8 Equality and Discrimination 8 Equality and Discrimination

8.1 Public Accomodation 8.1 Public Accomodation

8.1.2 Masterpiece Cakeshop Ltd. v. Colorado Civil Rights Commission 8.1.2 Masterpiece Cakeshop Ltd. v. Colorado Civil Rights Commission

138 S.Ct. 1719 (2018)

MASTERPIECE CAKESHOP, LTD., et al., Petitioners
v.
COLORADO CIVIL RIGHTS COMMISSION, et al.

No. 16-111.

Supreme Court of United States.

Argued December 5, 2017.
Decided June 4, 2018.

ON WRIT OF CERTIORARI TO THE COURT OF APPEALS OF COLORADO.

Kristen K. Waggoner, Scottsdale, AZ, for Petitioners.

Noel J. Francisco, Solicitor General, for the United States as amicus curiae, by special leave of the Court, supporting the petitioners.

Frederick R. Yarger, Denver, CO, for the State Respondent.

David D. Cole, Washington, DC, for the Private Respondents.

David A. Cortman, Rory T, Gray, Alliance Defending Freedom, Lawrenceville, GA, Nicolle H. Martin, Lakewood, CO, Kristen K. Waggoner, Jeremy D. Tedesco, James A. Campbell, Jonathan A. Scruggs, Alliance Defending Freedom, Scottsdale, AZ, for Petitioners.

Cynthia H. Coffman, Attorney General, Frederick R. Yarger, Solicitor General, Office of the Colorado Attorney General, Denver, CO, Vincent E. Morscher, Deputy Attorney General, Glenn E. Roper, Deputy Solicitor General, Stacy L. Worthington, Senior Assistant Attorney General, Grant T. Sullivan, Assistant Solicitor General, for Respondent Colorado Civil Rights Commission.

Mark Silverstein, Sara R. Neel, American Civil Liberties Union Foundation of Colorado, Paula Greisen, King & Greisen, LLC, Denver, CO, Ria Tabacco Mar, James D. Esseks, Leslie Cooper, Rachel Wainer Apter, Louise Melling, Rose A. Saxe, Lee Rowland, American Civil Liberties Union Foundation, New York, NY, David D. Cole, Amanda W. Shanor, Daniel Mach, American Civil Liberties Union Foundation, Washington, DC, for Respondents Charlie Craig and David Mullins.

 

Syllabus[*]

Masterpiece Cakeshop, Ltd., is a Colorado bakery owned and operated by Jack Phillips, an expert baker and devout Christian. In 2012 he told a same-sex couple that he would not create a cake for their wedding celebration because of his religious opposition to same-sex marriages — marriages that Colorado did not then recognize — but that he would sell them other baked goods, e.g., birthday cakes. The couple filed a charge with the Colorado Civil Rights Commission (Commission) pursuant to the Colorado Anti-Discrimination Act (CADA), which prohibits, as relevant here, discrimination based on sexual orientation in a "place of business engaged in any sales to the public and any place offering services ... to the public." Under CADA's administrative review system, the Colorado Civil Rights Division first found probable cause for a violation and referred the case to the Commission. The Commission then referred the case for a formal hearing before a state Administrative Law Judge (ALJ), who ruled in the couple's favor. In so doing, the ALJ rejected Phillips' First Amendment claims: that requiring him to create a cake for a same-sex wedding would violate his right to free speech by compelling him to exercise his artistic talents to express a message with which he disagreed and would violate his right to the free exercise of religion. Both the Commission and the Colorado Court of Appeals affirmed.

Held: The Commission's actions in this case violated the Free Exercise Clause. Pp. 1727-1732.

(a) The laws and the Constitution can, and in some instances must, protect gay persons and gay couples in the exercise of their civil rights, but religious and philosophical  objections to gay marriage are protected views and in some instances protected forms of expression. See Obergefell v. Hodges, 576 U.S. ___, ___, 135 S.Ct. 2584, 2594, 192 L.Ed.2d 609. While it is unexceptional that Colorado law can protect gay persons in acquiring products and services on the same terms and conditions as are offered to other members of the public, the law must be applied in a manner that is neutral toward religion. To Phillips, his claim that using his artistic skills to make an expressive statement, a wedding endorsement in his own voice and of his own creation, has a significant First Amendment speech component and implicates his deep and sincere religious beliefs. His dilemma was understandable in 2012, which was before Colorado recognized the validity of gay marriages performed in the State and before this Court issued United States v. Windsor, 570 U.S. 744, 133 S.Ct. 2675, 186 L.Ed.2d 808, or Obergefell. Given the State's position at the time, there is some force to Phillips' argument that he was not unreasonable in deeming his decision lawful. State law at the time also afforded storekeepers some latitude to decline to create specific messages they considered offensive. Indeed, while the instant enforcement proceedings were pending, the State Civil Rights Division concluded in at least three cases that a baker acted lawfully in declining to create cakes with decorations that demeaned gay persons or gay marriages. Phillips too was entitled to a neutral and respectful consideration of his claims in all the circumstances of the case. Pp. 1727-1729.

(b) That consideration was compromised, however, by the Commission's treatment of Phillips' case, which showed elements of a clear and impermissible hostility toward the sincere religious beliefs motivating his objection. As the record shows, some of the commissioners at the Commission's formal, public hearings endorsed the view that religious beliefs cannot legitimately be carried into the public sphere or commercial domain, disparaged Phillips' faith as despicable and characterized it as merely rhetorical, and compared his invocation of his sincerely held religious beliefs to defenses of slavery and the Holocaust. No commissioners objected to the comments. Nor were they mentioned in the later state-court ruling or disavowed in the briefs filed here. The comments thus cast doubt on the fairness and impartiality of the Commission's adjudication of Phillips' case.

Another indication of hostility is the different treatment of Phillips' case and the cases of other bakers with objections to anti-gay messages who prevailed before the Commission. The Commission ruled against Phillips in part on the theory that any message on the requested wedding cake would be attributed to the customer, not to the baker. Yet the Division did not address this point in any of the cases involving requests for cakes depicting anti-gay marriage symbolism. The Division also considered that each bakery was willing to sell other products to the prospective customers, but the Commission found Phillips' willingness to do the same irrelevant. The State Court of Appeals' brief discussion of this disparity of treatment does not answer Phillips' concern that the State's practice was to disfavor the religious basis of his objection. Pp. 1728-1731.

(c) For these reasons, the Commission's treatment of Phillips' case violated the State's duty under the First Amendment not to base laws or regulations on hostility to a religion or religious viewpoint. The government, consistent with the Constitution's guarantee of free exercise, cannot impose regulations that are hostile to the religious beliefs of affected citizens and cannot act in a manner that passes judgment upon or presupposes the illegitimacy of religious beliefs and practices. Church of Lukumi Babalu Aye, Inc. v. Hialeah, 508 U.S. 520, 113 S.Ct. 2217, 124 L.Ed.2d 472. Factors relevant to the assessment of governmental neutrality include "the historical background of the decision under challenge, the specific series of events leading to the enactment or official policy in question, and the legislative or administrative history, including contemporaneous statements made by members of the decisionmaking body." Id., at 540, 113 S.Ct. 2217. In view of these factors, the record here demonstrates that the Commission's consideration of Phillips' case was neither tolerant nor respectful of his religious beliefs. The Commission gave "every appearance," id., at 545, 113 S.Ct. 2217, of adjudicating his religious objection based on a negative normative "evaluation of the particular justification" for his objection and the religious grounds for it, id., at 537, 113 S.Ct. 2217, but government has no role in expressing or even suggesting whether the religious ground for Phillips' conscience-based objection is legitimate or illegitimate. The inference here is thus that Phillips' religious objection was not considered with the neutrality required by the Free Exercise Clause. The State's interest could have been weighed against Phillips' sincere religious objections in a way consistent with the requisite religious neutrality that must be strictly observed. But the official expressions of hostility to religion in some of the commissioners' comments were inconsistent with that requirement, and the Commission's disparate consideration of Phillips' case compared to the cases of the other bakers suggests the same. Pp. 1730-1732.

370 P.3d 272, reversed.

KENNEDY, J., delivered the opinion of the Court, in which ROBERTS, C.J., and BREYER, ALITO, KAGAN, and GORSUCH, JJ., joined. KAGAN, J., filed a concurring opinion, in which BREYER, J., joined. GORSUCH, J., filed a concurring opinion, in which ALITO, J., joined. THOMAS, J., filed an opinion concurring in part and concurring in the judgment, in which GORSUCH, J., joined. GINSBURG, J., filed a dissenting opinion, in which SOTOMAYOR, J., joined.

Justice KENNEDY delivered the opinion of the Court.

In 2012 a same-sex couple visited Masterpiece Cakeshop, a bakery in Colorado, to make inquiries about ordering a cake for their wedding reception. The shop's owner told the couple that he would not create a cake for their wedding because of his religious opposition to same-sex marriages — marriages the State of Colorado itself did not recognize at that time. The couple filed a charge with the Colorado Civil Rights Commission alleging discrimination on the basis of sexual orientation in violation of the Colorado Anti-Discrimination Act.

The Commission determined that the shop's actions violated the Act and ruled in the couple's favor. The Colorado state courts affirmed the ruling and its enforcement order, and this Court now must decide whether the Commission's order violated the Constitution.

The case presents difficult questions as to the proper reconciliation of at least two principles. The first is the authority of a State and its governmental entities to protect the rights and dignity of gay persons who are, or wish to be, married but who face discrimination when they seek goods or services. The second is the right of all persons to exercise fundamental freedoms under the First Amendment, as applied to the States through the Fourteenth Amendment.

The freedoms asserted here are both the freedom of speech and the free exercise of religion. The free speech aspect of this case is difficult, for few persons who have seen a beautiful wedding cake might have thought of its creation as an exercise of protected speech. This is an instructive example, however, of the proposition that the application of constitutional freedoms in new contexts can deepen our understanding of their meaning.

One of the difficulties in this case is that the parties disagree as to the extent of the baker's refusal to provide service. If a baker refused to design a special cake with words or images celebrating the marriage — for instance, a cake showing words with religious meaning — that might be different from a refusal to sell any cake at all. In defining whether a baker's creation can be protected, these details might make a difference.

The same difficulties arise in determining whether a baker has a valid free exercise claim. A baker's refusal to attend the wedding to ensure that the cake is cut the right way, or a refusal to put certain religious words or decorations on the cake, or even a refusal to sell a cake that has been baked for the public generally but includes certain religious words or symbols on it are just three examples of possibilities that seem all but endless.

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 reason and motive for the baker's refusal were based on his sincere religious beliefs and convictions. The Court's precedents make clear that the baker, in his capacity as the owner of a business serving the public, might have his right to the free exercise of religion limited by generally applicable laws. Still, the delicate question of when the free exercise of his religion must yield to an otherwise valid exercise of state power needed to be determined in an adjudication in which religious hostility on the part of the State itself would not be a factor in the balance the State sought to reach. That requirement, however, was not met here. When the Colorado Civil Rights Commission considered this case, it did not do so with the religious neutrality that the Constitution requires.

Given all these considerations, it is proper to hold that whatever the outcome of some future controversy involving facts similar to these, the Commission's actions here violated the Free Exercise Clause; and its order must be set aside.

 

I

 

A

Masterpiece Cakeshop, Ltd., is a bakery in Lakewood, Colorado, a suburb of Denver. The shop offers a variety of baked goods, ranging from everyday cookies and brownies to elaborate custom-designed cakes for birthday parties, weddings, and other events.

Jack Phillips is an expert baker who has owned and operated the shop for 24 years. Phillips is a devout Christian. He has explained that his "main goal in life is to be obedient to" Jesus Christ and Christ's "teachings in all aspects of his life." App. 148. And he seeks to "honor God through his work at Masterpiece Cakeshop." Ibid. One of Phillips' religious beliefs is that "God's intention for marriage from the beginning of history is that it is and should be the union of one man and one woman." Id., at 149. To Phillips, creating a wedding cake for a same-sex wedding would be equivalent to participating in a celebration that is contrary to his own most deeply held beliefs.

Phillips met Charlie Craig and Dave Mullins when they entered his shop in the summer of 2012. Craig and Mullins were planning to marry. At that time, Colorado did not recognize same-sex marriages, so the couple planned to wed legally in Massachusetts and afterwards to host a reception for their family and friends in Denver. To prepare for their celebration, Craig and Mullins visited the shop and told Phillips that they were interested in ordering a cake for "our wedding." Id., at 152 (emphasis deleted). They did not mention the design of the cake they envisioned.

Phillips informed the couple that he does not "create" wedding cakes for same-sex weddings. Ibid. He explained, "I'll make your birthday cakes, shower cakes, sell you cookies and brownies, I just don't make cakes for same sex weddings." Ibid.The couple left the shop without further discussion.

The following day, Craig's mother, who had accompanied the couple to the cakeshop and been present for their interaction with Phillips, telephoned to ask Phillips why he had declined to serve her son. Phillips explained that he does not create wedding cakes for same-sex weddings because of his religious opposition to same-sex marriage, and also because Colorado (at that time) did not recognize same-sex marriages. Id., at 153. He later explained his belief that "to create a wedding cake for an event that celebrates something that directly goes against the teachings of the Bible, would have been a personal endorsement and participation in the ceremony and relationship that they were entering into." Ibid. (emphasis deleted).

 

B

For most of its history, Colorado has prohibited discrimination in places of public accommodation. In 1885, less than a decade after Colorado achieved statehood, the General Assembly passed "An Act to Protect All Citizens in Their Civil Rights," which guaranteed "full and equal enjoyment" of certain public facilities to "all citizens," "regardless of race, color or previous condition of servitude." 1885 Colo. Sess. Laws pp. 132-133. A decade later, the General Assembly expanded the requirement to apply to "all other places of public accommodation." 1895 Colo. Sess. Laws ch. 61, p. 139.

Today, the Colorado Anti-Discrimination Act (CADA) carries forward the state's tradition of prohibiting discrimination in places of public accommodation. Amended in 2007 and 2008 to prohibit discrimination on the basis of sexual orientation as well as other protected characteristics, CADA in relevant part provides as follows:

"It is a discriminatory practice and unlawful for a person, directly or indirectly, to refuse, withhold from, or deny to an individual or a group, because of disability, race, creed, color, sex, sexual orientation, marital status, national origin, or ancestry, the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of a place of public accommodation." Colo. Rev. Stat. § 24-34-601(2)(a) (2017).

The Act defines "public accommodation" broadly to include any "place of business engaged in any sales to the public and any place offering services ... to the public," but excludes "a church, synagogue, mosque, or other place that is principally used for religious purposes." § 24-34-601(1).

CADA establishes an administrative system for the resolution of discrimination claims. Complaints of discrimination in violation of CADA are addressed in the first instance by the Colorado Civil Rights Division. The Division investigates each claim; and if it finds probable cause that CADA has been violated, it will refer the matter to the Colorado Civil Rights Commission. The Commission, in turn, decides whether to initiate a formal hearing before a state Administrative Law Judge (ALJ), who will hear evidence and argument before issuing a written decision. See §§ 24-34-306, 24-4-105(14). The decision of the ALJ may be appealed to the full Commission, a seven-member appointed body. The Commission holds a public hearing and deliberative session before voting on the case. If the Commission determines that the evidence proves a CADA violation, it may impose remedial measures as provided by statute. See § 24-34-306(9). Available remedies include, among other things, orders to cease-and-desist a discriminatory policy, to file regular compliance reports with the Commission, and "to take affirmative action, including the posting of notices setting forth the substantive rights of the public." § 24-34-605. Colorado law does not permit the Commission to assess money damages or fines. §§ 24-34-306(9), 24-34-605.

 

C

Craig and Mullins filed a discrimination complaint against Masterpiece Cakeshop and Phillips in September 2012, shortly after the couple's visit to the shop. App. 31. The complaint alleged that Craig and Mullins had been denied "full and equal service" at the bakery because of their sexual orientation, id., at 35, 48, and that it was Phillips' "standard business practice" not to provide cakes for same-sex weddings, id., at 43.

