Litigation Update: Klein v. Oregon Bureau of Labor and Industries

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Melissa and Aaron Klein, of the Sweet Cakes by Melissa bakery in Oregon, were ordered to pay $135,000 in emotional damages for declining to create a custom wedding cake for a same sex wedding because of their religious convictions. This June, the U.S. Supreme Court vacated an Oregon Court of Appeals decision that had upheld the award and remanded the case for reconsideration in light of last year’s Masterpiece Cakeshop v. Colorado Civil Rights Commission decision. That decision held that state administrative proceedings must be free from anti-religious hostility under the Free Exercise Clause, concluding that the Colorado commission displayed both overt and subtle signs of bias against the baker’s religious beliefs. This teleforum will discuss recent updates in the case of Klein v. Oregon Bureau of Labor and Industries.


Adam Gustafson, Partner, Boyden Gray & Associates


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Event Transcript

Operator:  Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Religious Liberties Practice Group, was recorded on Thursday, October 3, 2019, during a live teleforum conference call held exclusively for Federalist Society members.        


Micah Wallen:  Welcome to The Federalist Society's teleforum conference call. This afternoon's topic is a "Litigation Update on Klein v. Oregon Bureau of Labor and Industries." My name is Micah Wallen, and I am the Assistant Director of Practice Groups at The Federalist Society.


      As always, please note that all expressions of opinion are those of the experts on today's call.


      Today, we are fortunate to have with us Adam Gustafson, who is a Partner at Boyden Gray & Associates. After our speaker gives his opening remarks, we will then go to audience Q&A. Thank you for sharing with us today. Adam, the floor is yours.


Adam Gustafson:  Thank you, and thanks to The Federalist Society for inviting me to give an update on Klein following the Supreme Court's grant, vacatur, and remand at the end of the last term.


More on that later, but first, I'd like to tell you a little bit about my clients, Melissa and Aaron Klein. You probably know the Kleins better as the one-time proprietors of Sweet Cakes by Melissa, a bakery in Gresham, Oregon, outside Portland. Borden Gray & Associates, my firm, is honored to represent them along with First Liberty and Herb Grey in Oregon.


Melissa Klein was a stay-at-home mom raising a passel of children. Her kids occasionally had birthdays, as children tend to do. On one of those birthdays, Melissa made a cake, as some of our listeners have probably done. But unlike you or me, when Melissa baked a cake, she produced one that was so amazing, the other moms at the party took notice. One of them asked Melissa to make a cake for her child, and she did.


Word started getting around that Melissa Klein was the person to go to for highly-decorated cakes of all kinds. She realized she had a gift to share with the world, and she did what people of talent and vision do in that circumstance. She opened a business: Sweet Cakes by Melissa. It turns out, there's a market for really beautiful custom cakes, especially for weddings, and that suited Melissa and her husband, Aaron, perfectly because they believe marriage is sacred, something worth celebrating.


Sweet Cakes by Melissa was so successful that Aaron was able to quit his job driving a truck so that he could work in the bakery supporting Melissa's artistic vision. You might think that sounds like the American dream, but there was a problem: Melissa and Aaron are Christians, and they take their faith seriously. They dedicated their business to God, and they committed to operating it in accordance with their religious convictions, including their belief that God designed marriage as the union of one man and one woman.


There was another problem. Aaron and Melissa live in Oregon where traditional views about marriage are no longer favored by the powers that be. Oregon had recently amended its public accommodations statute to prohibit discrimination on account of sexual orientation. And Brad Avakian, a civil rights lawyer and Democratic state legislator with aspirations for higher office, was commissioner of the Oregon Bureau of Labor and Industries.


One day in 2013, a repeat customer of the bakery came into the store for a wedding cake tasting. When she was asked for the names of the bride and groom, she said there were two brides. Aaron Klein, who was manning the store at the time, said he was sorry, but because of their religious beliefs, he and his wife could not create a custom-designed cake for that purpose. The same-sex couple filed charges with the Oregon Department of Justice and the Oregon Bureau of Labor and Industries.


