resounding victory for religious freedom."
The Greens "run their business according to their Christian beliefs," said Emily Hardman, spokeswoman for the Washington-based Becket Fund for Religious Liberty, which represents Hobby Lobby.
Americans United for Separation of Church and State said the judges were wrong to say Hobby Lobby had a case.
"This court has taken a huge step toward handing bosses and company owners a blank check to meddle in the private medical decisions of their workers," executive director Barry Lynn said in a statement. "This isn't religious freedom; it's the worst kind of religious oppression."
The 10th Circuit opted to hear the case before eight active judges, not the typical three-judge panel, indicating the case's importance.
Hobby Lobby's lawsuit will now head back to U.S. District Court for the Western District of Oklahoma, which earlier ruled against Hobby Lobby's religious exemption request.
Hobby Lobby calls itself a "biblically founded business" and is closed on Sundays. Founded in 1972, the company now operates more than 500 stores in 41 states and employs more than 13,000 full-time employees who are eligible for health insurance.