The Civil Rights Division opened an investigation. The investigator found that "on multiple occasions," Phillips "turned away potential customers on the basis of their sexual orientation, stating that he could not create a cake for a same-sex wedding ceremony or reception" because his religious beliefs prohibited it and because the potential customers "were doing something illegal" at that time. Id., at 76. The investigation found that Phillips had declined to sell custom wedding cakes to about six other same-sex couples on this basis. Id., at 72. The investigator also recounted that, according to affidavits submitted by Craig and Mullins, Phillips' shop had refused to sell cupcakes to a lesbian couple for their commitment celebration because the shop "had a policy of not selling baked goods to same-sex couples for this type of event." Id., at 73. Based on these findings, the Division found probable cause that Phillips violated CADA and referred the case to the Civil Rights Commission. Id., at 69.

The Commission found it proper to conduct a formal hearing, and it sent the case to a State ALJ. Finding no dispute as to material facts, the ALJ entertained cross-motions for summary judgment and ruled in the couple's favor. The ALJ first rejected Phillips' argument that declining to make or create a wedding cake for Craig and Mullins did not violate Colorado law. It was undisputed that the shop is subject to state public accommodations laws. And the ALJ determined that Phillips' actions constituted prohibited discrimination on the basis of sexual orientation, not simply opposition to same-sex marriage as Phillips contended. App. to Pet. for Cert. 68a-72a.

Phillips raised two constitutional claims before the ALJ. He first asserted that applying CADA in a way that would require him to create a cake for a same-sex wedding would violate his First Amendment right to free speech by compelling him to exercise his artistic talents to express a message with which he disagreed. The ALJ rejected the contention that preparing a wedding cake is a form of protected speech and did not agree that creating Craig and Mullins' cake would force Phillips to adhere to "an ideological point of view." Id., at 75a. Applying CADA to the facts at hand, in the ALJ's view, did not interfere with Phillips' freedom of speech.

Phillips also contended that requiring him to create cakes for same-sex weddings would violate his right to the free exercise of religion, also protected by the First Amendment. Citing this Court's precedent in Employment Div., Dept. of Human Resources of Ore. v. Smith, 494 U.S. 872, 110 S.Ct. 1595, 108 L.Ed.2d 876 (1990), the ALJ determined that CADA is a "valid and neutral law of general applicability" and therefore that applying it to Phillips in this case did not violate the Free Exercise Clause. Id., at 879, 110 S.Ct. 1595; App. to Pet. for Cert. 82a-83a. The ALJ thus ruled against Phillips and the cakeshop and in favor of Craig and Mullins on both constitutional claims.

The Commission affirmed the ALJ's decision in full. Id., at 57a. The Commission ordered Phillips to "cease and desist from discriminating against ... same-sex couples by refusing to sell them wedding cakes or any product [they] would sell to heterosexual couples." Ibid. It also ordered additional remedial measures, including "comprehensive staff training on the Public Accommodations section" of CADA "and changes to any and all company policies to comply with ... this Order." Id., at 58a. The Commission additionally required Phillips to prepare "quarterly compliance reports" for a period of two years documenting "the number of patrons denied service" and why, along with "a statement describing the remedial actions taken." Ibid.

Phillips appealed to the Colorado Court of Appeals, which affirmed the Commission's legal determinations and remedial order. The court rejected the argument that the "Commission's order unconstitutionally compels" Phillips and the shop "to convey a celebratory message about same sex marriage." Craig v. Masterpiece Cakeshop, Inc., 370 P.3d 272, 283 (2015). The court also rejected the argument that the Commission's order violated the Free Exercise Clause. Relying on this Court's precedent in Smith, supra, at 879, 110 S.Ct. 1595, the court stated that the Free Exercise Clause "does not relieve an individual of the obligation to comply with a valid and neutral law of general applicability" on the ground that following the law would interfere with religious practice or belief. 370 P.3d, at 289. The court concluded that requiring Phillips to comply with the statute did not violate his free exercise rights. The Colorado Supreme Court declined to hear the case.

Phillips sought review here, and this Court granted certiorari. 582 U.S. ___, 137 S.Ct. 2290, 198 L.Ed.2d 723 (2017). He now renews his claims under the Free Speech and Free Exercise Clauses of the First Amendment.

 

II

 

A

Our society has come to the recognition that gay persons and gay couples cannot be treated as social outcasts or as inferior in dignity and worth. For that reason the laws and the Constitution can, and in some instances must, protect them in the exercise of their civil rights. The exercise of their freedom on terms equal to others must be given great weight and respect by the courts. At the same time, the religious and philosophical objections to gay marriage are protected views and in some instances protected forms of expression. As this Court observed in Obergefell v. Hodges, 576 U.S. ___, 135 S.Ct. 2584, 192 L.Ed.2d 609 (2015), "[t]he First Amendment ensures that religious organizations and persons are given proper protection as they seek to teach the principles that are so fulfilling and so central to their lives and faiths." Id., at ___, 135 S.Ct., at 2607. Nevertheless, while those religious and philosophical objections are protected, it is a general rule that such objections do not allow business owners and other actors in the economy and in society to deny protected persons equal access to goods and services under a neutral and generally applicable public accommodations law. See Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 402, n. 5, 88 S.Ct. 964, 19 L.Ed.2d 1263 (1968) (per curiam); see also Hurley v. Irish-American Gay, Lesbian and Bisexual Group of Boston, Inc., 515 U.S. 557, 572, 115 S.Ct. 2338, 132 L.Ed.2d 487 (1995) ("Provisions like these are well within the State's usual power to enact when a legislature has reason to believe that a given group is the target of discrimination, and they do not, as a general matter, violate the First or Fourteenth Amendments").

When it comes to weddings, it can be assumed that a member of the clergy who objects to gay marriage on moral and religious grounds could not be compelled to perform the ceremony without denial of his or her right to the free exercise of religion. This refusal would be well understood in our constitutional order as an exercise of religion, an exercise that gay persons could recognize and accept without serious diminishment to their own dignity and worth. Yet if that exception were not confined, then a long list of persons who provide goods and services for marriages and weddings might refuse to do so for gay persons, thus resulting in a community-wide stigma inconsistent with the history and dynamics of civil rights laws that ensure equal access to goods, services, and public accommodations.

It is unexceptional that Colorado law can protect gay persons, just as it can protect other classes of individuals, in acquiring whatever products and services they choose on the same terms and conditions as are offered to other members of the public. And there are no doubt innumerable goods and services that no one could argue implicate the First Amendment. Petitioners conceded, moreover, that if a baker refused to sell any goods or any cakes for gay weddings, that would be a different matter and the State would have a strong case under this Court's precedents that this would be a denial of goods and services that went beyond any protected rights of a baker who offers goods and services to the general public and is subject to a neutrally applied and generally applicable public accommodations law. See Tr. of Oral Arg. 4-7, 10.

Phillips claims, however, that a narrower issue is presented. He argues that he had to use his artistic skills to make an expressive statement, a wedding endorsement in his own voice and of his own creation. As Phillips would see the case, this contention has a significant First Amendment speech component and implicates his deep and sincere religious beliefs. In this context the baker likely found it difficult to find a line where the customers' rights to goods and services became a demand for him to exercise the right of his own personal expression for their message, a message he could not express in a way consistent with his religious beliefs.

Phillips' dilemma was particularly understandable given the background of legal principles and administration of the law in Colorado at that time. His decision and his actions leading to the refusal of service all occurred in the year 2012. At that point, Colorado did not recognize the validity of gay marriages performed in its own State. See Colo. Const., Art. II, § 31 (2012); 370 P.3d, at 277. At the time of the events in question, this Court had not issued its decisions either in United States v. Windsor, 570 U.S. 744, 133 S.Ct. 2675, 186 L.Ed.2d 808 (2013), or Obergefell. Since the State itself did not allow those marriages to be performed in Colorado, there is some force to the argument that the baker was not unreasonable in deeming it lawful to decline to take an action that he understood to be an expression of support for their validity when that expression was contrary to his sincerely held religious beliefs, at least insofar as his refusal was limited to refusing to create and express a message in support of gay marriage, even one planned to take place in another State.

At the time, state law also afforded storekeepers some latitude to decline to create specific messages the storekeeper considered offensive. Indeed, while enforcement proceedings against Phillips were ongoing, the Colorado Civil Rights Division itself endorsed this proposition in cases involving other bakers' creation of cakes, concluding on at least three occasions that a baker acted lawfully in declining to create cakes with decorations that demeaned gay persons or gay marriages. See Jack v. Gateaux, Ltd., Charge No. P20140071X (Mar. 24, 2015); Jack v. Le Bakery Sensual, Inc., Charge No. P20140070X (Mar. 24, 2015); Jack v. Azucar Bakery, Charge No. P20140069X (Mar. 24, 2015).

There were, to be sure, responses to these arguments that the State could make when it contended for a different result in seeking the enforcement of its generally applicable state regulations of businesses that serve the public. And any decision in favor of the baker would have to be sufficiently constrained, lest all purveyors of goods and services who object to gay marriages for moral and religious reasons in effect be allowed to put up signs saying "no goods or services will be sold if they will be used for gay marriages," something that would impose a serious stigma on gay persons. But, nonetheless, Phillips was entitled to the neutral and respectful consideration of his claims in all the circumstances of the case.

 

B

The neutral and respectful consideration to which Phillips was entitled was compromised here, however. The Civil Rights Commission's treatment of his case has some elements of a clear and impermissible hostility toward the sincere religious beliefs that motivated his objection.

That hostility surfaced at the Commission's formal, public hearings, as shown by the record. On May 30, 2014, the seven-member Commission convened publicly to consider Phillips' case. At several points during its meeting, commissioners 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 Colorado's business community. One commissioner suggested 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." Tr. 23. A few moments later, the commissioner restated the same position: "[I]f a businessman wants to do business in the state and he's got an issue with the — the law's impacting his personal belief system, he needs to look at being able to compromise." Id., at 30. Standing alone, these statements are susceptible of different interpretations. On the one hand, they might mean simply that a business cannot refuse to provide services based on sexual orientation, regardless of the proprietor's personal views. On the other hand, they might be seen as inappropriate and dismissive comments showing lack of due consideration for Phillips' free exercise rights and the dilemma he faced. In view of the comments that followed, the latter seems the more likely.

On July 25, 2014, the Commission met again. This meeting, too, was conducted in public and on the record. On this occasion another commissioner made specific reference to the previous meeting's discussion but said far more to disparage Phillips' beliefs. The commissioner stated:

"I would also like to reiterate what we said in the hearing or the last meeting. Freedom of religion and religion has been used to justify all kinds of discrimination throughout history, whether it be slavery, whether it be the holocaust, whether it be — I mean, we — we can list hundreds of situations where freedom of religion has been used to justify discrimination. And to me it is one of the most despicable pieces of rhetoric that people can use to — to use their religion to hurt others." Tr. 11-12.

To describe a man's faith as "one of the most despicable pieces of rhetoric that people can use" is to disparage his religion in at least two distinct ways: by describing it as despicable, and also by characterizing it as merely rhetorical — something insubstantial and even insincere. The commissioner even went so far as to compare Phillips' invocation of his sincerely held religious beliefs to defenses of slavery and the Holocaust. This sentiment is inappropriate for a Commission charged with the solemn responsibility of fair and neutral enforcement of Colorado's antidiscrimination law — a law that protects against discrimination on the basis of religion as well as sexual orientation.

The record shows no objection to these comments from other commissioners. And the later state-court ruling reviewing the Commission's decision did not mention those comments, much less express concern with their content. Nor were the comments by the commissioners disavowed in the briefs filed in this Court. For these reasons, the Court cannot avoid the conclusion that these statements cast doubt on the fairness and impartiality of the Commission's adjudication of Phillips' case. Members of the Court have disagreed on the question whether statements made by lawmakers may properly be taken into account in determining whether a law intentionally discriminates on the basis of religion. See Church of Lukumi Babalu Aye, Inc. v. Hialeah, 508 U.S. 520, 540-542, 113 S.Ct. 2217, 124 L.Ed.2d 472 (1993); id., at 558, 113 S.Ct. 2217 (Scalia, J., concurring in part and concurring in judgment). In this case, however, the remarks were made in a very different context — by an adjudicatory body deciding a particular case.

Another indication of hostility is the difference in treatment between Phillips' case and the cases of other bakers who objected to a requested cake on the basis of conscience and prevailed before the Commission.

As noted above, on at least three other occasions the Civil Rights Division considered the refusal of bakers to create cakes with images that conveyed disapproval of same-sex marriage, along with religious text. Each time, the Division found that the baker acted lawfully in refusing service. It made these determinations because, in the words of the Division, the requested cake included "wording and images [the baker] deemed derogatory," Jack v. Gateaux, Ltd.,Charge No. P20140071X, at 4; featured "language and images [the baker] deemed hateful," Jack v. Le Bakery Sensual, Inc., Charge No. P20140070X, at 4; or displayed a message the baker "deemed as discriminatory, Jack v. Azucar Bakery, Charge No. P20140069X, at 4.

The treatment of the conscience-based objections at issue in these three cases contrasts with the Commission's treatment of Phillips' objection. The Commission ruled against Phillips in part on the theory that any message the requested wedding cake would carry would be attributed to the customer, not to the baker. Yet the Division did not address this point in any of the other cases with respect to the cakes depicting anti-gay marriage symbolism. Additionally, the Division found no violation of CADA in the other cases in part because each bakery was willing to sell other products, including those depicting Christian themes, to the prospective customers. But the Commission dismissed Phillips' willingness to sell "birthday cakes, shower cakes, [and] cookies and brownies," App. 152, to gay and lesbian customers as irrelevant. The treatment of the other cases and Phillips' case could reasonably be interpreted as being inconsistent as to the question of whether speech is involved, quite apart from whether the cases should ultimately be distinguished. In short, the Commission's consideration of Phillips' religious objection did not accord with its treatment of these other objections.

Before the Colorado Court of Appeals, Phillips protested that this disparity in treatment reflected hostility on the part of the Commission toward his beliefs. He argued that the Commission had treated the other bakers' conscience-based objections as legitimate, but treated his as illegitimate — thus sitting in judgment of his religious beliefs themselves. The Court of Appeals addressed the disparity only in passing and relegated its complete analysis of the issue to a footnote. There, the court stated that "[t]his case is distinguishable from the Colorado Civil Rights Division's recent findings that [the other bakeries] in Denver did not discriminate against a Christian patron on the basis of his creed" when they refused to create the requested cakes. 370 P.3d, at 282, n. 8. In those cases, the court continued, there was no impermissible discrimination because "the Division found that the bakeries ... refuse[d] the patron's request ... because of the offensive nature of the requested message." Ibid.

A principled rationale for the difference in treatment of these two instances cannot be based on the government's own assessment of offensiveness. Just as "no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion," West Virginia Bd. of Ed. v. Barnette, 319 U.S. 624, 642, 63 S.Ct. 1178, 87 L.Ed. 1628 (1943), it is not, as the Court has repeatedly held, the role of the State or its officials to prescribe what shall be offensive. See Matal v. Tam, 582 U.S. ___, ___-___, 137 S.Ct. 1744, 1762-1764, 198 L.Ed.2d 366 (2017) (opinion of ALITO, J.). The Colorado court's attempt to account for the difference in treatment elevates one view of what is offensive over another and itself sends a signal of official disapproval of Phillips' religious beliefs. The court's footnote does not, therefore, answer the baker's concern that the State's practice was to disfavor the religious basis of his objection.

 

C

For the reasons just described, the Commission's treatment of Phillips' case violated the State's duty under the First Amendment not to base laws or regulations on hostility to a religion or religious viewpoint.

In Church of Lukumi Babalu Aye, supra, the Court made clear that the government, if it is to respect the Constitution's guarantee of free exercise, cannot impose regulations that are hostile to the religious beliefs of affected citizens and cannot act in a manner that passes judgment upon or presupposes the illegitimacy of religious beliefs and practices. The Free Exercise Clause bars even "subtle departures from neutrality" on matters of religion. Id., at 534, 113 S.Ct. 2217. Here, that means the Commission was obliged under the Free Exercise Clause to proceed in a manner neutral toward and tolerant of Phillips' religious beliefs. The Constitution "commits government itself to religious tolerance, and upon even slight suspicion that proposals for state intervention stem from animosity to religion or distrust of its practices, all officials must pause to remember their own high duty to the Constitution and to the rights it secures." Id., at 547, 113 S.Ct. 2217.