The Bureau investigated and issued formal charges against the Kleins. The same Bureau then adjudicated those charges and found that Aaron and Melissa had discriminated on account of sexual orientation and ordered them to pay $135,000 in compensatory damages for the complainants' emotional, mental, and physical suffering. It didn't matter to the Commission that Melissa and Aaron were happy to serve gay customers. It didn't matter that they'd happily served that very same couple just two years earlier when they were buying a wedding cake for the marriage of a man and a woman.


It didn't matter to the Commission that same-sex marriage was still unlawful in Oregon at the time. It didn't matter that the Oregon Constitution prohibits all laws that in any case, whatever, control the free exercise and enjoyment of religious opinions or interfere with the rights of conscience. And, finally, it didn't matter that same-sex couples in Oregon have no trouble finding wedding cake artists to celebrate their unions. In fact, the complainants in this case got an elaborate peacock-shaped wedding cake from the very next baker they met and a second cake free from a celebrity baker.


The Oregon Court of Appeals affirmed the Bureau's order. First, the Court rejected our arguments under the Free Speech Clauses of the U.S. and Oregon Constitutions. Yes, it said art is protected expression under the Free Speech Clause and, yes, Melissa uses her own design skills and aesthetic judgements on every custom wedding cake that they produced, but it's not clear, the Court said, that others will perceive the client's cakes predominantly as expression. Then, applying intermediate scrutiny, the Court determined that the Bureau's enforcement served the important government interests of ensuring equal access to public goods and services and preventing the dignitary harm that results from discrimination.


Turning to our free exercise claim, the Court denied it under Employment Division v. Smith. After concluding that the public accommodations statute is neutral on its face and that the Bureau did not impermissibly target religion, the Oregon Supreme Court denied review. We, then, petitioned the U.S. Supreme Court, which rescheduled and relisted the case a dozen times before finally granting our petition, vacating the judgment of the Oregon Court, and remanding for further consideration in light of Masterpiece Cakeshop v. Colorado Civil Rights Commission.


I probably don't have to remind this audience that Masterpiece Cakeshop was a case brought by the Colorado Civil Rights Commission against Jack Phillips, a baker like the Kleins, and like the Kleins, Phillips declined on religious grounds to make a wedding cake for a same-sex wedding ceremony. The Supreme Court held that Phillips was entitled to the neutral and respectful consideration of his claims in all the circumstances of the case, free from hostility toward the sincere religious beliefs that motivated his objection.


The Supreme Court identified several indications of hostility infecting the Commission's proceedings against Phillips. During one hearing, one commissioner stated that Phillips can believe what he wants to believe but cannot act on his religious beliefs if he decides to do business in the state. In a separate hearing, another commissioner called Phillips' religious beliefs a "despicable piece of rhetoric," and suggested that religion has been used to justify all kinds of discrimination, including slavery and the Holocaust.


The Court found that these statements and the other commissioner's failure to object to them cast doubt on the fairness and the impartiality of the commissioner's adjudication. And the Commission also suggested hostility to Phillips' religion in its inconsistent application of Colorado's anti-discrimination law.


In three other cases, the Commission upheld other bakers' refusal to make cakes with the religious text and symbolism conveying anti-same-sex marriage messages. It applied a different standard to Phillips.


In light of all of these indications of hostility, the Supreme Court held that the Colorado Commission violated the Free Exercise Clause. The government agencies, the Court said, cannot act in a manner that passes judgment upon or presupposes the illegitimacy of religious beliefs and practices. And it said that the requisite religious neutrality must be strictly observed.


So on the basis of that case, Masterpiece Cakeshop, the Court remanded the Kleins’ case to the Oregon Court of Appeals. On remand, we've demonstrated in supplemental briefing that the Oregon Bureau was infected by the same unconstitutional hostility to religion as in Masterpiece.


