Supreme Court Cases Send Mixed Messages about LGBTQ Rights

The U.S. Supreme Court continues to send seemingly mixed messages about the recognition of LGBTQ equity rights and the limitation of those rights in commerce and social contracts under the First Amendment’s Free Exercise Clause. On June 15, 2021, the Court announced its decision in Fulton v. Philadelphia, one of the most-watched cases in the Court’s October 2020 term.

In Fulton, the Court considered the objection of social services organization Catholic Social Services (CSS) to the foster placement of children with married same-sex couples under a service contract with the city of Philadelphia. CSS claimed that the church’s long-standing religious tenet that marriage is a sacrament between a man and woman only prevented CSS from certifying same-sex couples as qualified foster parents.

Although the position of CSS on this point was hardly new in its over 50-year relationship with the city, Philadelphia’s city council started an investigation in 2018, based on the city’s Fair Practices Ordinance that bans discrimination for sexual orientation. The city’s ordinance was new (as of 2017).

The city determined that the refusal of CSS to recognize the eligibility of same-sex married couples was unlawful discrimination against sexual orientation and suspended referrals for foster placement to CSS. The city further declared it would not renew its contract with CSS to serve Philadelphia’s foster system without a provision expressly forbidding any discrimination against its LGBTQ community. According to the city, CSS would have to change its policy about same-sex marriage in order to continue providing the city’s foster services.

As a result, CSS and other interested parties sued the city in federal court. The case was significant for the constitutional issues of LGBTQ equity rights versus First Amendment free exercise of religion and free speech.

The Contract Provision Involved in the Supreme Court Case

Here is the city’s contract provision that became the centerpiece of the case’s constitutional controversy:

“Rejection of Referral. Provider shall not reject a child or family including, but not limited to, prospective foster or adoptive parents for Services based upon …their …sexual orientation…unless an exception is granted by the Commissioner or the Commissioner’s designee, in his/her sole discretion.”

Early on, the city prevailed in the case. Both the District Court and the U.S. Court of Appeals for the Third Circuit found the city’s contract provision to be neutral and generally applicable. It was not unduly restrictive to the free exercise of religion by CSS, but was equivalent to all parties and beneficiaries of the city’s foster program contracts. The Third Circuit explained, “religious or conscientious objections do not supersede the basic obligation to comply with generally applicable civil rights laws provided those laws are applied neutrally.”

The Supreme Court recognized the Third Circuit’s view that a generally applicable law, neutrally applied, would pass muster. However, the Court disagreed with the Third Circuit’s interpretation of Philadelphia’s contract. While the Third Circuit disputed the notion that the city of Philadelphia had targeted the religious belief of CSS and viewed the city’s action to be a neutral and necessary approach to ensure nondiscrimination, the Supreme Court viewed the same actions as unconstitutional when CSS’s free exercise of its religious beliefs was targeted. 

In a unanimous decision, the Court sided with CSS on the religious freedom argument and declined to opine on the free speech issue. However, this decision by the U.S. Supreme Court is narrower than it sounds. In ruling against Philadelphia’s argument, the Court essentially pinned its reasoning to the city’s targeting of CSS in its contractual terms, limiting the application of this case to balancing the exercise of CSS’s exercise of religious belief against the city’s governmental interest in limiting that exercise.

Understanding the Factual Landscape behind Fulton v. Philadelphia

It all came down to the contract. To fully understand Fulton, it is important to realize the factual landscape behind this important case, which the Supreme Court carefully outlined in explaining its opinion. These points provide context for the contractual relationship of the parties and CSS’s established practice in foster placement and also suggest political nuances influencing this case:

1. The Catholic Church’s history of public social service in Philadelphia spans two centuries.
2. The city’s foster care system depends on private foster agency services like those of CSS.
3. Several private agencies serve the city’s foster system with standard contracts. Despite many agencies, the acute demand on Philadelphia for foster care had created a shortage in service.
4. A private agency has authority under the city contract to approve, disapprove, or conditionally approve individuals or couples for a foster placement.  
5. In making its decisions, the religious views of CSS “inform its work.”
6. The long-standing religious view of CSS on marriage is that it is a sacrament between a man and woman only.
7. CSS does not object to certifying “gay or lesbian” single foster parents or to placing “gay or lesbian” children. It does not approve of any unmarried couples.
8. If a same-sex married couple were to apply to CSS, it would send the couple to one of several other agencies serving Philadelphia. According to the Court opinion, no same-sex couple had actually applied to CSS and therefore none had actually been denied.
9. For over 50 years, CSS has provided foster care services to Philadelphia under the city’s foster care arrangement.
10. In 2018, the city decided it was time for CSS to change its policy with the times. It suspended foster referrals to CSS and added the Rejection of Referral provision to its renewal contract banning discrimination for “sexual orientation” unless the city’s Commissioner were to grant an “exception” to this provision “in his/her sole discretion.” However, the city made clear no such exception would be granted for CSS’ religious policy toward same-sex married couples. These actions resulted in the lawsuit.

Did Philadelphia Place an ‘Unconstitutional Burden’ on CSS for Exercising Its Religious Belief?

On these facts, the Court considered the constitutional question of whether Philadelphia had placed an unconstitutional burden on CSS for the free exercise of its religious beliefs. Some measure of burden is allowed, but it must be neutral and “generally applicable.” It is neither of these if the government has the discretion, case by case, to arbitrarily carve out exceptions.