Factors relevant to the assessment of governmental neutrality include "the historical background of the decision under challenge, the specific series of events leading to the enactment or official policy in question, and the legislative or administrative history, including contemporaneous statements made by members of the decisionmaking body." Id., at 540, 113 S.Ct. 2217. In view of these factors the record here demonstrates that the Commission's consideration of Phillips' case was neither tolerant nor respectful of Phillips' religious beliefs. The Commission gave "every appearance," id., at 545, 113 S.Ct. 2217, of adjudicating Phillips' religious objection based on a negative normative "evaluation of the particular justification" for his objection and the religious grounds for it. Id., at 537, 113 S.Ct. 2217. It hardly requires restating that government has no role in deciding or even suggesting whether the religious ground for Phillips' conscience-based objection is legitimate or illegitimate. On these facts, the Court must draw the inference that Phillips' religious objection was not considered with the neutrality that the Free Exercise Clause requires.

 While the issues here are difficult to resolve, it must be concluded that the State's interest could have been weighed against Phillips' sincere religious objections in a way consistent with the requisite religious neutrality that must be strictly observed. The official expressions of hostility to religion in some of the commissioners' comments — comments that were not disavowed at the Commission or by the State at any point in the proceedings that led to affirmance of the order — were inconsistent with what the Free Exercise Clause requires. The Commission's disparate consideration of Phillips' case compared to the cases of the other bakers suggests the same. For these reasons, the order must be set aside.

 

III

The Commission's hostility was inconsistent with the First Amendment's guarantee that our laws be applied in a manner that is neutral toward religion. Phillips was entitled to a neutral decisionmaker who would give full and fair consideration to his religious objection as he sought to assert it in all of the circumstances in which this case was presented, considered, and decided. In this case the adjudication concerned a context that may well be different going forward in the respects noted above. However later cases raising these or similar concerns are resolved in the future, for these reasons the rulings of the Commission and of the state court that enforced the Commission's order must be invalidated.

The outcome of cases like this in other circumstances must await further elaboration in the courts, all in the context of recognizing that these disputes must be resolved with tolerance, without undue disrespect to sincere religious beliefs, and without subjecting gay persons to indignities when they seek goods and services in an open market.

The judgment of the Colorado Court of Appeals is reversed.

It is so ordered.

Justice KAGAN, with whom Justice BREYER joins, concurring.

"[I]t is a general rule that [religious and philosophical] objections do not allow business owners and other actors in the economy and in society to deny protected persons equal access to goods and services under a neutral and generally applicable public accommodations law." Ante, at 1727. But in upholding that principle, state actors cannot show hostility to religious views; rather, they must give those views "neutral and respectful consideration." Ante, at 1729. I join the Court's opinion in full because I believe the Colorado Civil Rights Commission did not satisfy that obligation. I write separately to elaborate on one of the bases for the Court's holding.

The Court partly relies on the "disparate consideration of Phillips' case compared to the cases of [three] other bakers" who "objected to a requested cake on the basis of conscience." Ante, at 1730, 1732. In the latter cases, a customer named William Jack sought "cakes with images that conveyed disapproval of same-sex marriage, along with religious text"; the bakers whom he approached refused to make them. Ante, at 1730; see post, at 1749 (GINSBURG, J., dissenting) (further describing the requested cakes). Those bakers prevailed before the Colorado Civil Rights Division and Commission, while Phillips — who objected for religious reasons to baking a wedding cake for a same-sex couple — did not. The Court finds that the legal reasoning of the state agencies differed in significant ways as between the Jack cases and the Phillips case. See ante, at 1730. And the Court takes especial note of the suggestion made by the Colorado Court of Appeals, in comparing those cases, that the state agencies found the message Jack requested "offensive [in] nature." Ante, at 1731 (internal quotation marks omitted). As the Court states, a "principled rationale for the difference in treatment" cannot be "based on the government's own assessment of offensiveness." Ibid.

What makes the state agencies' consideration yet more disquieting is that a proper basis for distinguishing the cases was available — in fact, was obvious. The Colorado Anti-Discrimination Act (CADA) makes it unlawful for a place of public accommodation to deny "the full and equal enjoyment" of goods and services to individuals based on certain characteristics, including sexual orientation and creed. Colo. Rev. Stat. § 24-34-601(2)(a) (2017). The three bakers in the Jack cases did not violate that law. Jack requested them to make a cake (one denigrating gay people and same-sex marriage) that they would not have made for any customer. In refusing that request, the bakers did not single out Jack because of his religion, but instead treated him in the same way they would have treated anyone else — just as CADA requires. By contrast, the same-sex couple in this case requested a wedding cake that Phillips would have made for an opposite-sex couple. In refusing that request, Phillips contravened CADA's demand that customers receive "the full and equal enjoyment" of public accommodations irrespective of their sexual orientation. Ibid. The different outcomes in the Jack cases and the Phillips case could thus have been justified by a plain reading and neutral application of Colorado law — untainted by any bias against a religious belief.[*]

I read the Court's opinion as fully consistent with that view. The Court limits its analysis to the reasoning of the state agencies (and Court of Appeals) — "quite apart from whether the [Phillips and Jack] cases should ultimately be distinguished." Ante, at 1727. And the Court itself recognizes the principle that would properly account for a difference in result between those cases. Colorado law, the Court says, "can protect gay persons, just as it can protect other classes of individuals, in acquiring whatever products and services they choose on the same terms and conditions as are offered to other members of the public." Ante, at 1728. For that reason, Colorado can treat a baker who discriminates based on sexual orientation differently from a baker who does not discriminate on that or any other prohibited ground. But only, as the Court rightly says, if the State's decisions are not infected by religious hostility or bias. I accordingly concur.

Justice GORSUCH, with whom Justice ALITO joins, concurring.

In Employment Div., Dept. of Human Resources of Ore. v. Smith, this Court held that a neutral and generally applicable law will usually survive a constitutional free exercise challenge. 494 U.S. 872, 878-879, 110 S.Ct. 1595, 108 L.Ed.2d 876 (1990). Smith remains controversial in many quarters. Compare McConnell, The Origins and Historical Understanding of Free Exercise of Religion, 103 Harv. L. Rev. 1409 (1990), with Hamburger, A Constitutional Right of Religious Exemption: An Historical Perspective, 60 Geo. Wash. L. Rev. 915 (1992). But we know this with certainty: when the government fails to act neutrally toward the free exercise of religion, it tends to run into trouble. Then the government can prevail only if it satisfies strict scrutiny, showing that its restrictions on religion both serve a compelling interest and are narrowly tailored. Church of Lukumi Babalu Aye, Inc. v. Hialeah, 508 U.S. 520, 546, 113 S.Ct. 2217, 124 L.Ed.2d 472 (1993).

Today's decision respects these principles. As the Court explains, the Colorado Civil Rights Commission failed to act neutrally toward Jack Phillips's religious faith. Maybe most notably, the Commission allowed three other bakers to refuse a customer's request that would have required them to violate their secular commitments. Yet it denied the same accommodation to Mr. Phillips when he refused a customer's request that would have required him to violate his religious beliefs. Ante, at 1729-1731. As the Court also explains, the only reason the Commission seemed to supply for its discrimination was that it found Mr. Phillips's religious beliefs "offensive." Ibid. That kind of judgmental dismissal of a sincerely held religious belief is, of course, antithetical to the First Amendment and cannot begin to satisfy strict scrutiny. The Constitution protects not just popular religious exercises from the condemnation of civil authorities. It protects them all. Because the Court documents each of these points carefully and thoroughly, I am pleased to join its opinion in full.

The only wrinkle is this. In the face of so much evidence suggesting hostility toward Mr. Phillips's sincerely held religious beliefs, two of our colleagues have written separately to suggest that the Commission acted neutrally toward his faith when it treated him differently from the other bakers — or that it could have easily done so consistent with the First Amendment. See post, at 1749-1750, and n. 4 (GINSBURG, J., dissenting); ante, at 1732-1734, and n. (KAGAN, J., concurring). But, respectfully, I do not see how we might rescue the Commission from its error.

A full view of the facts helps point the way to the problem. Start with William Jack's case. He approached three bakers and asked them to prepare cakes with messages disapproving same-sex marriage on religious grounds. App. 233, 243, 252. All three bakers refused Mr. Jack's request, stating that they found his request offensive to their secular convictions. Id., at 231, 241, 250. Mr. Jack responded by filing complaints with the Colorado Civil Rights Division. Id., at 230, 240, 249. He pointed to Colorado's Anti-Discrimination Act, which prohibits discrimination against customers in public accommodations because of religious creed, sexual orientation, or certain other traits. See ibid.; Colo. Rev. Stat. § 24-34-601(2)(a) (2017). Mr. Jack argued that the cakes he sought reflected his religious beliefs and that the bakers could not refuse to make them just because they happened to disagree with his beliefs. App. 231, 241, 250. But the Division declined to find a violation, reasoning that the bakers didn't deny Mr. Jack service because of his religious faith but because the cakes he sought were offensive to their own moral convictions. Id., at 237, 247, 255-256. As proof, the Division pointed to the fact that the bakers said they treated Mr. Jack as they would have anyone who requested a cake with similar messages, regardless of their religion. Id., at 230-231, 240, 249. The Division pointed, as well, to the fact that the bakers said they were happy to provide religious persons with other cakes expressing other ideas. Id., at 237, 247, 257. Mr. Jack appealed to the Colorado Civil Rights Commission, but the Commission summarily denied relief. App. to Pet. for Cert. 326a-331a.

Next, take the undisputed facts of Mr. Phillips's case. Charlie Craig and Dave Mullins approached Mr. Phillips about creating a cake to celebrate their wedding. App. 168. Mr. Phillips explained that he could not prepare a cake celebrating a same-sex wedding consistent with his religious faith. Id., at 168-169. But Mr. Phillips offered to make other baked goods for the couple, including cakes celebrating other occasions. Ibid. Later, Mr. Phillips testified without contradiction that he would have refused to create a cake celebrating a same-sex marriage for any customer, regardless of his or her sexual orientation. Id., at 166-167 ("I will not design and create wedding cakes for a same-sex wedding regardless of the sexual orientation of the customer"). And the record reveals that Mr. Phillips apparently refused just such a request from Mr. Craig's mother. Id., at 38-40, 169. (Any suggestion that Mr. Phillips was willing to make a cake celebrating a same-sex marriage for a heterosexual customer or was not willing to sell other products to a homosexual customer, then, would simply mistake the undisputed factual record. See post, at 1749, n. 2 (GINSBURG, J., dissenting); ante, at 1732-1734, and n. (KAGAN, J., concurring)). Nonetheless, the Commission held that Mr. Phillips's conduct violated the Colorado public accommodations law. App. to Pet. for Cert. 56a-58a.

The facts show that the two cases share all legally salient features. In both cases, the effect on the customer was the same: bakers refused service to persons who bore a statutorily protected trait (religious faith or sexual orientation). But in both cases the bakers refused service intending only to honor a personal conviction. To be sure, the bakers knew their conduct promised the effect of leaving a customer in a protected class unserved. But there's no indication the bakers actually intended to refuse service because of a customer's protected characteristic. We know this because all of the bakers explained without contradiction that they would not sell the requested cakes to anyone, while they would sell other cakes to members of the protected class (as well as to anyone else). So, for example, the bakers in the first case would have refused to sell a cake denigrating same-sex marriage to an atheist customer, just as the baker in the second case would have refused to sell a cake celebrating same-sex marriage to a heterosexual customer. And the bakers in the first case were generally happy to sell to persons of faith, just as the baker in the second case was generally happy to sell to gay persons. In both cases, it was the kind of cake, not the kind of customer, that mattered to the bakers.

The distinction between intended and knowingly accepted effects is familiar in life and law. Often the purposeful pursuit of worthy commitments requires us to accept unwanted but entirely foreseeable side effects: so, for example, choosing to spend time with family means the foreseeable loss of time for charitable work, just as opting for more time in the office means knowingly forgoing time at home with loved ones. The law, too, sometimes distinguishes between intended and foreseeable effects. See, e.g., ALI, Model Penal Code §§ 1.13, 2.02(2)(a)(i) (1985); 1 W. LaFave, Substantive Criminal Law § 5.2(b), pp. 460-463 (3d ed. 2018). Other times, of course, the law proceeds differently, either conflating intent and knowledge or presuming intent as a matter of law from a showing of knowledge. See, e.g., Restatement (Second) of Torts § 8A (1965); Radio Officers v. NLRB, 347 U.S. 17, 45, 74 S.Ct. 323, 98 L.Ed. 455 (1954).

The problem here is that the Commission failed to act neutrally by applying a consistent legal rule. In Mr. Jack's case, the Commission chose to distinguish carefully between intended and knowingly accepted effects. Even though the bakers knowingly denied service to someone in a protected class, the Commission found no violation because the bakers only intended to distance themselves from "the offensive nature of the requested message." Craig v. Masterpiece Cakeshop, Inc., 370 P.3d 272, 282, n. 8 (Colo.App.2015); App. 237, 247, 256; App. to Pet. for Cert. 326a-331a; see also Brief for Respondent Colorado Civil Rights Commission 52 ("Businesses are entitled to reject orders for any number of reasons, including because they deem a particular product requested by a customer to be `offensive'"). Yet, in Mr. Phillips's case, the Commission dismissed this very same argument as resting on a "distinction without a difference." App. to Pet. for Cert. 69a. It concluded instead that an "intent to disfavor" a protected class of persons should be "readily ... presumed" from the knowing failure to serve someone who belongs to that class. Id., at 70a. In its judgment, Mr. Phillips's intentions were "inextricably tied to the sexual orientation of the parties involved" and essentially "irrational." Ibid.

Nothing in the Commission's opinions suggests any neutral principle to reconcile these holdings. If Mr. Phillips's objection is "inextricably tied" to a protected class, then the bakers' objection in Mr. Jack's case must be "inextricably tied" to one as well. For just as cakes celebrating same-sex weddings are (usually) requested by persons of a particular sexual orientation, so too are cakes expressing religious opposition to same-sex weddings (usually) requested by persons of particular religious faiths. In both cases the bakers' objection would (usually) result in turning down customers who bear a protected characteristic. In the end, the Commission's decisions simply reduce to this: it presumed that Mr. Phillip harbored an intent to discriminate against a protected class in light of the foreseeable effects of his conduct, but it declined to presume the same intent in Mr. Jack's case even though the effects of the bakers' conduct were just as foreseeable. Underscoring the double standard, a state appellate court said that "no such showing" of actual "animus" — or intent to discriminate against persons in a protected class — was even required in Mr. Phillips's case. 370 P.3d, at 282.

The Commission cannot have it both ways. The Commission cannot slide up and down the mens rea scale, picking a mental state standard to suit its tastes depending on its sympathies. Either actual proof of intent to discriminate on the basis of membership in a protected class is required (as the Commission held in Mr. Jack's case), or it is sufficient to "presume" such intent from the knowing failure to serve someone in a protected class (as the Commission held in Mr. Phillips's case). Perhaps the Commission could have chosen either course as an initial matter. But the one thing it can't do is apply a more generous legal test to secular objections than religious ones. See Church of Lukumi Babalu Aye, 508 U.S., at 543-544, 113 S.Ct. 2217. That is anything but the neutral treatment of religion.

The real explanation for the Commission's discrimination soon comes clear, too — and it does anything but help its cause. This isn't a case where the Commission self-consciously announced a change in its legal rule in all public accommodation cases. Nor is this a case where the Commission offered some persuasive reason for its discrimination that might survive strict scrutiny. Instead, as the Court explains, it appears the Commission wished to condemn Mr. Phillips for expressing just the kind of "irrational" or "offensive ... message" that the bakers in the first case refused to endorse. Ante, at 1730-1731. Many may agree with the Commission and consider Mr. Phillips's religious beliefs irrational or offensive. Some may believe he misinterprets the teachings of his faith. And, to be sure, this Court has held same-sex marriage a matter of constitutional right and various States have enacted laws that preclude discrimination on the basis of sexual orientation. But it is also true that no bureaucratic judgment condemning a sincerely held religious belief as "irrational" or "offensive" will ever survive strict scrutiny under the First Amendment. In this country, the place of secular officials isn't to sit in judgment of religious beliefs, but only to protect their free exercise. Just as it is the "proudest boast of our free speech jurisprudence" that we protect speech that we hate, it must be the proudest boast of our free exercise jurisprudence that we protect religious beliefs that we find offensive. See Matal v. Tam, 582 U.S. ___, ___, 137 S.Ct. 1744, 1764, 198 L.Ed.2d 366 (2017) (plurality opinion) (citing United States v. Schwimmer, 279 U.S. 644, 655, 49 S.Ct. 448, 73 L.Ed. 889 (1929) (Holmes, J., dissenting)). Popular religious views are easy enough to defend. It is in protecting unpopular religious beliefs that we prove this country's commitment to serving as a refuge for religious freedom. See Church of Lukumi Babalu Aye, supra, at 547, 113 S.Ct. 2217; Thomas v. Review Bd. of Indiana Employment Security Div., 450 U.S. 707, 715-716, 101 S.Ct. 1425, 67 L.Ed.2d 624 (1981); Wisconsin v. Yoder, 406 U.S. 205, 223-224, 92 S.Ct. 1526, 32 L.Ed.2d 15 (1972); Cantwell v. Connecticut, 310 U.S. 296, 308-310, 60 S.Ct. 900, 84 L.Ed. 1213 (1940).