I'll talk briefly about the evidence of that in this case. First, the Board's commissioner, that is the Oregon Bureau of Labor and Industries’ only commissioner, and its prosecutor both made several remarks about the Kleins’ case that echo the inappropriate and dismissive comments in Masterpiece Cakeshop. To take one example, Commissioner Brad Avakian posted a Facebook comment about the Kleins’ case before it even came before him. "Everyone has a right to their religious beliefs," he wrote, "but that doesn't mean they can disobey laws already in place. Having one set of rules for everybody assures that people are treated fairly."


That sounds a whole lot like the Colorado Commissioner's statement in Masterpiece Cakeshop that "Phillips can believe what he wants to believe but cannot act on his religious beliefs if he decides to do business in the state." The Supreme court ruled that statements like this, "endorsed the view that religious beliefs cannot legitimately be carried into the public sphere or commercial domain," implying that religious beliefs and persons are less than fully welcome in the business community.


Not only that, but Commissioner's insistence on one set of rules for everybody pre-judged the Klein's claim to a religious exemption under the Oregon Constitution, but that wasn't the only statement that impugned the Kleins' religious beliefs. BLI's prosecutor, in response to an interrogatory, asserted that the Kleins have "continually used their religion as an excuse for not serving complainants."


Calling their religion an excuse is reminiscent of the Colorado Commissioner's statement that religion has been used to justify all kinds of discrimination. Masterpiece Court held that such statements cast doubt on the fairness and impartiality of the Commission's adjudication, so to hear.


In my opinion, perhaps the strongest evidence of anti-religious hostility in the Klein’s case is the Bureau's decision to reward $135,000 in damages based on Aaron Klein's quotation of the Bible. For this, I need to tell you a little more about the story. After Aaron politely explained that Sweet Cakes could not celebrate a same-sex wedding for religious reasons, the complainant and her mother, who was at the cake tasting with her, left the bakery and drove away.


But then the mother turned around and went back into the store to confront Aaron alone, against her daughter's will. The mother, then, started a conversation about religion by directly engaging Aaron about the basis for his beliefs. She told him how she used to share his convictions about marriage but that her truth had changed and that she had come to believe the Bible to be silent about same-sex relationships. Only then did Aaron respond to her interpretation of the Bible by quoting Leviticus 18:22. That verse says, "You shall not lie with a male as with a female. It is an abomination."


The complainant's mother then left the bakery and told her daughter that Aaron "had told her that her children were an abomination unto God." The Bureau found that the complainant's mother had misreported Aaron's statement, but it awarded damages anyway for the emotional harm inflicted by his use of the word abomination.


On remand, the Bureau admits that it rewarded damages for the effects of Aaron's quotation of scripture, but it argues that this was appropriate because "the manner in which Aaron denied services included his reference to a Bible verse using the word abomination."


Needless to say, we think it's a gross injustice to award damages for the effects of a conversation about religion initiated by a third-party, especially when that conversation occurred separate from the denial of service. The record in this case is clear that the complainant's mother did not return to the store to convince Aaron to make a wedding cake. Rather, she returned to the store to convince him that his religious views were wrong.


More to the point, this aspect of the Bureau's decision shows anti-religious hostility because the Bureau picked sides in a religious dispute, valuing the mother's religious statements over Aaron Klein's. The Bureau's hostility was also evident in the size of the damages award for which it had to look to cases involving physical violence and sexual harassment over prolonged periods of time as comparators.


That hostility is also evident in the gag order that the Bureau issued which prevented the Kleins from even describing the facts of their case and their religious convictions. The Bureau had interpreted such statements as threats of future discrimination. Fortunately, in its now vacated decision, the Oregon Court of Appeals had reversed that aspect of the Bureau's order.


So on remand, BLI's strategy has been to take each individual piece of evidence of the Board's anti-religious hostility and distinguish it from Masterpiece. We argue that this approach is inconsistent with Masterpiece itself, because in that case, the Supreme Court took a holistic approach to all of the evidence in all of the circumstances of the case. It did not require any one overwhelming piece of evidence of anti-religious hostility.