Philadelphia argued that its contract provision prohibiting the discrimination on the basis of “sexual orientation” was generally applicable and reflective of the city’s local laws protecting LGBTQ rights. The lower courts agreed.

But the U.S. Supreme Court gave more weight to the “exceptions” language in the contract. Applying contract interpretation, the Court held that the city had violated CSS’s First Amendment right of free exercise of its religious belief. Coupled with the city’s admission that CSS’s religious belief was outside the pale of any such exception, the Court found the city’s actions to be narrowly and directed to CSS specifically.

The Masterpiece Cakeshop Case: Another Case Relating to LGBTQ Rights

This view of government overreach targeting religious belief is consistent with the Court’s 2018 opinion in Masterpiece Cakeshop v. Colorado Civil Rights Commission. In that case, a Colorado baker refused to prepare a wedding cake for a same-sex couple because he viewed it as equivalent to his participation in a marriage ceremony that was against his religious belief. He was willing to sell the couple anything else he baked or had for sale in his shop, just not this particular cake.

Like CSS asserted in Fulton, the baker stated that he conducted his business according to his religious beliefs. When his denial of service to the same-sex couple was charged as discrimination under Colorado law, the state agency hearing the case criticized the baker’s beliefs, apparently in a hostile manner. This criticism did not sit well with the U.S. Supreme Court, which ruled in his favor because of the state’s hostility toward his beliefs. 

Because Masterpiece Cakeshop focused on the state’s negative attitude toward the baker’s religious belief, the Court left unresolved whether bakers or similar artistic purveyors can invoke the Free Exercise Clause to deny service at a same-sex wedding.

A majority of the Court remains unwilling to answer that question in its refusal of another petition. On July 2, 2021, the Court turned down Arlene’s Flowers, Inc. v. Washington, tacitly justifying the Washington Supreme Court’s ruling that a florist unlawfully discriminated against a same-sex couple when she refused to provide flowers for their wedding on religious grounds. (Justices Alito, Thomas, and Gorsuch voted to take the case.)

The US Supreme Court Has Not Seized Opportunities to Limit LGBTQ Rights

While it would be disingenuous to underestimate the import of Fulton and Masterpiece Cakeshop as judicial push-backs against LGBTQ rights, neither case stands as a blanket precedent to limit the general right of same-sex couples to marry and adopt or foster children. Likewise, these cases do not indicate that all assertions of religious belief will succeed as a justification for discrimination.

First, in Fulton, the Court was careful to focus on the contractual nature of the rights and obligations of the parties in applying the Free Exercise Clause. Second, in exercising its religious belief in this situation, CSS was not requiring nonbelievers to agree or participate in its belief, such as, for example, requiring all foster applicants to be heterosexual married couples. Also, CSS will certify single individuals, including LGBTQ, according to the Court’s opinion.

Third, in its actions to pursue equity and constitutional protection for one group of citizenry – the LGBTQ community – the city of Philadelphia, a governmental body, specifically targeted the protected constitutional right of religious freedom of another group – the Catholic Church. These features distinguish Fulton as an attempt of a conservative court to balance competing, legitimate constitutional interests in a contentious sociopolitical environment.

In this regard, the case is also notable for what it does not say. The Court pointedly ignored an opportunity in Fulton to roll back progress for LGBTQ marriage rights.

The petitioners in Fulton argued that Philadelphia’s actions against CSS were predictable, thanks to the Court’s recognition of same-sex marriage as a constitutional right in Obergefell v. Hodges. The Court ignored this invitation to overturn or even question Obergefell.

Similarly, the Supreme Court’s recent refusals to hear cases favoring LGBTQ rights signal a reluctance of the Court to seize opportunities to limit LGBTQ rights. Along with Arlene’s Flowers, the court declined to take up Gloucester County School Board v. Grimm. In this case, a Virginia high school denied a transgender male student the right to use the men’s bathroom and segregated him in a private bathroom, effectively stigmatizing him in a type of shunning.

The U.S. Court of Appeals for the Fourth Circuit held that the school had unlawfully discriminated against the student. The Court’s denial of the school’s petition for review leaves the Fourth Circuit’s decision intact as legal precedent on this issue, however. The case stands as an important decision for LGBTQ rights, a point the Supreme Court well understands.

The Court’s rebuff of Arlene’s Flowers and Grimm is consistent with its recognition of LGBTQ equality in employment in Bostock v. Clayton County Georgia last year. Grimm carries an ironic echo of Justice Alito’s dissent in Bostock, in which he predicted that the Bostock majority’s approval of LGBTQ rights would create a future in which “transgender persons will be able to argue that they are entitled to use a bathroom or locker room,” as if such an imaginary dystopian nightmare of bathroom chaos were a constitutional justification to discount civil rights. He cited Grimm (then pending in the lower court) as evidence the danger was real. Though Justices Alito and Thomas voted to hear the Grimm case, seven justices voted to let it stand without the Court’s interference.

All these cases relate to compelling societal interests and business practice as well as legal questions. It is worthwhile to explore them in fair-minded, thoughtful forums.

We include study and analysis of current and historic Supreme Court opinions and related issues in our Business and Legal Studies courses, such as constitutional law, business law, management, and ethics. These discussions inspire critical thinking and lively debate.