Nor can any amount of after-the-fact maneuvering by our colleagues save the Commission. It is no answer, for example, to observe that Mr. Jack requested a cake with text on it while Mr. Craig and Mr. Mullins sought a cake celebrating their wedding without discussing its decoration, and then suggest this distinction makes all the difference. See post, at 1749-1750, and n. 4 (GINSBURG, J., dissenting). It is no answer either simply to slide up a level of generality to redescribe Mr. Phillips's case as involving only a wedding cake like any other, so the fact that Mr. Phillips would make one for some means he must make them for all. See ante, at 1732-1734, and n. (KAGAN, J., concurring). These arguments, too, fail to afford Mr. Phillips's faith neutral respect.

Take the first suggestion first. To suggest that cakes with words convey a message but cakes without words do not — all in order to excuse the bakers in Mr. Jack's case while penalizing Mr. Phillips — is irrational. Not even the Commission or court of appeals purported to rely on that distinction. Imagine Mr. Jack asked only for a cake with a symbolic expression against same-sex marriage rather than a cake bearing words conveying the same idea. Surely the Commission would have approved the bakers' intentional wish to avoid participating in that message too. Nor can anyone reasonably doubt that a wedding cake without words conveys a message. Words or not and whatever the exact design, it celebrates a wedding, and if the wedding cake is made for a same-sex couple it celebrates a same-sex wedding. See 370 P.3d, at 276 (stating that Mr. Craig and Mr. Mullins "requested that Phillips design and create a cake to celebrate their same-sex wedding") (emphasis added). Like "an emblem or flag," a cake for a same-sex wedding is a symbol that serves as "a short cut from mind to mind," signifying approval of a specific "system, idea, [or] institution." West Virginia Bd. of Ed. v. Barnette, 319 U.S. 624, 632, 63 S.Ct. 1178, 87 L.Ed. 1628 (1943). It is precisely that approval that Mr. Phillips intended to withhold in keeping with his religious faith. The Commission denied Mr. Phillips that choice, even as it afforded the bakers in Mr. Jack's case the choice to refuse to advance a message they deemed offensive to their secular commitments. That is not neutral.

Nor would it be proper for this or any court to suggest that a person must be forced to write words rather than create a symbol before his religious faith is implicated. Civil authorities, whether "high or petty," bear no license to declare what is or should be "orthodox" when it comes to religious beliefs, id., at 642, 63 S.Ct. 1178, or whether an adherent has "correctly perceived" the commands of his religion, Thomas, supra, at 716, 101 S.Ct. 1425. Instead, it is our job to look beyond the formality of written words and afford legal protection to any sincere act of faith. See generally Hurley v. Irish-American Gay, Lesbian and Bisexual Group of Boston, Inc., 515 U.S. 557, 569, 115 S.Ct. 2338. 132 L.Ed.2d 487 (1995) ("[T]he Constitution looks beyond written or spoken words as mediums of expression," which are "not a condition of constitutional protection").

The second suggestion fares no better. Suggesting that this case is only about "wedding cakes" — and not a wedding cake celebrating a same-sex wedding — actually points up the problem. At its most general level, the cake at issue in Mr. Phillips's case was just a mixture of flour and eggs; at its most specific level, it was a cake celebrating the same-sex wedding of Mr. Craig and Mr. Mullins. We are told here, however, to apply a sort of Goldilocks rule: describing the cake by its ingredients is too general; understanding it as celebrating a same-sex wedding is too specific; but regarding it as a generic wedding cake is just right. The problem is, the Commission didn't play with the level of generality in Mr. Jack's case in this way. It didn't declare, for example, that because the cakes Mr. Jack requested were just cakes about weddings generally, and all such cakes were the same, the bakers had to produce them. Instead, the Commission accepted the bakers' view that the specific cakes Mr. Jack requested conveyed a message offensive to their convictions and allowed them to refuse service. Having done that there, it must do the same here.

Any other conclusion would invite civil authorities to gerrymander their inquiries based on the parties they prefer. Why calibrate the level of generality in Mr. Phillips's case at "wedding cakes" exactly — and not at, say, "cakes" more generally or "cakes that convey a message regarding same-sex marriage" more specifically? If "cakes" were the relevant level of generality, the Commission would have to order the bakers to make Mr. Jack's requested cakes just as it ordered Mr. Phillips to make the requested cake in his case. Conversely, if "cakes that convey a message regarding same-sex marriage" were the relevant level of generality, the Commission would have to respect Mr. Phillips's refusal to make the requested cake just as it respected the bakers' refusal to make the cakes Mr. Jack requested. In short, when the same level of generality is applied to both cases, it is no surprise that the bakers have to be treated the same. Only by adjusting the dials just right — fine-tuning the level of generality up or down for each case based solely on the identity of the parties and the substance of their views — can you engineer the Commission's outcome, handing a win to Mr. Jack's bakers but delivering a loss to Mr. Phillips. Such results-driven reasoning is improper. Neither the Commission nor this Court may apply a more specific level of generality in Mr. Jack's case (a cake that conveys a message regarding same-sex marriage) while applying a higher level of generality in Mr. Phillips's case (a cake that conveys no message regarding same-sex marriage). Of course, under Smith a vendor cannot escape a public accommodations law just because his religion frowns on it. But for any law to comply with the First Amendment and Smith, it must be applied in a manner that treats religion with neutral respect. That means the government must apply the same level of generality across cases — and that did not happen here.

There is another problem with sliding up the generality scale: it risks denying constitutional protection to religious beliefs that draw distinctions more specific than the government's preferred level of description. To some, all wedding cakes may appear indistinguishable. But to Mr. Phillips that is not the case — his faith teaches him otherwise. And his religious beliefs are entitled to no less respectful treatment than the bakers' secular beliefs in Mr. Jack's case. This Court has explained these same points "[r]epeatedly and in many different contexts" over many years. Smith, 494 U.S. at 887, 110 S.Ct. 1595. For example, in Thomas a faithful Jehovah's Witness and steel mill worker agreed to help manufacture sheet steel he knew might find its way into armaments, but he was unwilling to work on a fabrication line producing tank turrets. 450 U.S., at 711, 101 S.Ct. 1425. Of course, the line Mr. Thomas drew wasn't the same many others would draw and it wasn't even the same line many other members of the same faith would draw. Even so, the Court didn't try to suggest that making steel is just making steel. Or that to offend his religion the steel needed to be of a particular kind or shape. Instead, it recognized that Mr. Thomas alone was entitled to define the nature of his religious commitments — and that those commitments, as defined by the faithful adherent, not a bureaucrat or judge, are entitled to protection under the First Amendment. Id., at 714-716, 101 S.Ct. 1425; see also United States v. Lee, 455 U.S. 252, 254-255, 102 S.Ct. 1051, 71 L.Ed.2d 127 (1982); Smith, supra, at 887, 110 S.Ct. 1595(collecting authorities). It is no more appropriate for the United States Supreme Court to tell Mr. Phillips that a wedding cake is just like any other — without regard to the religious significance his faith may attach to it — than it would be for the Court to suggest that for all persons sacramental bread is just bread or a kippah is just a cap.

Only one way forward now remains. Having failed to afford Mr. Phillips's religious objections neutral consideration and without any compelling reason for its failure, the Commission must afford him the same result it afforded the bakers in Mr. Jack's case. The Court recognizes this by reversing the judgment below and holding that the Commission's order "must be set aside." Ante, at 1732. Maybe in some future rulemaking or case the Commission could adopt a new "knowing" standard for all refusals of service and offer neutral reasons for doing so. But, as the Court observes, "[h]owever later cases raising these or similar concerns are resolved in the future, ... the rulings of the Commission and of the state court that enforced the Commission's order" in this case "must be invalidated." Ibid. Mr. Phillips has conclusively proven a First Amendment violation and, after almost six years facing unlawful civil charges, he is entitled to judgment.

Justice THOMAS, with whom Justice GORSUCH joins, concurring in part and concurring in the judgment.

I agree that the Colorado Civil Rights Commission (Commission) violated Jack Phillips' right to freely exercise his religion. As Justice GORSUCH explains, the Commission treated Phillips' case differently from a similar case involving three other bakers, for reasons that can only be explained by hostility toward Phillips' religion. See ante, at 1734-1737 (concurring opinion). The Court agrees that the Commission treated Phillips differently, and it points out that some of the Commissioners made comments disparaging Phillips' religion. See ante, at 1728-1731. Although the Commissioners' comments are certainly disturbing, the discriminatory application of Colorado's public-accommodations law is enough on its own to violate Phillips' rights. To the extent the Court agrees, I join its opinion.

While Phillips rightly prevails on his free-exercise claim, I write separately to address his free-speech claim. The Court does not address this claim because it has some uncertainties about the record. See ante, at 1723-1724. Specifically, the parties dispute whether Phillips refused to create a custom wedding cake for the individual respondents, or whether he refused to sell them any wedding cake (including a premade one). But the Colorado Court of Appeals resolved this factual dispute in Phillips' favor. The court described his conduct as a refusal to "design and create a cake to celebrate [a] same-sex wedding." Craig v. Masterpiece Cakeshop, Inc., 370 P.3d 272, 276 (2015); see also id., at 286 ("designing and selling a wedding cake"); id., at 283 ("refusing to create a wedding cake"). And it noted that the Commission's order required Phillips to sell "`any product [he] would sell to heterosexual couples,'" including custom wedding cakes. Id., at 286 (emphasis added).

Even after describing his conduct this way, the Court of Appeals concluded that Phillips' conduct was not expressive and was not protected speech. It reasoned that an outside observer would think that Phillips was merely complying with Colorado's public-accommodations law, not expressing a message, and that Phillips could post a disclaimer to that effect. This reasoning flouts bedrock principles of our free-speech jurisprudence and would justify virtually any law that compels individuals to speak. It should not pass without comment.

 

I

The First Amendment, applicable to the States through the Fourteenth Amendment, prohibits state laws that abridge the "freedom of speech." When interpreting this command, this Court has distinguished between regulations of speech and regulations of conduct. The latter generally do not abridge the freedom of speech, even if they impose "incidental burdens" on expression. Sorrell v. IMS Health Inc., 564 U.S. 552, 567, 131 S.Ct. 2653, 180 L.Ed.2d 544 (2011). As the Court explains today, public-accommodations laws usually regulate conduct. Ante,at 1727-1728 (citing Hurley v. Irish-American Gay, Lesbian and Bisexual Group of Boston, Inc., 515 U.S. 557, 572, 115 S.Ct. 2338, 132 L.Ed.2d 487 (1995)). "[A]s a general matter," public-accommodations laws do not "target speech" but instead prohibit "the act of discriminating against individuals in the provision of publicly available goods, privileges, and services." Id., at 572, 115 S.Ct. 2338 (emphasis added).

Although public-accommodations laws generally regulate conduct, particular applications of them can burden protected speech. When a public-accommodations law "ha[s] the effect of declaring ... speech itself to be the public accommodation," the First Amendment applies with full force. Id., at 573, 115 S.Ct. 2338; accord, Boy Scouts of America v. Dale, 530 U.S. 640, 657-659, 120 S.Ct. 2446, 147 L.Ed.2d 554 (2000). In Hurley, for example, a Massachusetts public-accommodations law prohibited "`any distinction, discrimination or restriction on account of ... sexual orientation ... relative to the admission of any person to, or treatment in any place of public accommodation.'" 515 U.S., at 561, 115 S.Ct. 2338(quoting Mass. Gen. Laws § 272:98 (1992); ellipsis in original). When this law required the sponsor of a St. Patrick's Day parade to include a parade unit of gay, lesbian, and bisexual Irish-Americans, the Court unanimously held that the law violated the sponsor's right to free speech. Parades are "a form of expression," this Court explained, and the application of the public-accommodations law "alter[ed] the expressive content" of the parade by forcing the sponsor to add a new unit. 515 U.S., at 568, 572-573, 115 S.Ct. 2338. The addition of that unit compelled the organizer to "bear witness to the fact that some Irish are gay, lesbian, or bisexual"; "suggest ... that people of their sexual orientation have as much claim to unqualified social acceptance as heterosexuals"; and imply that their participation "merits celebration." Id., at 574, 115 S.Ct. 2338. While this Court acknowledged that the unit's exclusion might have been "misguided, or even hurtful," ibid., it rejected the notion that governments can mandate "thoughts and statements acceptable to some groups or, indeed, all people" as the "antithesis" of free speech, id., at 579, 115 S.Ct. 2338; accord, Dale, supra, at 660-661, 120 S.Ct. 2446.

The parade in Hurley was an example of what this Court has termed "expressive conduct." See 515 U.S., at 568-569, 115 S.Ct. 2338. This Court has long held that "the Constitution looks beyond written or spoken words as mediums of expression," id., at 569, 115 S.Ct. 2338, and that "[s]ymbolism is a primitive but effective way of communicating ideas," West Virginia Bd. of Ed. v. Barnette, 319 U.S. 624, 632, 63 S.Ct. 1178, 87 L.Ed. 1628 (1943). Thus, a person's "conduct may be `sufficiently imbued with elements of communication to fall within the scope of the First and Fourteenth Amendments.'" Texas v. Johnson, 491 U.S. 397, 404, 109 S.Ct. 2533, 105 L.Ed.2d 342 (1989). Applying this principle, the Court has recognized a wide array of conduct that can qualify as expressive, including nude dancing, burning the American flag, flying an upside-down American flag with a taped-on peace sign, wearing a military uniform, wearing a black armband, conducting a silent sit-in, refusing to salute the American flag, and flying a plain red flag.[1]

Of course, conduct does not qualify as protected speech simply because "the person engaging in [it] intends thereby to express an idea." United States v. O'Brien, 391 U.S. 367, 376, 88 S.Ct. 1673, 20 L.Ed.2d 672 (1968). To determine whether conduct is sufficiently expressive, the Court asks whether it was "intended to be communicative" and, "in context, would reasonably be understood by the viewer to be communicative." Clark v. Community for Creative Non-Violence, 468 U.S. 288, 294, 104 S.Ct. 3065, 82 L.Ed.2d 221 (1984). But a "`particularized message'" is not required, or else the freedom of speech "would never reach the unquestionably shielded painting of Jackson Pollock, music of Arnold Schöenberg, or Jabberwocky verse of Lewis Carroll." Hurley, 515 U.S., at 569, 115 S.Ct. 2338.

Once a court concludes that conduct is expressive, the Constitution limits the government's authority to restrict or compel it. "[O]ne important manifestation of the principle of free speech is that one who chooses to speak may also decide `what not to say'" and "tailor" the content of his message as he sees fit. Id., at 573, 115 S.Ct. 2338 (quoting Pacific Gas & Elec. Co. v. Public Util. Comm'n of Cal., 475 U.S. 1, 16, 106 S.Ct. 903, 89 L.Ed.2d 1 (1986) (plurality opinion)). This rule "applies not only to expressions of value, opinion, or endorsement, but equally to statements of fact the speaker would rather avoid." Hurley, supra, at 573, 115 S.Ct. 2338. And it "makes no difference" whether the government is regulating the "creati[on], distributi[on], or consum[ption]" of the speech. Brown v. Entertainment Merchants Assn., 564 U.S. 786, 792, n. 1, 131 S.Ct. 2729, 180 L.Ed.2d 708 (2011).