We also argue in our briefs that the Oregon Court of Appeals needs to reconsider its holding, now vacated, that the Bureau's order did not violate the Kleins' right to free speech. Although Masterpiece Cakeshop was decided without reaching all of Jack Phillips' claims, three justices wrote separately to opine that the creation of custom wedding cakes is expressive. That was the basis for the Oregon Court of Appeals rejection of the Kleins' free speech claims.


And in the intervening month, the Eight Circuit and the Arizona Supreme Court have both cited Masterpiece Cakeshop in upholding the First Amendment rights of wedding videographers, in a case called Telescope Media, and calligraphers, in a case called Brush & Nib. So on remand, the case has now been fully briefed, and we're waiting further instructions from the Oregon Court of Appeals.


Of course, we hope that the Court will take seriously the evidence of the Oregon Bureau's hostility to the Kleins' sincerely-held religious beliefs. Ultimately, though, we look forward to someday when the Supreme Court will grant a definitive ruling on the free speech and free exercise rights of faithful artists and entrepreneurs in this situation.


Why don’t I stop there and leave time for any questions?


Micah Wallen:  Absolutely. Thank you, Adam. We'll now go to our first question.


Phil Cole:  This is Phil Cole, Minnesota. I'm glad that the speaker mentioned Telescope Media because that addresses directly the free speech issue. The Bill of Rights issue doesn't get into the question about bias and prejudice from the part of the body because in Oregon, they got to get back to that Board, ultimately, probably, and get the same result. But in the Telescope case, out of the Eighth Circuit just in August, they addressed it directly, not in the case of a wedding cake but in the case of a photographer, where photography is an expression protected by the First Amendment.


And in this case, like in the Oregon case, the photographer wishes to take his photographs and then publish them to celebrate ordinary, regular marriages, and he refused to do photography for same-sex marriages. And it was held that the photographer had a free speech right to decline to offer services in that connections.


Now, that case was remanded for a trial when they -- the Attorney General in Minnesota just put a letter to the editor in the paper today about what he's going to do on the trial in the case, but it's also very clear he doesn't understand the case. And I'm pretty sure that the lawyers for the photographer do understand the case and what they have to make there. But I guess the point is that there is now a case out of the Federal Circuit on this clash between services and Bill of Rights, free speech, free religion. So whatever they do in Oregon is going to, perhaps, create a clash and get this issue back to the Supreme Court, where they don't get to punt it like they did in Cakeshop.


Adam Gustafson:  I think that's an excellent point. I think we're starting to see real division among the courts, and, ultimately, that division can only be resolved by the U.S. Supreme Court. It took Masterpiece Cakeshop to address this question and ultimately avoided the question in Masterpiece, but it can't avoid the question forever.


      You mentioned Telescope Media. Of course, in that case, the court had the benefit of lots of precedent including Supreme Court precedent saying movies, videos are pure speech, fully protected by Free Speech Clause. We don't have the benefit of such clear precedent for wedding cakes, but we certainly do have corresponding precedent for the protected status of artwork including even abstract artwork like Jackson Pollock paintings.


      So we think that we agree with Justices Gorsuch and Alito and Thomas that there's no way to distinguish wedding cakes from other pure expression. We look forward to that question finally being resolved at some point, but in the meantime, I think there are several helpful aspects that we can draw from the Telescope Media case. That court, the Eight Circuit, resisted some of the arguments that the Oregon Court of Appeals fell into.


The Oregon Court of Appeals suggested that speech may be subject to less First Amendment protection when it's done for a commercial motive or when it is done in collaboration between the artist and customer. And the Eight Circuit addresses both of those arguments head on and rejects both of them out of hand on the First Amendment doesn't cease to apply in a commercial context and even collaborative art is still fully protected by the First Amendment. So I look forward to seeing other courts take on those questions, and I hope they'll reach the same answers as the Eighth Circuit.


Micah Wallen:  And, Adam, I wanted to ask you what you thought the prospects were for the Supreme Court overruling Employment Division v. Smith?


Adam Gustafson:  Well, we took a lot of comfort in a recent development on that question in the last term. So, just to review, Employment Division v. Smith is the case that really undermined the application of the Free Exercise Clause, really defamed it. So we were very interested to see earlier this term when four justices of the Court directly addressed that question. The case was Kennedy v. Bremerton School District.


