In a 7-2 decision written by Supreme Court Justice Anthony Kennedy, the Court ruled that the Colorado Civil Rights Commission "showed elements of a clear and impermissible hostility toward the honest religious beliefs motivating his objection".
The Supreme Court justices' limited ruling turned on what the court described as anti-religious bias on that commission when it ruled against Phillips.
The decision made it clear that even if the court ultimately rules in a future case that bakers or other businesses that sell creative products such as florists and wedding photographers can avoid punishment under anti-discrimination laws, most businesses open to the public would have no such defense. Phillips said his Christian faith prevented him for providing a cake for a same-sex wedding.
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This court specifically this case does not decide all other pending cases involving the conflict between religious views and gay marriage, and they will have to be further hammered out in the courts. The two men were going to be married in MA, and they were looking for a wedding cake for a reception in Colorado. Colorado Solicitor General Frederick Yarger argued for the state commission.
"Whatever the confluence of speech and free exercise principles might be in some cases, the Colorado Civil Rights Commission's consideration of this case was inconsistent with the State's obligation of religious neutrality", the Court continued.
But when the justices heard arguments in December, Justice Anthony Kennedy was plainly bothered by comments by a commission member. In particular, Kennedy pointed to the fact that the Commission said that religious freedom has been used to justify such atrocities as slavery or the Holocaust.
That same sentiment coursed through his opinion on Monday (local time). The Court ruled that the bakers were protected by the Free Exercise Clause of the First Amendment and that the discrimination rules were not viewpoint neutral for religious believers. Kagan and Breyer were the only two judges who disagreed with the ruling. The blockbuster case pitted civil liberties versus religious freedom - an important issue for conservatives who believe that serving people who cross certain moral thresholds (like being gay) counts as an infringement of their rights.
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Mullins and Craig successfully brought their complaint to the Colorado Civil Rights Commission.
Colorado is one of 22 states that includes sexual orientation in its anti-discrimination law, which allowed Mr Craig and Mr Mullins to win their case before the state's Civil Rights Commission.
Phillips said his cakes are artistic expression and that creating a cake celebrating gay marriage violates his religious beliefs. However, cake design is inherently expressive, "a message telling all who see it that this event is a wedding and that it is an occasion for celebration".
Justice Ginsburg added that she did not agree with the finding that the Commission acted unfairly, citing "several layers of independent decisionmaking of which the Colorado Civil Rights Commission was but one" in the state case.
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