 

II

 

A

The conduct that the Colorado Court of Appeals ascribed to Phillips — creating and designing custom wedding cakes — is expressive. Phillips considers himself an artist. The logo for Masterpiece Cakeshop is an artist's paint palette with a paintbrush and baker's whisk. Behind the counter Phillips has a picture that depicts him as an artist painting on a canvas. Phillips takes exceptional care with each cake that he creates — sketching the design out on paper, choosing the color scheme, creating the frosting and decorations, baking and sculpting the cake, decorating it, and delivering it to the wedding. Examples of his creations can be seen on Masterpiece's website. See http://masterpiececakes.com/wedding-cakes (as last visited June 1, 2018).

Phillips is an active participant in the wedding celebration. He sits down with each couple for a consultation before he creates their custom wedding cake. He discusses their preferences, their personalities, and the details of their wedding to ensure that each cake reflects the couple who ordered it. In addition to creating and delivering the cake — a focal point of the wedding celebration — Phillips sometimes stays and interacts with the guests at the wedding. And the guests often recognize his creations and seek his bakery out afterward. Phillips also sees the inherent symbolism in wedding cakes. To him, a wedding cake inherently communicates that "a wedding has occurred, a marriage has begun, and the couple should be celebrated." App. 162.

Wedding cakes do, in fact, communicate this message. A tradition from Victorian England that made its way to America after the Civil War, "[w]edding cakes are so packed with symbolism that it is hard to know where to begin." M. Krondl, Sweet Invention: A History of Dessert 321 (2011) (Krondl); see also ibid. (explaining the symbolism behind the color, texture, flavor, and cutting of the cake). If an average person walked into a room and saw a white, multi-tiered cake, he would immediately know that he had stumbled upon a wedding. The cake is "so standardised and inevitable a part of getting married that few ever think to question it." Charsley, Interpretation and Custom: The Case of the Wedding Cake, 22 Man 93, 95 (1987). Almost no wedding, no matter how spartan, is missing the cake. See id., at 98. "A whole series of events expected in the context of a wedding would be impossible without it: an essential photograph, the cutting, the toast, and the distribution of both cake and favours at the wedding and afterwards." Ibid.Although the cake is eventually eaten, that is not its primary purpose. See id., at 95 ("It is not unusual to hear people declaring that they do not like wedding cake, meaning that they do not like to eat it. This includes people who are, without question, having such cakes for their weddings"); id., at 97 ("Nothing is made of the eating itself"); Krondl 320-321 (explaining that wedding cakes have long been described as "inedible"). The cake's purpose is to mark the beginning of a new marriage and to celebrate the couple.[2]

Accordingly, Phillips' creation of custom wedding cakes is expressive. The use of his artistic talents to create a well-recognized symbol that celebrates the beginning of a marriage clearly communicates a message — certainly more so than nude dancing, Barnes v. Glen Theatre, Inc., 501 U.S. 560, 565-566, 111 S.Ct. 2456, 115 L.Ed.2d 504 (1991), or flying a plain red flag, Stromberg v. California, 283 U.S. 359, 369, 51 S.Ct. 532, 75 L.Ed. 1117 (1931).[3] By forcing Phillips to create custom wedding cakes for same-sex weddings, Colorado's public-accommodations law "alter[s] the expressive content" of his message. Hurley, 515 U.S., at 572, 115 S.Ct. 2338. The meaning of expressive conduct, this Court has explained, depends on "the context in which it occur[s]." Johnson, 491 U.S., at 405, 109 S.Ct. 2533. Forcing Phillips to make custom wedding cakes for same-sex marriages requires him to, at the very least, acknowledge that same-sex weddings are "weddings" and suggest that they should be celebrated — the precise message he believes his faith forbids. The First Amendment prohibits Colorado from requiring Phillips to "bear witness to [these] fact[s]," Hurley, 515 U.S., at 574, 115 S.Ct. 2338, or to "affir[m] ... a belief with which [he] disagrees," id., at 573, 115 S.Ct. 2338.

 

B

The Colorado Court of Appeals nevertheless concluded that Phillips' conduct was "not sufficiently expressive" to be protected from state compulsion. 370 P.3d, at 283. It noted that a reasonable observer would not view Phillips' conduct as "an endorsement of same-sex marriage," but rather as mere "compliance" with Colorado's public-accommodations law. Id., at 286-287 (citing Rumsfeld v. Forum for Academic and Institutional Rights, Inc., 547 U.S. 47, 64-65, 126 S.Ct. 1297, 164 L.Ed.2d 156 (2006) (FAIR); Rosenberger v. Rector and Visitors of Univ. of Va.,515 U.S. 819, 841-842, 115 S.Ct. 2510, 132 L.Ed.2d 700 (1995); PruneYard Shopping Center v. Robins, 447 U.S. 74, 76-78, 100 S.Ct. 2035, 64 L.Ed.2d 741 (1980)). It also emphasized that Masterpiece could "disassociat[e]" itself from same-sex marriage by posting a "disclaimer" stating that Colorado law "requires it not to discriminate" or that "the provision of its services does not constitute an endorsement." 370 P.3d, at 288. This reasoning is badly misguided.

 

1

The Colorado Court of Appeals was wrong to conclude that Phillips' conduct was not expressive because a reasonable observer would think he is merely complying with Colorado's public-accommodations law. This argument would justify any law that compelled protected speech. And, this Court has never accepted it. From the beginning, this Court's compelled-speech precedents have rejected arguments that "would resolve every issue of power in favor of those in authority." Barnette,319 U.S., at 636, 63 S.Ct. 1178. Hurley, for example, held that the application of Massachusetts' public-accommodations law "requir[ed] [the organizers] to alter the expressive content of their parade." 515 U.S., at 572-573, 115 S.Ct. 2338. It did not hold that reasonable observers would view the organizers as merely complying with Massachusetts' public-accommodations law.

The decisions that the Colorado Court of Appeals cited for this proposition are far afield. It cited three decisions where groups objected to being forced to provide a forum for a third party's speech. See FAIR, supra, at 51, 126 S.Ct. 1297 (law school refused to allow military recruiters on campus); Rosenberger, supra,at 822-823, 115 S.Ct. 2510 (public university refused to provide funds to a religious student paper); PruneYard, supra, at 77, 100 S.Ct. 2035 (shopping center refused to allow individuals to collect signatures on its property). In those decisions, this Court rejected the argument that requiring the groups to provide a forum for third-party speech also required them to endorse that speech. See FAIR, supra, at 63-65, 126 S.Ct. 1297; Rosenberger, supra, at 841-842, 115 S.Ct. 2510; PruneYard, supra, at 85-88, 100 S.Ct. 2035. But these decisions do not suggest that the government can force speakers to alter their own message. See Pacific Gas & Elec., 475 U.S., at 12, 106 S.Ct. 903 ("Notably absent from PruneYard was any concern that access... might affect the shopping center owner's exercise of his own right to speak"); Hurley, supra, at 580, 115 S.Ct. 2338 (similar).

The Colorado Court of Appeals also noted that Masterpiece is a "for-profit bakery" that "charges its customers." 370 P.3d, at 287. But this Court has repeatedly rejected the notion that a speaker's profit motive gives the government a freer hand in compelling speech. See Pacific Gas & Elec., supra, at 8, 16, 106 S.Ct. 903(collecting cases); Virginia Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 761, 96 S.Ct. 1817, 48 L.Ed.2d 346 (1976) (deeming it "beyond serious dispute" that "[s]peech... is protected even though it is carried in a form that is `sold' for profit"). Further, even assuming that most for-profit companies prioritize maximizing profits over communicating a message, that is not true for Masterpiece Cakeshop. Phillips routinely sacrifices profits to ensure that Masterpiece operates in a way that represents his Christian faith. He is not open on Sundays, he pays his employees a higher-than-average wage, and he loans them money in times of need. Phillips also refuses to bake cakes containing alcohol, cakes with racist or homophobic messages, cakes criticizing God, and cakes celebrating Halloween — even though Halloween is one of the most lucrative seasons for bakeries. These efforts to exercise control over the messages that Masterpiece sends are still more evidence that Phillips' conduct is expressive. See Miami Herald Publishing Co. v. Tornillo, 418 U.S. 241, 256-258, 94 S.Ct. 2831, 41 L.Ed.2d 730 (1974); Walker v. Texas Div., Sons of Confederate Veterans, Inc., 576 U.S. ___, ___, 135 S.Ct. 2239, 2251, 192 L.Ed.2d 274 (2015).

 

2

The Colorado Court of Appeals also erred by suggesting that Phillips could simply post a disclaimer, disassociating Masterpiece from any support for same-sex marriage. Again, this argument would justify any law compelling speech. And again, this Court has rejected it. We have described similar arguments as "beg[ging] the core question." Tornillo, supra, at 256, 94 S.Ct. 2831. Because the government cannot compel speech, it also cannot "require speakers to affirm in one breath that which they deny in the next." Pacific Gas & Elec., 475 U.S., at 16, 106 S.Ct. 903; see also id., at 15, n. 11, 106 S.Ct. 903 (citing PruneYard, 447 U.S., at 99, 100 S.Ct. 2035 (Powell, J., concurring in part and concurring in judgment)). States cannot put individuals to the choice of "be[ing] compelled to affirm someone else's belief" or "be[ing] forced to speak when [they] would prefer to remain silent." Id., at 99, 100 S.Ct. 2035.

 

III

Because Phillips' conduct (as described by the Colorado Court of Appeals) was expressive, Colorado's public-accommodations law cannot penalize it unless the law withstands strict scrutiny. Although this Court sometimes reviews regulations of expressive conduct under the more lenient test articulated in O'Brien,[4] that test does not apply unless the government would have punished the conduct regardless of its expressive component. See, e.g., Barnes, 501 U.S., at 566-572, 111 S.Ct. 2456 (applying O'Brien to evaluate the application of a general nudity ban to nude dancing); Clark, 468 U.S., at 293, 104 S.Ct. 3065(applying O'Brien to evaluate the application of a general camping ban to a demonstration in the park). Here, however, Colorado would not be punishing Phillips if he refused to create any custom wedding cakes; it is punishing him because he refuses to create custom wedding cakes that express approval of same-sex marriage. In cases like this one, our precedents demand "`the most exacting scrutiny.'" Johnson, 491 U.S., at 412, 109 S.Ct. 2533; accord, Holder v. Humanitarian Law Project, 561 U.S. 1, 28, 130 S.Ct. 2705, 177 L.Ed.2d 355 (2010).

The Court of Appeals did not address whether Colorado's law survives strict scrutiny, and I will not do so in the first instance. There is an obvious flaw, however, with one of the asserted justifications for Colorado's law. According to the individual respondents, Colorado can compel Phillips' speech to prevent him from "`denigrat[ing] the dignity'" of same-sex couples, "`assert[ing] [their] inferiority,'" and subjecting them to "`humiliation, frustration, and embarrassment.'" Brief for Respondents Craig et al. 39 (quoting J.E.B. v. Alabama ex rel. T. B., 511 U.S. 127, 142, 114 S.Ct. 1419, 128 L.Ed.2d 89 (1994); Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241, 292, 85 S.Ct. 348, 13 L.Ed.2d 258 (1964) (Goldberg, J., concurring)). These justifications are completely foreign to our free-speech jurisprudence.

States cannot punish protected speech because some group finds it offensive, hurtful, stigmatic, unreasonable, or undignified. "If there is a bedrock principle underlying the First Amendment, it is that the government may not prohibit the expression of an idea simply because society finds the idea itself offensive or disagreeable." Johnson, supra, at 414, 109 S.Ct. 2533. A contrary rule would allow the government to stamp out virtually any speech at will. See Morse v. Frederick,551 U.S. 393, 409, 127 S.Ct. 2618, 168 L.Ed.2d 290 (2007) ("After all, much political and religious speech might be perceived as offensive to some"). As the Court reiterates today, "it is not ... the role of the State or its officials to prescribe what shall be offensive." Ante, at 1731. "`Indeed, if it is the speaker's opinion that gives offense, that consequence is a reason for according it constitutional protection.'" Hustler Magazine, Inc. v. Falwell, 485 U.S. 46, 55, 108 S.Ct. 876, 99 L.Ed.2d 41 (1988); accord, Johnson, supra, at 408-409, 109 S.Ct. 2533. If the only reason a public-accommodations law regulates speech is "to produce a society free of ... biases" against the protected groups, that purpose is "decidedly fatal" to the law's constitutionality, "for it amounts to nothing less than a proposal to limit speech in the service of orthodox expression." Hurley, 515 U.S., at 578-579, 115 S.Ct. 2338; see also United States v. Playboy Entertainment Group, Inc., 529 U.S. 803, 813, 120 S.Ct. 1878, 146 L.Ed.2d 865 (2000) ("Where the designed benefit of a content-based speech restriction is to shield the sensibilities of listeners, the general rule is that the right of expression prevails"). "[A] speech burden based on audience reactions is simply government hostility ... in a different guise." Matal v. Tam, 582 U.S. ___, ___, 137 S.Ct. 1744, 1767, 198 L.Ed.2d 366 (2017) (KENNEDY, J., concurring in part and concurring in judgment).

Consider what Phillips actually said to the individual respondents in this case. After sitting down with them for a consultation, Phillips told the couple, "`I'll make your birthday cakes, shower cakes, sell you cookies and brownies, I just don't make cakes for same sex weddings.'" App. 168. It is hard to see how this statement stigmatizes gays and lesbians more than blocking them from marching in a city parade, dismissing them from the Boy Scouts, or subjecting them to signs that say "God Hates Fags" — all of which this Court has deemed protected by the First Amendment. See Hurley, supra, at 574-575, 115 S.Ct. 2338; Dale, 530 U.S., at 644, 120 S.Ct. 2446; Snyder v. Phelps, 562 U.S. 443, 448, 131 S.Ct. 1207, 179 L.Ed.2d 172 (2011). Moreover, it is also hard to see how Phillips' statement is worse than the racist, demeaning, and even threatening speech toward blacks that this Court has tolerated in previous decisions. Concerns about "dignity" and "stigma" did not carry the day when this Court affirmed the right of white supremacists to burn a 25-foot cross, Virginia v. Black, 538 U.S. 343, 123 S.Ct. 1536, 155 L.Ed.2d 535 (2003); conduct a rally on Martin Luther King Jr.'s birthday, Forsyth County v. Nationalist Movement, 505 U.S. 123, 112 S.Ct. 2395, 120 L.Ed.2d 101 (1992); or circulate a film featuring hooded Klan members who were brandishing weapons and threatening to "`Bury the niggers,'" Brandenburg v. Ohio,395 U.S. 444, 446, n. 1, 89 S.Ct. 1827, 23 L.Ed.2d 430 (1969) (per curiam).

Nor does the fact that this Court has now decided Obergefell v. Hodges, 576 U.S. ___, 135 S.Ct. 2584, 192 L.Ed.2d 609 (2015), somehow diminish Phillips' right to free speech. "It is one thing ... to conclude that the Constitution protects a right to same-sex marriage; it is something else to portray everyone who does not share [that view] as bigoted" and unentitled to express a different view. Id., at ___, 135 S.Ct., at 2626 (ROBERTS, C.J., dissenting). This Court is not an authority on matters of conscience, and its decisions can (and often should) be criticized. The First Amendment gives individuals the right to disagree about the correctness of Obergefell and the morality of same-sex marriage. Obergefell itself emphasized that the traditional understanding of marriage "long has been held — and continues to be held — in good faith by reasonable and sincere people here and throughout the world." Id., at ___, 135 S.Ct., at 2594 (majority opinion). If Phillips' continued adherence to that understanding makes him a minority after Obergefell,that is all the more reason to insist that his speech be protected. See Dale, supra,at 660, 120 S.Ct. 2446 ("[T]he fact that [the social acceptance of homosexuality] may be embraced and advocated by increasing numbers of people is all the more reason to protect the First Amendment rights of those who wish to voice a different view").

 

* * *

In Obergefell, I warned that the Court's decision would "inevitabl[y] ... come into conflict" with religious liberty, "as individuals... are confronted with demands to participate in and endorse civil marriages between same-sex couples." 576 U.S., at ___, 135 S.Ct., at 2638 (dissenting opinion). This case proves that the conflict has already emerged. Because the Court's decision vindicates Phillips' right to free exercise, it seems that religious liberty has lived to fight another day. But, in future cases, the freedom of speech could be essential to preventing Obergefellfrom being used to "stamp out every vestige of dissent" and "vilify Americans who are unwilling to assent to the new orthodoxy." Id., at ___, 135 S.Ct., at 2642 (ALITO, J., dissenting). If that freedom is to maintain its vitality, reasoning like the Colorado Court of Appeals' must be rejected.