      So just to back up a little bit, so Employment Division v. Smith basically said no heightened scrutiny for laws that burden -- for generally applicable neutral laws that burden religious exercise. And the result is religious freedom cases are being won or lost as free speech cases rather than free exercise cases.


And so that's why we see so many religious freedom cases coming before the court brought by artists and others raising speech claims. If you're not engaged in speech, the lower courts can do very little to protect you from generally applicable laws that would force you to violate your beliefs.


      But Employment Division v. Smith seems to be on shaky footing. Four justices in this case Kennedy v. Bremerton School District said in a statement respecting the denial of cert in that case. This case involved the free speech claims of a high school football coach who said he was fired for praying on the sidelines. Justice Alito joined by Justice Thomas, Gorsuch, and Kavanaugh suggested that the Court's own precedent in Smith was the reason that he hadn't brought a free exercise claim in the first place.


They said that in Smith, the court "drastically cut back on the protection provided by the Free Exercise Clause." Those four justices noted that the Court had not yet "been asked to revisit Smith," but a lot of us read that opinion and noted that it was signed by four justices as a strong suggestion that those justices are willing to consider petitions that would invite the Court to overrule Smith.


      That would be a big deal, a big step toward restoring the Constitution's protection of religious exercise. Think the likelihood that the Court will address that question, certainly greater today than it was a couple of terms ago.


Micah Wallen:  Absolutely, and with that, we'll go to our next question.


David Applegate:  This is David Applegate in Chicago. There's an old saying that hard cases make bad law, but it seems to me, this is a rather easy case based on the facts that have been described here: the sincere religious beliefs of the couple who started the business, the history of the business, the nature of the conversation that provoked the complaint, and, perhaps, I'm showing my age at 66 and don't understand some of the young folks today, but it's hard to believe that even being called an abomination is actually going to cause anyone emotional distress.


      Putting that aside, it seems to me that there are much harder cases, and I wonder if the speaker has any views on some of the following situations. Imagine a custom-tailor who says each wedding gown I design or each tuxedo that I custom-make is an expression of my artistic freedoms, and I'm either devout Muslim or an Evangelical Christian and I don't believe in same-sex marriage, and I think there would be severe consequences for me in the afterlife, as well as personal shame in this life, were I to participate in that.


      Is there a rule that is going to govern that sort of claim to artistic expression or freedom of expression as well as the bakery examples? And can we reasonably expect the Supreme Court, which for decades, it seems to me, has rather mucked up the law of freedom of expression, of religion, as with public displays of Christian religion at Christmas time or Easter and so forth. What really can we expect in terms of any kind of consistent ruling that's going to apply across the board as opposed to something that is going to return this question literally on a case-by-case basis back to the Supreme Court every time?


Adam Gustafson:  Well, that's a good question, and I'm not sure I have a good answer to it. I think the Court certainly wanted to resolve -- granted cert to resolve that question, and I think it realized that it needed to craft a rule that would be useful to the lower courts outside the narrow context of wedding cakes. And the Court ultimately sidestepped that question, but I don't think it can sidestep it forever.


So I do think it is possible for the Court to craft a rule that protects artists who are engaged in what the Court has previously called pure speech. It's clear from the Court's precedence that not only speech with words is protected by the First Amendment but that art is also pure speech, pure expression that's fully protected by the First Amendment's free speech clause. And I think if you're dealing with a tailor who is custom-making a dress using the kind of artistic skill and aesthetic judgments that the Kleins employed in this case, then that ought to be protected as well.


I think facts will always matter in these cases. We benefitted from a really well-done record for which we have Herb Grey and Tyler Smith in Oregon to thank. But the record in our case makes abundantly clear that every time that the Kleins made a cake, it was always a work of art, an expression of their own aesthetic judgement, and that it was an expression of their celebration of marriage, and specifically the marriage of their clients. One of the lessons that we can draw from this case is that these facts do matter in constitutional litigation, and that it's important to build a strong record.


