SALEM - A Gresham bakery’s refusal to sell a wedding cake to a same-sex couple has returned to court, six years after the bakery’s co-owner told one of the brides he wouldn’t bake a cake for the wedding of two women and more than five years after the state civil rights division fined the bakery $135,000 for illegal discrimination.

At issue during oral arguments before the Oregon Court of Appeals Thursday: whether a 2018 U.S. Supreme Court ruling in a similar Colorado case undermines Oregon’s earlier Appeals Court ruling upholding the finding of discrimination and the large fine.

A state civil rights investigation overseen by then-Labor Commissioner Brad Avakian concluded Sweet Cakes by Melissa violated the women’s civil rights. The bakery’s owners appealed Avakian’s determination and civil penalty attached to it. They said baking a cake for a same-sex wedding went against their Christian beliefs.

Oregon law bans discrimination against gay, lesbian, bisexual and transgender people in jobs and in places that serve the public, such as bakeries.

The debate over equal rights and religious freedom has drawn national attention to both the bakers and the couple at the center of the case.

On Thursday, a lawyer for the bakery’s owners, Aaron and Melissa Klein, contended that the Appeals Court should reverse Avakian’s ruling because of the clear hostility Avakian and others demonstrated toward the Kleins’ religion.

An attorney representing Oregon’s Bureau of Labor Industries urged the three-judge panel to reaffirm the court’s 2017 decision to uphold the determination and damages as lawful. Two of the three judges considering the case Thursday, Joel DeVore and Bronson James, were part of the panel that issued that unanimous 2017 opinion.

In June, the nation’s highest court ordered the state appellate court to hear the case again in light of its ruling in the Colorado case.

That case centered on a bakery found by the Colorado Civil Rights Commission to have discriminated against a same-sex couple who wanted to buy a cake for their wedding. Supreme Court justices ruled on narrow grounds that because one of the commissioners was openly hostile to religion, the commission’s decision violated the First Amendment’s requirement for governmental religious neutrality.

Adam Gustafson, lawyer for bakers Aaron and Melissa Klein, argues before three judges of the Oregon Court of Appeals that they should dismiss the case against his clients because decision-makers showed signs of hostility toward the Kleins' religious beliefs when deciding the case.Beth Nakamura / The Oregonian|OregonLive

The Kleins’ attorney, Adam Gustafson, listed several instances during the Bureau of Labor and Industries process that he said showed hostility toward the couple’s religious beliefs, including that Avakian posted on Facebook about the case before his commission reached a conclusion about the case. The post said everyone had a right to their own religious beliefs but that doesn’t mean they could violate state laws.

DeVore asked what about Avakian’s post was wrong, if his statement was true.

Gustafson said the post spoke directly to neutrality: If Avakian already prejudged the Kleins, how could he fully and accurately consider the facts of the case?

Gustafson said the 2018 Supreme Court decision set a high bar that even “subtle departures of neutrality” constitute an infringement of constitutional religious rights.

The Kleins sat directly behind Gustafson as he addressed the judges. At times, they nodded in agreement.

Rachel and Laurel Bowman-Cryer, who lodged the complaint against the Kleins that triggered the civil rights investigation, sat several feet away.

Two dozen other people filled the small courtroom, a temporary home for the state’s two highest courts while their historic building is renovated.

Each attorney had 30 minutes to address the judges and answer questions. They also filed court papers that outlined their positions.

Gustafson contended the state’s $135,000 fine was another indicator of the state’s religious hostility because the levy was based in part on Aaron Klein’s recitation of the Bible. He quoted a verse from Leviticus to one bride’s mother: “You shall not lie with a male as with a woman; it is an abomination.”

The mother relayed Klein’s quotation to the couple, telling them he called them an abomination. The pair testified during the initial proceedings that they were deeply affected by being described that way.

The term factored into the calculation of the damages against the Kleins. Other penalties issued by the Bureau of Labor and Industries around that same time for discrimination based on race, disability or other protected status that caused only emotional, not physical or economic, damage were much smaller, from $10,000 to $60,000, Gustafson said.

The disproportionate levy shows an evident bias against the Kleins, he told the judges.

Carson Whitehead, the assistant attorney general representing the state Labor Bureau, argues that the Oregon Appeals Court should again uphold a discrimination verdict and $135,000 fine against bakers Aaron and Melissa Klein, who can be seen seated behind him.Beth Nakamura / The Oregonian|OregonLive

Carson Whitehead, the Bureau of Labor and Industries lawyer, said that courts often rely on what people say to assess penalties, in criminal and civil proceedings. He said several days’ worth of testimony established the deep and long-lasting emotional damage the women suffered as a result of the Kleins’ conduct.

“All the evidence here was about the harm the complainants suffered by the manner service was denied,” he said.

Whitehead said the Kleins did not clearly establish hostility on the part of decision-makers in the case and contended that was the bar set by the Supreme Court decision in the Colorado case. But Presiding Judge Erin Lagesen questioned whether the decision established such a clear standard.

James, another of the judges, quoted from the labor commission’s order against the Kleins that referred to copious “hate-filled comments supportive of the Kleins.”

“Doesn’t that equate those who support the respondents as being motivated by hate?” James asked Whitehead.

Whitehead said the sometimes vicious comments about the Bowman-Cryers on social media could accurately be categorized as hateful, but that did not necessarily mean Avakian viewed the Kleins’ beliefs about same-sex marriage to be motivated by hate.

The judges also pressed whether civil rights investigatory process can be neutral, given that the labor commissioner both chooses which investigations to launch and signs off on any ultimate findings.

Whitehead said the state’s procedural rules and processes weren’t at issue in the case, and the Supreme Court decision did not call a similar process into question in the Colorado ruling. He also noted that an independent administrative law judge first determined the Kleins had broken the law and decided the size of the fine before Avakian signed off on those decisions.

“The problem in (that case) was specific statements by the Colorado Civil Rights Commission that exhibited clear hostility, coupled with different case law treatment,” he said.

James asked both attorneys what the Court of Appeals should do if judges conclude the Kleins did face some hostility at some point during the process.

Whitehead said that would depend on the court’s exact conclusion and could include ordering the labor commission to reconsider the case or damages.

Oregon Court of Appeals judges, from left, Joel DeVore, Erin Lagesen and Bronson James listed to oral arguments Thursday from lawyers representing bakers Melissa and Aaron Klein and a same-sex couple to whom the Kleins refused to sell a wedding cake.Beth Nakamura / The Oregonian|OregonLive

Gustafson said the court’s only option -- based on the Supreme Court decision -- was to reverse the order and damages and declare the case completely over.

“The Kleins have been put through too much to have to endure this all over again,” he said.

The Kleins closed their Gresham shop in 2013 and stopped selling cakes in 2016.

DeVore asked Gustafson to point to another case in which the appellate court had issued an outright dismissal. Gustafson said he had none and continued to address other points during his remaining time.

As the hearing concluded, two judges circled back to Gustafson’s assertion that the court had no other option but to fully set aside the case without remanding it back to the labor commission or some other venue if it found so much as what James called a “specter of impropriety” by decision-makers.

“That cannot possibly be the answer,” James said.

-- Molly Young

myoung@oregonian.com