Justice GINSBURG, with whom Justice SOTOMAYOR joins, dissenting.

There is much in the Court's opinion with which I agree. "[I]t is a general rule that [religious and philosophical] objections do not allow business owners and other actors in the economy and in society to deny protected persons equal access to goods and services under a neutral and generally applicable public accommodations law." Ante, at 1727. "Colorado law can protect gay persons, just as it can protect other classes of individuals, in acquiring whatever products and services they choose on the same terms and conditions as are offered to other members of the public." Ante, at 1727-1728. "[P]urveyors of goods and services who object to gay marriages for moral and religious reasons [may not] put up signs saying `no goods or services will be sold if they will be used for gay marriages.'" Ante, at 1728-1729. Gay persons may be spared from "indignities when they seek goods and services in an open market." Ante, at 1732.[1] I strongly disagree, however, with the Court's conclusion that Craig and Mullins should lose this case. All of the above-quoted statements point in the opposite direction.

The Court concludes that "Phillips' religious objection was not considered with the neutrality that the Free Exercise Clause requires." Ante, at 1731. This conclusion rests on evidence said to show the Colorado Civil Rights Commission's (Commission) hostility to religion. Hostility is discernible, the Court maintains, from the asserted "disparate consideration of Phillips' case compared to the cases of" three other bakers who refused to make cakes requested by William Jack, an amicus here. Ante, at 1732. The Court also finds hostility in statements made at two public hearings on Phillips' appeal to the Commission. Ante, at 1728-1730. The different outcomes the Court features do not evidence hostility to religion of the kind we have previously held to signal a free-exercise violation, nor do the comments by one or two members of one of the four decisionmaking entities considering this case justify reversing the judgment below.

 

I

On March 13, 2014 — approximately three months after the ALJ ruled in favor of the same-sex couple, Craig and Mullins, and two months before the Commission heard Phillips' appeal from that decision — William Jack visited three Colorado bakeries. His visits followed a similar pattern. He requested two cakes

"made to resemble an open Bible. He also requested that each cake be decorated with Biblical verses. [He] requested that one of the cakes include an image of two groomsmen, holding hands, with a red `X' over the image. On one cake, he requested [on] one side[,] ... `God hates sin. Psalm 45:7' and on the opposite side of the cake `Homosexuality is a detestable sin. Leviticus 18:2.' On the second cake, [the one] with the image of the two groomsmen covered by a red `X' [Jack] requested [these words]: `God loves sinners' and on the other side `While we were yet sinners Christ died for us. Romans 5:8.'" App. to Pet. for Cert. 319a; see id., at 300a, 310a.

In contrast to Jack, Craig and Mullins simply requested a wedding cake: They mentioned no message or anything else distinguishing the cake they wanted to buy from any other wedding cake Phillips would have sold.

One bakery told Jack it would make cakes in the shape of Bibles, but would not decorate them with the requested messages; the owner told Jack her bakery "does not discriminate" and "accept[s] all humans." Id., at 301a (internal quotation marks omitted). The second bakery owner told Jack he "had done open Bibles and books many times and that they look amazing," but declined to make the specific cakes Jack described because the baker regarded the messages as "hateful." Id., at 310a (internal quotation marks omitted). The third bakery, according to Jack, said it would bake the cakes, but would not include the requested message. Id., at 319a.[2]

Jack filed charges against each bakery with the Colorado Civil Rights Division (Division). The Division found no probable cause to support Jack's claims of unequal treatment and denial of goods or services based on his Christian religious beliefs. Id., at 297a, 307a, 316a. In this regard, the Division observed that the bakeries regularly produced cakes and other baked goods with Christian symbols and had denied other customer requests for designs demeaning people whose dignity the Colorado Antidiscrimination Act (CADA) protects. See id., at 305a, 314a, 324a. The Commission summarily affirmed the Division's no-probable-cause finding. See id., at 326a-331a.

The Court concludes that "the Commission's consideration of Phillips' religious objection did not accord with its treatment of [the other bakers'] objections." Ante, at 1730. See also ante, at 1736-1737 (GORSUCH, J., concurring). But the cases the Court aligns are hardly comparable. The bakers would have refused to make a cake with Jack's requested message for any customer, regardless of his or her religion. And the bakers visited by Jack would have sold him any baked goods they would have sold anyone else. The bakeries' refusal to make Jack cakes of a kind they would not make for any customer scarcely resembles Phillips' refusal to serve Craig and Mullins: Phillips would notsell to Craig and Mullins, for no reason other than their sexual orientation, a cake of the kind he regularly sold to others. When a couple contacts a bakery for a wedding cake, the product they are seeking is a cake celebrating their wedding — not a cake celebrating heterosexual weddings or same-sex weddings — and that is the service Craig and Mullins were denied. Cf. ante, at 1735-1736, 1738-1739 (GORSUCH, J., concurring). Colorado, the Court does not gainsay, prohibits precisely the discrimination Craig and Mullins encountered. See supra, at 1748. Jack, on the other hand, suffered no service refusal on the basis of his religion or any other protected characteristic. He was treated as any other customer would have been treated — no better, no worse.[3]

The fact that Phillips might sell other cakes and cookies to gay and lesbian customers[4] was irrelevant to the issue Craig and Mullins' case presented. What matters is that Phillips would not provide a good or service to a same-sex couple that he would provide to a heterosexual couple. In contrast, the other bakeries' sale of other goods to Christian customers was relevant: It shows that there were no goods the bakeries would sell to a non-Christian customer that they would refuse to sell to a Christian customer. Cf. ante, at 1730.

Nor was the Colorado Court of Appeals' "difference in treatment of these two instances... based on the government's own assessment of offensiveness." Ante,at 1731. Phillips declined to make a cake he found offensive where the offensiveness of the product was determined solely by the identity of the customer requesting it. The three other bakeries declined to make cakes where their objection to the product was due to the demeaning message the requested product would literally display. As the Court recognizes, a refusal "to design a special cake with words or images... might be different from a refusal to sell any cake at all." Ante, at 1723.[5] The Colorado Court of Appeals did not distinguish Phillips and the other three bakeries based simply on its or the Division's finding that messages in the cakes Jack requested were offensive while any message in a cake for Craig and Mullins was not. The Colorado court distinguished the cases on the ground that Craig and Mullins were denied service based on an aspect of their identity that the State chose to grant vigorous protection from discrimination. See App. to Pet. for Cert. 20a, n. 8 ("The Division found that the bakeries did not refuse [Jack's] request because of his creed, but rather because of the offensive nature of the requested message.... [T]here was no evidence that the bakeries based their decisions on [Jack's] religion... [whereas Phillips] discriminat[ed] on the basis of sexual orientation."). I do not read the Court to suggest that the Colorado Legislature's decision to include certain protected characteristics in CADA is an impermissible government prescription of what is and is not offensive. Cf. ante, at 1727-1728. To repeat, the Court affirms that "Colorado law can protect gay persons, just as it can protect other classes of individuals, in acquiring whatever products and services they choose on the same terms and conditions as are offered to other members of the public." Ante, at 1728.

 

II

Statements made at the Commission's public hearings on Phillips' case provide no firmer support for the Court's holding today. Whatever one may think of the statements in historical context, I see no reason why the comments of one or two Commissioners should be taken to overcome Phillips' refusal to sell a wedding cake to Craig and Mullins. The proceedings involved several layers of independent decisionmaking, of which the Commission was but one. See App. to Pet. for Cert. 5a-6a. First, the Division had to find probable cause that Phillips violated CADA. Second, the ALJ entertained the parties' cross-motions for summary judgment. Third, the Commission heard Phillips' appeal. Fourth, after the Commission's ruling, the Colorado Court of Appeals considered the case de novo. What prejudice infected the determinations of the adjudicators in the case before and after the Commission? The Court does not say. Phillips' case is thus far removed from the only precedent upon which the Court relies, Church of Lukumi Babalu Aye, Inc. v. Hialeah, 508 U.S. 520, 113 S.Ct. 2217, 124 L.Ed.2d 472 (1993), where the government action that violated a principle of religious neutrality implicated a sole decisionmaking body, the city council, see id., at 526-528, 113 S.Ct. 2217.

 

* * *

For the reasons stated, sensible application of CADA to a refusal to sell any wedding cake to a gay couple should occasion affirmance of the Colorado Court of Appeals' judgment. I would so rule.

[*] The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337, 26 S.Ct. 282, 50 L.Ed. 499.

[*] Justice GORSUCH disagrees. In his view, the Jack cases and the Phillips case must be treated the same because the bakers in all those cases "would not sell the requested cakes to anyone." Post, at 1735. That description perfectly fits the Jack cases — and explains why the bakers there did not engage in unlawful discrimination. But it is a surprising characterization of the Phillips case, given that Phillips routinely sells wedding cakes to opposite-sex couples. Justice GORSUCH can make the claim only because he does not think a "wedding cake" is the relevant product. As Justice GORSUCH sees it, the product that Phillips refused to sell here — and would refuse to sell to anyone — was a "cake celebrating same-sex marriage." Ibid.; see post, at 1735, 1736-1737, 1737-1738. But that is wrong. The cake requested was not a special "cake celebrating same-sex marriage." It was simply a wedding cake — one that (like other standard wedding cakes) is suitable for use at same-sex and opposite-sex weddings alike. See ante, at 1724-1725 (majority opinion) (recounting that Phillips did not so much as discuss the cake's design before he refused to make it). And contrary to Justice GORSUCH's view, a wedding cake does not become something different whenever a vendor like Phillips invests its sale to particular customers with "religious significance." Post, at 1728. As this Court has long held, and reaffirms today, a vendor cannot escape a public accommodations law because his religion disapproves selling a product to a group of customers, whether defined by sexual orientation, race, sex, or other protected trait. See Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 402, n. 5, 88 S.Ct. 964, 19 L.Ed.2d 1263 (1968) (per curiam) (holding that a barbeque vendor must serve black customers even if he perceives such service as vindicating racial equality, in violation of his religious beliefs); ante,at 1727. A vendor can choose the products he sells, but not the customers he serves — no matter the reason. Phillips sells wedding cakes. As to that product, he unlawfully discriminates: He sells it to opposite-sex but not to same-sex couples. And on that basis — which has nothing to do with Phillips' religious beliefs — Colorado could have distinguished Phillips from the bakers in the Jack cases, who did not engage in any prohibited discrimination.

[1] Barnes v. Glen Theatre, Inc., 501 U.S. 560, 565-566, 111 S.Ct. 2456, 115 L.Ed.2d 504 (1991); Texas v. Johnson, 491 U.S. 397, 405-406, 109 S.Ct. 2533, 105 L.Ed.2d 342 (1989); Spence v. Washington,418 U.S. 405, 406, 409-411, 94 S.Ct. 2727, 41 L.Ed.2d 842 (1974) (per curiam); Schacht v. United States, 398 U.S. 58, 62-63, 90 S.Ct. 1555, 26 L.Ed.2d 44 (1970); Tinker v. Des Moines Independent Community School Dist., 393 U.S. 503, 505-506, 89 S.Ct. 733, 21 L.Ed.2d 731 (1969); Brown v. Louisiana, 383 U.S. 131, 141-142, 86 S.Ct. 719, 15 L.Ed.2d 637 (1966) (opinion of Fortas, J.); West Virginia Bd. of Ed. v. Barnette, 319 U.S. 624, 633-634, 63 S.Ct. 1178, 87 L.Ed. 1628 (1943); Stromberg v. California, 283 U.S. 359, 361, 369, 51 S.Ct. 532, 75 L.Ed. 1117 (1931).

[2] The Colorado Court of Appeals acknowledged that "a wedding cake, in some circumstances, may convey a particularized message celebrating same-sex marriage," depending on its "design" and whether it has "written inscriptions." Craig v. Masterpiece Cakeshop, Inc., 370 P.3d 272, 288 (2015). But a wedding cake needs no particular design or written words to communicate the basic message that a wedding is occurring, a marriage has begun, and the couple should be celebrated. Wedding cakes have long varied in color, decorations, and style, but those differences do not prevent people from recognizing wedding cakes as wedding cakes. See Charsley, Interpretation and Custom: The Case of the Wedding Cake, 22 Man 93, 96 (1987). And regardless, the Commission's order does not distinguish between plain wedding cakes and wedding cakes with particular designs or inscriptions; it requires Phillips to make any wedding cake for a same-sex wedding that he would make for an opposite-sex wedding.

[3] The dissent faults Phillips for not "submitting... evidence" that wedding cakes communicate a message. Post, at 1748, n. 1 (opinion of GINSBURG, J.). But this requirement finds no support in our precedents. This Court did not insist that the parties submit evidence detailing the expressive nature of parades, flags, or nude dancing. See Hurley v. Irish-American Gay, Lesbian and Bisexual Group of Boston, Inc., 515 U.S. 557, 568-570, 115 S.Ct. 2338, 132 L.Ed.2d 487 (1995); Spence, 418 U.S., at 410-411, 94 S.Ct. 2727; Barnes, 501 U.S., at 565-566, 111 S.Ct. 2456. And we do not need extensive evidence here to conclude that Phillips' artistry is expressive, see Hurley, 515 U.S., at 569, 115 S.Ct. 2338, or that wedding cakes at least communicate the basic fact that "this is a wedding," see id., at 573-575, 115 S.Ct. 2338. Nor does it matter that the couple also communicates a message through the cake. More than one person can be engaged in protected speech at the same time. See id., at 569-570, 115 S.Ct. 2338. And by forcing him to provide the cake, Colorado is requiring Phillips to be "intimately connected" with the couple's speech, which is enough to implicate his First Amendment rights. See id., at 576, 115 S.Ct. 2338.

[4] "[A] government regulation [of expressive conduct] is sufficiently justified if it is within the constitutional power of the Government; if it furthers an important or substantial governmental interest; if the governmental interest is unrelated to the suppression of free expression; and if the incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest." United States v. O'Brien, 391 U.S. 367, 377, 88 S.Ct. 1673, 20 L.Ed.2d 672 (1968).

[1] As Justice THOMAS observes, the Court does not hold that wedding cakes are speech or expression entitled to First Amendment protection. See ante, at 1740 (opinion concurring in part and concurring in judgment). Nor could it, consistent with our First Amendment precedents. Justice THOMAS acknowledges that for conduct to constitute protected expression, the conduct must be reasonably understood by an observer to be communicative. Ante, at 1724-1725 (citing Clark v. Community for Creative Non-Violence, 468 U.S. 288, 294, 104 S.Ct. 3065, 82 L.Ed.2d 221 (1984)). The record in this case is replete with Jack Phillips' own views on the messages he believes his cakes convey. See ante, at 1742-1743 (THOMAS, J., concurring in part and concurring in judgment) (describing how Phillips "considers" and "sees" his work). But Phillips submitted no evidence showing that an objective observer understands a wedding cake to convey a message, much less that the observer understands the message to be the baker's, rather than the marrying couple's. Indeed, some in the wedding industry could not explain what message, or whose, a wedding cake conveys. See Charsley, Interpretation and Custom: The Case of the Wedding Cake, 22 Man 93, 100-101 (1987) (no explanation of wedding cakes' symbolism was forthcoming "even amongst those who might be expected to be the experts"); id., at 104-105 (the cake cutting tradition might signify "the bride and groom ... as appropriating the cake" from the bride's parents). And Phillips points to no case in which this Court has suggested the provision of a baked good might be expressive conduct. Cf. ante, at 1743, n. 2 (THOMAS, J., concurring in part and concurring in judgment); Hurley v. Irish-American Gay, Lesbian, and Bisexual Group of Boston, Inc., 515 U.S. 557, 568-579, 115 S.Ct. 2338, 132 L.Ed.2d 487 (1995) (citing previous cases recognizing parades to be expressive); Barnes v. Glen Theatre, Inc., 501 U.S. 560, 565, 111 S.Ct. 2456, 115 L.Ed.2d 504 (1991) (noting precedents suggesting nude dancing is expressive conduct); Spence v. Washington, 418 U.S. 405, 410, 94 S.Ct. 2727, 41 L.Ed.2d 842 (1974)(observing the Court's decades-long recognition of the symbolism of flags).

