The ongoing battle between gay rights and religious liberty escalated Thursday as husband-and-wife bakers in Oregon appealed their case after being ordered to pay $135,000 in damages for declining to make a cake for a same-sex wedding.

“Everything up to this point has been administrative hearings,” Aaron Klein, co-owner with his wife Melissa of the since-closed bakery, told The Daily Signal afterward.

“Every time we tried to make a constitutional argument it was stomped on, because it was administrative law,” he said. “But now we’re finally in a courtroom where the Constitution and due process can be argued on a level we haven’t seen before. I’m looking forward to seeing the outcome.”

In court, an attorney for the Kleins again argued that designing and baking a cake to celebrate a same-sex marriage would violate the bakers’ Christian faith.

Both the Kleins and the same-sex couple who filed the original complaint against them were present inside the courtroom.

Afterward, while speaking to reporters, Melissa Klein had an emotional response.

“I loved my shop, and losing it has been so hard for me and my family,” Melissa Klein says.

“We lost everything,” she said. “I loved my shop, and losing it has been so hard for me and my family.”

In an exclusive telephone interview with The Daily Signal later, she added:

“That was a part of our life, and it was something that we thought was going to be passed down to our kids. It’s something that I miss every day still. I don’t think I’ll ever be able to get over it because it was our second home.”

A three-judge panel of the Oregon Court of Appeals heard oral arguments from both sides, with questions focused on issues such as:

Does Oregon have a “compelling reason” to grant the Kleins a religious exemption from the state’s antidiscrimination law?

Does a cake count as artistic expression protected by the First Amendment, and how do you differentiate between what constitutes art and what doesn’t?

What was the particular message involved in designing and making a cake for a same-sex wedding, and how is it understood by an observer?

To what extent may an artist be compelled to do something?

The Kleins used to run Sweet Cakes by Melissa, a family bakery they owned and operated in Gresham, Oregon. But after the Kleins declined in 2013 to make a cake for a same-sex couple’s wedding, citing their religious beliefs, they faced protests that eventually led them to shut down their bakery.

In July 2015, an administrative judge for the Oregon Bureau of Labor and Industries ruled that the Kleins had discriminated against a lesbian couple, Rachel and Laurel Bowman-Cryer, on the basis of their sexual orientation. The judge ordered the Kleins to pay the $135,000 for physical, emotional, and mental damages.

Under Oregon law, it is illegal for businesses to refuse service based on a customer’s sexual orientation, as well as race, gender, and other characteristics.

The Kleins maintained that they did not discriminate, but only declined to make the cake because of their religious beliefs about marriage. Designing and baking a custom cake for a same-sex wedding, they said, would violate their Christian faith.

The Kleins appealed to the Oregon Court of Appeals on the basis of their constitutional rights to religious freedom, free speech, and due process.

The three appeals judges also pursued these lines of questioning:

Was the award of damages—the $135,000 the Kleins were ordered to pay—out of line with other cases before the Oregon Bureau of Labor and Industries?

Was it reasonable for that state agency to extend the damages through more than two years after the alleged discrimination actually occurred?

Did Bureau of Labor and Industries Commissioner Brad Avakian prejudge the case and in doing so strip the Kleins of their right to due process?

How is sexual orientation different from race as a personal characteristic?

Each side had equal time to make their case and the Kleins, as plaintiffs, got an additional five minutes for a rebuttal. The oral arguments were live-streamed, and may be watched in full here.

“The government should never force someone to violate their conscience or their beliefs,” Kelly Shackelford, president and CEO of First Liberty Institute, a religious freedom group that represents the Kleins, said in a press statement, adding:

“In a diverse and pluralistic society, people of good will should be able to peacefully coexist with different beliefs. We hope the court will uphold the Kleins’ rights to free speech and religious liberty.”

But Charlie Burr, a spokesman for the Oregon Bureau of Labor and Industries, whose lawyers represent the Bowman-Cryers, said:

“The facts of this case clearly demonstrate that the Kleins unlawfully discriminated against a same-sex couple when they refused service based on sexual orientation.”

Since the case began in 2013, the Kleins have argued the cards were stacked against them.

Lawyers for the Bureau of Labor and Industries pursued the charges against the Kleins on behalf of the lesbian couple, who went on to marry.

Avakian, the agency official, made multiple public comments criticizing them before any rulings, the Kleins said.

The administrative judge who issued the final ruling also is employed by the state agency.

Besides ordering the Kleins to pay $135,000, Avakian ordered the former bakery owners to “cease and desist” from speaking publicly about not wanting to bake cakes for same-sex weddings based on their Christian beliefs.

Both parties have said the case has taken a heavy toll on their families. Aaron and Melissa Klein, who have five children, say they continue to face hurtful attacks from liberal activists.

According to an article the Bowman-Cryers wrote for The Advocate, a publication focused on LGBT issues, they are foster parents for two “high-needs” girls.

“Part of the reason we decided to get married in the first place was to provide stability for our daughters,” they wrote, adding:

Before we became engaged, we became foster parents for two very high-needs girls after their mother, a close friend of ours, died suddenly. Lizzy, now 9, has cerebral palsy, autism, and a chromosomal disorder that causes developmental delays. Anastasia, now 7, has Asperger’s and stopped speaking when her mother died. While the case wound its way through the courts, we won full adoptive custody of Lizzy and Anastasia, and they are the light of our lives.

The appeals judges are not expected to rule for several months. If they rule against the Kleins, the couple’s next step would be appealing to the Oregon Supreme Court.