Associated Press
The owners of Hobby Lobby and a sister company, Mardel Inc., a Christian bookstore, sued the government in September, claiming the Affordable Care Act's mandate to provide certain emergency contraceptives violates their Christian beliefs.

A federal appeals court handed a victory Thursday to opponents of the U.S. government's contraception mandate when it ruled the owners of the Hobby Lobby craft store chain can pursue their case against the mandate without paying millions of dollars in fines for not complying with it.

The 10th U.S. Circuit Court of Appeals in Denver said Hobby Lobby and its sister store, Christian bookseller Mardel Inc., have a legitimate claim that the mandate violates the religious beliefs of its owners. The court sent the case back to an Oklahoma federal judge to reconsider his denial to delay enforcement of the mandate while Hobby Lobby pursues its case against the government.

"We hold that Hobby Lobby and Mardel ... have established a likelihood of success that their rights ... are substantially burdened by the contraceptive-coverage requirement, and have established an irreparable harm," the judges wrote.

The ruling was considered a victory by the retailer that faced an estimated $1.3 million in daily federal fines beginning July 1.

“Today marks a milestone in Hobby Lobby’s fight for religious liberty,” said Kyle Duncan, general counsel for the Becket Fund for Religious Liberty, which is representing Hobby Lobby. “This is a tremendous victory not only for the Green family and for their business, but also for many other religious business owners who should not have to forfeit their faith to make a living.”

Hobby Lobby's lawsuit is among 32 filed by for-profit firms claiming the Affordable Care Act's mandate to cover birth control under employee health care plans violates the owners' rights to practice their religious beliefs.

But Hobby Lobby, with 13,000 employees in 41 states, is the largest of the employers suing the government over the mandate, and its case has been the most closely watched. The appeal was also the first to be heard before an entire circuit court instead of the usual three-judge panel, a sign of the importance of the case.

"They did send some pretty strong signals," said Bob Tuttle, a law professor at George Washington University and an expert in church-state law. "The court seemed persuaded by (Hobby Lobby's) argument that for-profit corporations are not categorically precluded from protection."

Justice Department lawyers contend that for-profit corporations do not have the right to exercise their religious beliefs and that to allow those companies to exempt themselves from government requirements would effectively allow the owners to impose their religious beliefs on employees.

But the circuit court judges said making money doesn't disqualify someone from practicing their faith.

"A religious individual may enter the for-profit realm intending to demonstrate to the marketplace that a corporation can succeed financially while adhering to religious values," the judges wrote. "As a court, we do not see how we can distinguish this form of evangelism from any other."

One judge went even further in a concurring opinion.

"No one suggests that organizations, in contrast to their members, have souls," Judge Harris Hartz wrote. "But it does not follow that people must sacrifice their souls to engage in group activities through an organization."

The Green family claims that Hobby Lobby, founded in an Oklahoma City garage in 1972, is founded on biblical principles, such as not doing business on Sunday. The company does provide preventive contraceptives through its insurance plan, but claims the “morning-after” and “week-after” pills also required under the mandate are tantamount to abortion and violate their religious belief that life begins at conception.

In addressing the fines the company faced, the judges noted that Hobby Lobby would be subject to more fines for refusing the contraception mandate — nearly $475 million a year — than if it provided no employee health coverage at all. That action would prompt an annual fine of about $26 million.

The ruling was a disappointment to groups that oppose religious exemptions to federal laws.

"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 of Americans United for Separation of Church and State said in a statement. "This isn't religious freedom; it's the worst kind of religious oppression."

The ruling comes a month after Hobby Lobby was granted a rare hearing before eight circuit court judges. Five of the eight agreed that Hobby Lobby demonstrated a likelihood of success in its claims against the government.

So far, federal courts have granted 21 injunctions against the government in the for-profit cases and denied seven. With the circuit courts split on the question of whether for-profit companies qualify for a religious exemption from the mandate, legal experts agree the issue is likely headed to the Supreme Court.

"I wouldn’t be surprised if this comes up to the Supreme Court and if we see the same kind of analysis as this court," Tuttle said.

Meanwhile, 30 other lawsuits have been filed over the mandate by nonprofit entities, such as religiously affiliated schools and hospitals. Many of those cases have been dismissed since the government has yet to approve a final rule intended to address the nonprofits' concerns before the Aug. 1 deadline for the contraception mandate to take effect.

Bills have been introduced in the House and Senate to grant broad exemptions from the mandate to those who claim that providing contraception through employee health plans violates their religious beliefs. But there has been no indication the proposals will get a hearing.

Contributing: Associated Press