[2] The record provides no ideological explanation for the bakeries' refusals. Cf. ante, at 1734-1735, 1738, 1739-1740 (GORSUCH, J., concurring) (describing Jack's requests as offensive to the bakers' "secular" convictions).

[3] Justice GORSUCH argues that the situations "share all legally salient features." Ante, at 1735 (concurring opinion). But what critically differentiates them is the role the customer's "statutorily protected trait," ibid., played in the denial of service. Change Craig and Mullins' sexual orientation (or sex), and Phillips would have provided the cake. Change Jack's religion, and the bakers would have been no more willing to comply with his request. The bakers' objections to Jack's cakes had nothing to do with "religious opposition to same-sex weddings." Ante, at 1736 (GORSUCH, J., concurring). Instead, the bakers simply refused to make cakes bearing statements demeaning to people protected by CADA. With respect to Jack's second cake, in particular, where he requested an image of two groomsmen covered by a red "X" and the lines "God loves sinners" and "While we were yet sinners Christ died for us," the bakers gave not the slightest indication that religious words, rather than the demeaning image, prompted the objection. See supra, at 1749. Phillips did, therefore, discriminate because of sexual orientation; the other bakers did not discriminate because of religious belief; and the Commission properly found discrimination in one case but not the other. Cf. ante, at 1735-1737 (GORSUCH, J., concurring).

[4] But see ante, at 1726 (majority opinion) (acknowledging that Phillips refused to sell to a lesbian couple cupcakes for a celebration of their union).

[5] The Court undermines this observation when later asserting that the treatment of Phillips, as compared with the treatment of the other three bakeries, "could reasonably be interpreted as being inconsistent as to the question of whether speech is involved." Ante, at 1730. But recall that, while Jack requested cakes with particular text inscribed, Craig and Mullins were refused the sale of any wedding cake at all. They were turned away before any specific cake design could be discussed. (It appears that Phillips rarely, if ever, produces wedding cakes with words on them — or at least does not advertise such cakes. See Masterpiece Cakeshop, Wedding, http://www.masterpiececakes.com/wedding-cakes (as last visited June 1, 2018) (gallery with 31 wedding cake images, none of which exhibits words).) The Division and the Court of Appeals could rationally and lawfully distinguish between a case involving disparaging text and images and a case involving a wedding cake of unspecified design. The distinction is not between a cake with text and one without, see ante, at 1737-1738 (GORSUCH, J., concurring); it is between a cake with a particular design and one whose form was never even discussed.

8.2 Housing and Segregation 8.2 Housing and Segregation

8.2.1 Shelley v. Kraemer 8.2.1 Shelley v. Kraemer

334 U.S. 1
68 S.Ct. 836
92 L.Ed. 1161
SHELLEY et ux.

v.

KRAEMER et ux. McGHEE et ux. v. SIPES et al.

Nos. 72, 87.
Argued Jan. 15, 16, 1948.
Decided May 3, 1948.

 

          Messrs. George L. Vaughn and Herman Willer, both of St. Louis, Mo., for petitioners Shelley.

          Messrs. Thurgood Marshall, of New York City, Loren Miller, for petitioners McGhee.

          Mr. Gerald L. Seegers, of St. Louis, Mo., for respondents Kraemer.

          Messrs. Henry Gilligan and James A. Crooks, both of Washington, D.C. for respondents Sipes and others.

          Mr. Philip B. Perlman, Sol. Gen., of Washington, D.C., for the United States, as amicus curiae, by special leave of Court.

           Mr. Chief Justice VINSON delivered the opinion of the Court.

          These cases present for our consideration questions relating to the validity of court enforcement of private agreements, generally described as restrictive covenants, which have as their purpose the exclusion of persons of designated race or color from the ownership or occupancy of real property. Basic constitutional issues of obvious importance have been raised.

          The first of these cases comes to this Court on certiorari to the Supreme Court of Missouri. On February 16, 1911, thirty out of a total of thirty-nine owners of property fronting both sides of Labadie Avenue between Taylor Avenue and Cora Avenue in the city of St. Louis, signed an agreement, which was subsequently recorded, providing in part:

          "* * * the said property is hereby restricted to the use and occupancy for the term of Fifty (50) years from this date, so that it shall be a condition all the time and whether recited and referred to as (sic) not in subsequent conveyances and shall attach to the land, as a condition precedent to the sale of the same, that hereafter no part of said property or any portion thereof shall be, for said term of Fifty-years, occupied by any person not of the Caucasian race, it being intended hereby to restrict the use of said property for said period of time against the occupancy as owners or tenants of any portion of said property for resident or other purpose by people of the Negro or Mongolian Race."

          The entire district described in the agreement included fifty-seven parcels of land. The thirty owners who signed the agreement held title to forty-seven parcels, including the particular parcel involved in this case. At the time the agreement was signed, five of the parcels in the district were owned by Negroes. One of those had been occupied by Negro families since 1882, nearly thirty years before the restrictive agreement was executed. The trial court found that owners of seven out of nine homes on the south side of Labadie Avenue, within the restricted district and "in the immediate vicinity" of the premises in question, had failed to sign the restrictive agreement in 1911. At the time this action was brought, four of the premises were occupied by Negroes, and had been so occupied for periods ranging from twenty-three to sixty-three years. A fifth parcel had been occupied by Negroes until a year before this suit was instituted.

          On August 11, 1945, pursuant to a contract of sale, petitioners Shelley, who are Negroes, for valuable consideration received from one Fitzgerald a warranty deed to the parcel in question.1 The trial court found that petitioners had no actual knowledge of the restrictive agreement at the time of the purchase.

          On October 9, 1945, respondents, as owners of other property subject to the terms of the restrictive covenant, brought suit in Circuit Court of the city of St. Louis praying that petitioners Shelley be restrained from taking possession of the property and that judgment be entered divesting title out of petitioners Shelley and revesting title in the immediate grantor or in such other person as the court should direct. The trial court denied the requested relief on the ground that the restrictive agreement, upon which respondents based their action, had never become final and complete because it was the intention of the parties to that agreement that it was not to become effective until signed by all property owners in the district, and signatures of all the owners had never been obtained.

          The Supreme Court of Missouri sitting en banc reversed and directed the trial court to grant the relief for which respondents had prayed. That court held the agreement effective and concluded that enforcement of its provisions violated no rights guaranteed to petitioners by the Federal Constitution.2 At the time the court rendered its decision, petitioners were occupying the property in question.

          The second of the cases under consideration comes to this Court from the Supreme Court of Michigan. The circumstances presented do not differ materially from the Missouri case. In June, 1934, one Ferguson and his wife, who then owned the property located in the city of Detroit which is involved in this case, executed a contract providing in part:

          "This property shall not be used or occupied by any person or persons except those of the Caucasian race.

          "It is further agreed that this restriction shall not be effective unless at least eighty percent of the property fronting on both sides of the street in the block where our land is located is subjected to this or a similar restriction."

          The agreement provided that the restrictions were to remain in effect until January 1, 1960. The contract was subsequently recorded; and similar agreements were executed with respect to eighty percent of the lots in the block in which the property in question is situated.

          By deed dated November 30, 1944, petitioners, who were found by the trial court to be Negroes, acquired title to the property and thereupon entered into its occupancy. On January 30, 1945, respondents, as owners of property subject to the terms of the restrictive agreement, brought suit against petitioners in the Circuit Court of Wayne County. After a hearing, the court entered a decree directing petitioners to move from the property within ninety days. Petitioners were further enjoined and restrained from using or occupying the premises in the future. On appeal, the Supreme Court of Michigan affirmed, deciding adversely to petitioners' contentions that they had been denied rights protected by the Fourteenth Amendment.3

          Petitioners have placed primary reliance on their contentions, first raised in the state courts, that judicial enforcement of the restrictive agreements in these cases has violated rights guaranteed to petitioners by the Fourteenth Amendment of the Federal Constitution and Acts of Congress passed pursuant to that Amendment.4 Specifically, petitioners urge that they have been denied the equal protection of the laws, deprived of property without due process of law, and have been denied privileges and immunities of citizens of the United States. We pass to a consideration of those issues.

I.

          Whether the equal protection clause of the Fourteenth Amendment inhibits judicial enforcement by state courts of restrictive covenants based on race or color is a question which this Court has not heretofore been called upon to consider. Only two cases have been decided by this Court which in any way have involved the enforcement of such agreements. The first of these was the case of Corrigan v. Buckley, 1926, 271 U.S. 323, 46 S.Ct. 521, 70 L.Ed. 969. There, suit was brought in the courts of the District of Columbia to enjoin a threatened violation of certain restrictive covenants relating to lands situated in the city of Washington. Relief was granted, and the case was brought here on appeal. It is apparent that that case, which had originated in the federal courts and involved the enforcement of covenants on land located in the District of Columbia, could present no issues under the Fourteenth Amendment; for that Amendment by its terms applies only to the States. Nor was the question of the validity of court enforcement of the restrictive covenants under the Fifth Amendment properly before the Court, as the opinion of this Court specifically recognizes.5 The only constitutional issue which the appellants had raised in the lower courts, and hence the only constitutional issue before this Court on appeal, was the validity of the covenant agreements as such. This Court concluded that since the inhibitions of the constitutional provisions invoked apply only to governmental action, as contrasted to action of private individuals, there was no showing that the covenants, which were simply agreements between private property owners, were invalid. Accordingly, the appeal was dismissed for want of a substantial question. Nothing in the opinion of this Court, therefore, may properly be regarded as an adjudication on the merits of the constitutional issues presented by these cases, which raise the question of the validity, not of the private agreements as such, but of the judicial enforcement of those agreements.

          The second of the cases involving racial restrictive covenants was Hansberry v. Lee, 1940, 311 U.S. 32, 61 S.Ct. 115, 85 L.Ed. 22, 132 A.L.R. 741. In that case, petitioners, white property owners, were enjoined by the state courts from violating the terms of a restrictive agreement. The state Supreme Court had held petitioners bound by an earlier judicial determination, in litigation in which petitioners were not parties, upholding the validity of the restrictive agreement, although, in fact, the agreement had not been signed by the number of owners necessary to make it effective under state law. This Court reversed the judgment of the state Supreme Court upon the ground that petitioners had been denied due process of law in being held estopped to challenge the validity of the agreement on the theory, accepted by the state court, that the earlier litigation, in which petitioners did not participate, was in the nature of a class suit. In arriving at its result, this Court did not reach the issues presented by the cases now under consideration.

          It is well, at the outset, to scrutinize the terms of the restrictive agreements involved in these cases. In the Missouri case, the covenant declares that no part of the affected property shall be (355 Mo. 814, 198 S.W.2d 681) "occupied by any person not of the Caucasian race, it being intended hereby to restrict the use of said property * * * against the occupancy as owners or tenants of any portion of said property for resident or other purpose by people of the Negro or Mongolian Race." Not only does the restriction seek to proscribe use and occupancy of the affected properties by members of the excluded class, but as construed by the Missouri courts, the agreement requires that title of any person who uses his property in violation of the restriction shall be divested. The restriction of the covenant in the Michigan case seeks to bar occupancy by persons of the excluded class. It provides that (316 Mich. 614, 25 N.W.2d 642) "This property shall not be used or occupied by any person or persons except those of the Caucasian race."

          It should be observed that these covenants do not seek to proscribe any particular use of the affected properties. Use of the properties for residential occupancy, as such, is not forbidden. The restrictions of these agreements, rather, are directed toward a designated class of persons and seek to determine who may and who may not own or make use of the properties for residential purposes. The excluded class is defined wholly in terms of race or color; "simply that and nothing more."6

            It cannot be doubted that among the civil rights intended to be protected from discriminatory state action by the Fourteenth Amendment are the rights to acquire, enjoy, own and dispose of property. Equality in the enjoyment of property rights was regarded by the framers of that Amendment as an essential pre-condition to the realization of other basic civil rights and liberties which the Amendment was intended to guarantee.7 Thus, § 1978 of the Revised Statutes, derived from § 1 of the Civil Rights Act of 1866 which was enacted by Congress while the Fourteenth Amendment was also under consideration,8 provides:

          "All citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property."9

          This Court has given specific recognition to the same principle. Buchanan v. Warley, 1917, 245 U.S. 60, 38 S.Ct. 16, 62 L.Ed. 149, L.R.A. 1918C, 210, Ann.Cas. 1918A, 1201.

          It is likewise clear that restrictions on the right of occupancy of the sort sought to be created by the private agreements in these cases could not be squared with the requirements of the Fourteenth Amendment if imposed by state statute or local ordinance. We do not understand respondents to urge the contrary. In the case of Buchanan v. Warley, supa, a unanimous Court declared unconstitutional the provisions of a city ordinance which denied to colored persons the right to occupy houses in blocks in which the greater number of houses were occupied by white persons, and imposed similar restrictions on white persons with respect to blocks in which the greater number of houses were occupied by colored persons. During the course of the opinion in that case, this Court stated: "The Fourteenth Amendment and these statutes enacted in furtherance of its purpose operate to qualify and entitle a colored man to acquire property without state legislation discriminating against him solely because of color."10

          In Harmon v. Tyler, 1927, 273 U.S. 668, 47 S.Ct. 471, 71 L.Ed. 831, a unanimous court, on the authority of Buchanan v. Warley, supra, declared invalid an ordinance which forbade any Negro to establish a home on any property in a white community or any white person to establish a home in a Negro community, "except on the written consent of a majority of the persons of the opposite race inhabiting such community or portion of the City to be affected."

          The precise question before this Court in both the Buchanan and Harmon cases involved the rights of white sellers to dispose of their properties free from restrictions as to potential purchasers based on considerations of race or color. But that such legislation is also offensive to the rights of those desiring to acquire and occupy property and barred on grounds of race or color, is clear, not only from the language of the opinion in Buchanan v. Warley, supra, but from this Court's disposition of the case of City of Richmond v. Deans, 1930, 281 U.S. 704, 50 S.Ct. 407, 74 L.Ed. 1128. There, a Negro, barred from the occupancy of certain property by the terms of an ordinance similar to that in the Buchanan case, sought injunctive relief in the federal courts to enjoin the enforcement of the ordinance on the grounds that its provisions violated the terms of the Fourteenth Amendment. Such relief was granted, and this Court affirmed, finding the citation of Buchanan v. Warley, supra, and Harmon v. Tyler, supra, sufficient to support its judgment.11

          But the present cases, unlike those just discussed, do not involve action by state legislatures or city councils. Here the particular patterns of discrimination and the areas in which the restrictions are to operate, are determined, in the first instance, by the terms of agreements among private individuals. Participation of the State consists in the enforcement of the restrictions so defined. The crucial issue with which we are here confronted is whether this distinction removes these cases from the operation of the prohibitory provisions of the Fourteenth Amendment.

          Since the decision of this Court in the Civil Rights Cases, 1883, 109 U.S. 3, 3 S.Ct. 18, 27 L.Ed. 835, the principle has become firmly embedded in our constitutional law that the action inhibited by the first section of the Fourteenth Amendment is only such action as may fairly be said to be that of the States. That Amendment erects no shield against merely private conduct, however discriminatory or wrongful.12

          We conclude, therefore, that the restrictive agreements standing alone cannot be regarded as a violation of any rights guaranteed to petitioners by the Fourteenth Amendment. So long as the purposes of those agreements are effectuated by voluntary adherence to their terms, it would appear clear that there has been no action by the State and the provisions of the Amendment have not been violated. Cf. Corrigan v. Buckley, supra.

          But here there was more. These are cases in which the purposes of the agreements were secured only by judicial enforcement by state courts of the restrictive terms of the agreements. The respondents urge that judicial enforcement of private agreements does not amount to state action; or, in any event, the participation of the State is so attenuated in character as not to amount to state action within the meaning of the Fourteenth Amendment. Finally, it is suggested, even if the States in these cases may be deemed to have acted in the constitutional sense, their action did not deprive petitioners of rights guaranteed by the Fourteenth Amendment. We move to a consideration of these matters.

II.