Micah Wallen:  All right. We'll now move to our next question.


Lee McGraff (sp):  Hello, this is Lee McGraff calling from Minnesota. I wondered if Mr. Gustafson would return to the idea that there were alternative locations where the individual could buy a cake. I punched up a map and see that there are about three different bakeshops in Gresham, and Portland is only 20 miles to the west. Are there limits on that argument, and would he kindly flesh it out a little bit?


Adam Gustafson:  The facts of this case are that the very next bakery that they went to was very happy to create a custom wedding cake for the complainants. In fact, there was a contest between the baker that they hired and then the baker who offered to do one for free. They both wanted to make sure that they got credit and were seen by the public as being supportive of this wedding. So I think the facts of this case make clear that there's no difficulty in getting these other cakes -- getting cakes from other bakers.


      I don't know legally that that -- the case should turn on that fact. I think even if you were the only baker in town, your First Amendment rights shouldn't be taken away from you simply because you're the only baker in town. There's room for competition, and if there's a message that other speakers are called on to speak, one of the benefits of our commercial system is that it creates incentives for those speakers to exist.


But I do think that the facts of this case show why one of the common arguments against people like the Kleins should not be taken seriously. Often, it's said that if a court were to grant in favor of the Kleins or people like them, that it would create pandemic of discrimination against same-sex couples.


We don't see that bearing itself out in the wake of Telescope Media or the other cases, and I think it's contrary to the trends that are very patently observable in our society. There's a tendency towards acceptance of same-sex marriage, so the idea that enforcing the First Amendment rights of minority religious observers is going to interfere with the right to same-sex marriage does not seem to be a plausible argument.


Micah Wallen:  So without further ado, we'll move to the next question.


Phil Cole:  This is Phil Cole again in Minnesota. Looking at these cases, I think the essential fact that must be proven by the claim for free speech, free religion is that the -- in the offering of a rather mundane service like photography or tailored clothes or the like, the right of expression must be reserved by the seller, by the -- we'll call them an artist if you wish.


Know that the right is that is in Telescope Media, yeah, we do photography but in doing so, we express our belief in traditional marriage and do it in so many ways and reserve the right to do that as we see fit. Because if they're not reserving an expression right, if they're just doing custom work, they're going to lose the case.


So it's expression that is protected and the Court is very willing to extend, apparently, freedom in expression to all sorts of transactions. I would even think tailored clothes would be an example that would succeed, if you could show that there is a mode of expression in the course of delivering that service. That's the key as I read the cases.


Adam Gustafson:  Yes. I think I take your point. It wouldn't be sufficient even for a highly skilled artisan to merely follow specific instructions that didn't call on him to exercise any independent aesthetic judgement. So it's important that in these cases that there be a record that shows the usual practices of the artist and that emphasizes their own aesthetic input into the product.


      We certainly have that in this case, that the Oregon Court of Appeals was forced to admit that the Kleins' cakes "follow a collaborative design process through which Melissa uses her customer's preferences to develop a custom design including choices as to color, style, and other decorative detail. The process does not simply involve the Kleins executing precise instructions from their customers. Instead, it's clear that Melissa uses her own design skills and aesthetic judgements."


      So I think it's noteworthy that even in a court that ruled against us, the court was really backed into a corner and had to admit there's independent artistry happening here.


Micah Wallen:  Not seeing any other questions in the queue. Adam, did you have any closing remarks for us?


Adam Gustafson:  Well, I think I'd just close by saying that the Kleins' religious views don't prevent same-sex couples from exercising their right to marry, and there's no reason why the right to same-sex marriage should compel a violation of the Kleins' own constitutional rights. I'm hopeful that as these cases continue to percolate that our society will realize that we really can live at peace with one another, respecting the individual right of even people who disagree strongly with us. And it may, ultimately, take the Supreme Court to settle that question.        


Micah Wallen:  All right, and on behalf of The Federalist Society, I'd like to thank our expert for the benefit of his valuable time and expertise today. We welcome listener feedback by email at [email protected]. Thank you all for joining us. We are adjourned.


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