          That the action of state courts and of judicial officers in their official capacities is to be regarded as action of the State within the meaning of the Fourteenth Amendment, is a proposition which has long been established by decisions of this Court. That principle was given expression in the earliest cases involving the construction of the terms of the Fourteenth Amendment. Thus, in Commonwealth of Virginia v. Rives, 1880, 100 U.S. 313, 318, 25 L.Ed. 667, this Court stated: "It is doubtless true that a State may act through different agencies,—either by its legislative, its executive, or its judicial authorities; and the prohibitions of the amendment extend to all action of the State denying equal protection of the laws, whether it be action by one of these agencies or by another." In Ex parte Commonwealth of Virginia, 1880, 100 U.S. 339, 347, 25 L.Ed. 676, the Court observed: "A State acts by its legislative, its executive, or its judicial authorities. It can act in no other way." In the Civil Rights Cases, 1883, 109 U.S. 3, 11, 17, 3 S.Ct. 18, 21, 27 L.Ed. 835, this Court pointed out that the Amendment makes void "state action of every kind" which is inconsistent with the guaranties therein contained, and extends to manifestations of "state authority in the shape of laws, customs, or judicial or executive proceedings." Language to like effect is employed no less than eighteen times during the course of that opinion. 13

          Similar expressions, giving specific recognition to the fact that judicial action is to be regarded as action on the State for the purposes of the Fourteenth Amendment, are to be found in numerous cases which have been more recently decided. In Twining v. New Jersey, 1908, 211 U.S. 78, 90, 91, 29 S.Ct. 14, 16, 53 L.Ed. 97, the Court said: "The judicial act of the highest court of the state, in authoritatively construing and enforcing its laws, is the act of the state." In Brinkerhoff-Faris Trust & Savings Co. v. Hill, 1930, 281 U.S. 673, 680, 50 S.Ct. 451, 454, 74 L.Ed. 1107, the Court, through Mr. Justice Brandeis, stated: "The federal guaranty of due process extends to state action through its judicial as well as through its legislative, executive, or administrative branch of government." Further examples of such declarations in the opinions of this Court are not lacking.14

          One of the earliest applications of the prohibitions contained in the Fourteenth Amendment to action of state judicial officials occurred in cases in which Negroes had been excluded from jury service in criminal prosecutions by reason of their race or color. These cases demonstrate, also, the early recognition by this Court that state action in violation of the Amendment's provisions is equally repugnant to the constitutional commands whether directed by state statute or taken by a judicial official in the absence of statute. Thus, in Strauder v. West Virginia, 1880, 100 U.S. 303, 25 L.Ed. 664, this Court declared invalid a state statute restricting jury service to white persons as amounting to a denial of the equal protection of the laws to the colored defendant in that case. In the same volume of the reports, the Court in Ex parte Virginia, supra, held that a similar discrimination imposed by the action of a state judge denied rights protected by the Amendment, despite the fact that the language of the state statute relating to jury service contained no such restrictions.

          The action of state courts in imposing penalties or depriving parties of other substantive rights without providing adequate notice and opportunity to defend, has, of course, long been regarded as a denial of the due process of law guaranteed by the Fourteenth Amendment. Brinkerhoff-Faris Trust & Savings Co. v. Hill, supra. Cf. Pennoyer v. Neff, 1878, 95 U.S. 714, 24 L.Ed. 565.15

          In numerous cases, this Court has reversed criminal convictions in state courts for failure of those courts to provide the essential ingredients of a fair hearing. Thus it has been held that convictions obtained in state courts under the domination of a mob are void. Moore v. Dempsey, 1923, 261 U.S. 86, 43 S.Ct. 265, 67 L.Ed. 543. And see Frank v. Mangum, 1915, 237 U.S. 309, 35 S.Ct. 582, 59 L.Ed. 969. Convictions obtained by coerced confessions,16 by the use of perjured testimony known by the prosecution to be such,17 or without the effective assistance of counsel,18 have also been held to be exertions of state authority in conflict with the fundamental rights protected by the Fourteenth Amendment.

          But the examples of state judicial action which have been held by this Court to violate the Amendment's commands are not restricted to situations in which the judicial proceedings were found in some manner to be procedurally unfair. It has been recognized that the action of state courts in enforcing a substantive common-law rule formulated by those courts, may result in the denial of rights guaranteed by the Fourteenth Amendment, even though the judicial proceedings in such cases may have been in complete accord with the most rigorous conceptions of procedural due process.19 Thus, in American Federation of Labor v. Swing, 1941, 312 U.S. 321, 61 S.Ct. 568, 85 L.Ed. 855, enforcement by state courts of the common-law policy of the State, which resulted in the restraining of peaceful picketing, was held to be state action of the sort prohibited by the Amendment's guaranties of freedom of discussion. 20 In Cantwell v. Connecticut, 1940, 310 U.S. 296, 60 S.Ct. 900, 84 L.Ed. 1213, 128 A.L.R. 1352, a conviction in a state court of the common-law crime of breach of the peace was, under the circumstances of the case, found to be a violation of the Amendment's commands relating to freedom of religion. In Bridges v. California, 1941, 314 U.S. 252, 62 S.Ct. 190, 86 L.Ed. 192, 159 A.L.R. 1346, enforcement of the state's common-law rule relating to contempts by publication was held to be state action inconsistent with the prohibitions of the Fourteenth Amendment.21 And cf. Chicago, B. & Q.R. Co. v. Chicago, 1897, 166 U.S. 226, 17 S.Ct. 581, 41 L.Ed. 979.

          The short of the matter is that from the time of the adoption of the Fourteenth Amendment until the present, it has been the consistent ruling of this Court that the action of the States to which the Amendment has reference, includes action of state courts and state judicial officials. Although, in construing the terms of the Fourteenth Amendment, differences have from time to time been expressed as to whether particular types of state action may be said to offend the Amendment's prohibitory provisions, it has never been suggested that state court action is immunized from the operation of those provisions simply because the act is that of the judicial branch of the state government.

III.

          Against this background of judicial construction, extending over a period of some three-quarters of a century, we are called upon to consider whether enforcement by state courts of the restrictive agreements in these cases may be deemed to be the acts of those States; and, if so, whether that action has denied these petitioners the equal protection of the laws which the Amendment was intended to insure.

          We have no doubt that there has been state action in these cases in the full and complete sense of the phrase. The undisputed facts disclose that petitioners were willing purchasers of properties upon which they desired to establish homes. The owners of the properties were willing sellers; and contracts of sale were accordingly consummated. It is clear that but for the active intervention of the state courts, supported by the full panoply of state power, petitioners would have been free to occupy the properties in question without restraint.

          These are not cases, as has been suggested, in which the States have merely abstained from action, leaving private individuals free to impose such discriminations as they see fit. Rather, these are cases in which the States have made available to such individuals the full coercive power of government to deny to petitioners, on the grounds of race or color, the enjoyment of property rights in premises which petitioners are willing and financially able to acquire and which the grantors are willing to sell. The difference between judicial enforcement and nonenforcement of the restrictive covenants is the difference to petitioners between being denied rights of property available to other members of the community and being accorded full enjoyment of those rights on an equal footing.

          The enforcement of the restrictive agreements by the state courts in these cases was directed pursuant to the common-law policy of the States as formulated by those courts in earlier decisions.22 In the Missouri case, enforcement of the covenant was directed in the first instance by the highest court of the State after the trial court had determined the agreement to be invalid for want of the requisite number of signatures. In the Michigan case, the order of enforcement by the trial court was affirmed by the highest state court.23 The judicial action in each case bears the clear and unmistakable imprimatur of the State. We have noted that previous decisions of this Court have established the proposition that judicial action is not immunized from the operation of the Fourteenth Amendment simply because it is taken pursuant to the state's common-law policy.24 Nor is the Amendment ineffective simply because the particular pattern of discrimination, which the State has enforced, was defined initially by the terms of a private agreement. State action, as that phrase is understood for the purposes of the Fourteenth Amendment, refers to exertions of state power in all forms. And when the effect of that action is to deny rights subject to the protection of the Fourteenth Amendment, it is the obligation of this Court to enforce the constitutional commands.

          We hold that in granting judicial enforcement of the restrictive agreements in these cases, the States have denied petitioners the equal protection of the laws and that, therefore, the action of the state courts cannot stand. We have noted that freedom from discrimination by the States in the enjoyment of property rights was among the basic objectives sought to be effectuated by the framers of the Fourteenth Amendment. That such discrimination has occurred in these cases is clear. Because of the race or color of these petitioners they have been denied rights of ownership or occupancy enjoyed as a matter of course by other citizens of different race or color.25 The Fourteenth Amendment declares "that all persons, whether colored or white, shall stand equal before the laws of the States, and, in regard to the colored race, for whose protection the amendment was primarily designed, that no discrimination shall be made against them by law because of their color."26 Strauder v. West Virginia, supra, 100 U.S. at 307, 25 L.Ed. 664. Only recently this Court has had occasion to declare that a state law which denied equal enjoyment of property rights to a designated class of citizens of specified race and ancestry, was not a legitimate exercise of the state's police power but violated the guaranty of the equal protection of the laws. Oyama v. California, 1948, 332 U.S. 633, 68 S.Ct. 269. Nor may the discriminations imposed by the state courts in these cases be justified as proper exertions of state police power.27 Cf. Buchanan v. Warley, supra.

          Respondents urge, however, that since the state courts stand ready to enforce restrictive covenants excluding white persons from the ownership or occupancy of property covered by such agreements, enforcement of covenants excluding colored persons may not be deemed a denial of equal protection of the laws to the colored persons who are thereby affected.28 This contention does not bear scrutiny. The parties have directed our attention to no case in which a court, state or federal, has been called upon to enforce a covenant excluding members of the white majority from ownership or occupancy of real property on grounds of race or color. But there are more fundamental considerations. The rights created by the first section of the Fourteenth Amendment are, by its terms, guaranteed to the individual. The rights established are personal rights.29 It is, therefore, no answer to these petitioners to say that the courts may also be induced to deny white persons rights of ownership and occupancy on grounds of race or color. Equal protection of the laws is not achieved through indiscriminate imposition of inequalities.

          Nor do we find merit in the suggestion that property owners who are parties to these agreements are denied equal protection of the laws if denied access to the courts to enforce the terms of restrictive covenants and to assert property rights which the state courts have held to be created by such agreements. The Constitution confers upon no individual the right to demand action by the State which results in the denial of equal protection of the laws to other individuals. And it would appear beyond question that the power of the State to create and enforce property interests must be exercised within the boundaries defined by the Fourteenth Amendment. Cf. Marsh v. Alabama, 1946, 326 U.S. 501, 66 S.Ct. 276, 90 L.Ed. 265.

          The problem of defining the scope of the restrictions which the Federal Constitution imposes upon exertions of power by the States has given rise to many of the most persistent and fundamental issues which this Court has been called upon to consider. That problem was foremost in the minds of the framers of the Constitution, and since that early day, has arisen in a multitude of forms. The task of determining whether the action of a State offends constitutional provisions is one which may not be undertaken lightly. Where, however, it is clear that the action of the State violates the terms of the fundamental charter, it is the obligation of this Court so to declare.

          The historical context in which the Fourteenth Amendment became a part of the Constitution should not be forgotten. Whatever else the framers sought to achieve, it is clear that the matter of primary concern was the establishment of equality in the enjoyment of basic civil and political rights and the preservation of those rights from discriminatory action on the part of the States based on considerations of race or color. Seventy-five years ago this Court announced that the provisions of the Amendment are to be construed with this fundamental purpose in mind.30 Upon full consideration, we have concluded that in these cases the States have acted to deny petitioners the equal protection of the laws guaranteed by the Fourteenth Amendment. Having so decided, we find it unnecessary to consider whether petitioners have also been deprived of property without due process of law or denied privileges and immunities of citizens of the United States.

          For the reasons stated, the judgment of the Supreme Court of Missouri and the judgment of the Supreme Court of Michigan must be reversed.

          Reversed.

          Mr. Justice REED, Mr. Justice JACKSON, and Mr. Justice RUTLEDGE took no part in the consideration or decision of these cases.

1 The trial court found that title to the property which petitioners Shelley sought to purchase was held by one Bishop, a real estate dealer, who placed the property in the name of Josephine Fitzgerald. Bishop, who acted as agent for petitioners in the purchase, concealed the fact of his ownership.

2 Kraemer v. Shelley, 1946, 355 Mo. 814, 198 S.W.2d 679.

3 Sipes v. McGhee, 1947, 316 Mich 614, 25 N.W.2d 638.

4 The first section of the Fourteenth Amendment provides: "All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws."

5 Corrigan v. Buckley, 1926, 271 U.S. 323, 330, 331, 46 S.Ct. 521, 523, 524, 70 L.Ed. 969.

6 Buchanan v. Warley, 1917, 245 U.S. 60, 73, 38 S.Ct. 16, 18, 62 L.Ed. 149, L.R.A. 1918C, 210, Ann.Cas. 1918A, 1201.

7. Slaughter-House Cases, 1873, 16 Wall. 36, 70, 81, 21 L.Ed. 394. See Flack, The Adoption of the Fourteenth Amendment.

8 In Oyama v. California, 1948, 332 U.S. 633, 640, 68 S.Ct. 269, 272, the section of the Civil Rights Act herein considered is described as the federal statute, "enacted before the Fourteenth Amendment but vindicated by it." The Civil Rights Act of 1866 was reenacted in § 18 of the Act of May 31, 1870, subsequent to the adoption of the Fourteenth Amendment. 16 Stat. 144.

9 14 Stat. 27, 8 U.S.C. § 42, 8 U.S.C.A. § 42.

10 Buchanan v. Warley, 1917, 245 U.S. 60, 79, 38 S.Ct. 16, 62 L.Ed. 149, L.R.A. 1918C, 210, Ann.Cas. 1918A, 1201.

11 Courts of Georgia, Maryland, North Carolina, Oklahoma, Texas, and Virginia have also declared similar statutes invalid discussed, do not involve action by state Amendment. Glover v. Atlanta, 1918, 148 Ga. 285, 96 S.E. 562; Jackson v. State, 1918, 132 Md. 311, 103 A. 910; Clinard v. Winston-Salem, 1940, 217 N.C. 119, 6 S.E.2d 867, 126 A.L.R. 634; Allen v. Oklahoma City, 1936, 175 Okl. 421, 52 P.2d 1054; Liberty Annex Corp. v. Dallas, Tex.Civ.App. 1927, 289 S.W. 1067; Irvine v. Clifton Forge, 1918, 124 Va. 781, 97 S.E. 310.

12 And see United States v. Harris, 1883, 106 U.S. 629, 1 S.Ct. 601, 27 L.Ed. 290; United States v. Cruikshank, 1876, 92 U.S. 542, 23 L.Ed. 588.

13 Among the phrases appearing in the opinion are the following: "the operation of state laws, and the action of state officers, executive or judicial"; "state laws and state proceedings"; "state law * * * or some state action through its officers or agents"; "state laws and acts done under state authority"; "state laws or state action of some kind"; "such laws as the states may adopt or enforce"; "such acts and proceedings as the states may commit or take"; "state legislation or action"; "state law or state authority."

14 Neal v. Delaware, 1881, 103 U.S. 370, 397, 26 L.Ed. 567; Scott v. McNeal, 1894, 154 U.S. 34, 45, 14 S.Ct. 1108, 1112, 38 L.Ed. 896; Chicago , B. & Q.R. Co. v. Chicago, 1897, 166 U.S. 226, 233—235, 17 S.Ct. 581, 583, 584, 41 L.Ed. 979; Hovey v. Elliott, 1897, 167 U.S. 409, 417, 418, 17 S.Ct. 841, 844, 42 L.Ed. 215; Carter v. Texas, 1900, 177 U.S. 442, 447, 20 S.Ct. 687, 689, 44 L.Ed. 839; Martin v. Texas, 1906, 200 U.S. 316, 319, 26 S.Ct. 338, 50 L.Ed. 497; Raymond v. Chicago Union Traction Co., 1907, 207 U.S. 20, 35, 36, 28 S.Ct. 7, 12, 52 L.Ed. 78, 12 Ann.Cas. 757; Home Telephone and Telegraph Co. v. Los Angeles, 1913, 227 U.S. 278, 286, 287, 33 S.Ct. 312, 314, 57 L.Ed. 510; Prudential Ins. Co. v. Cheek, 1922, 259 U.S. 530, 548, 42 S.Ct. 516, 524, 66 L.Ed. 1044, 27 A.L.R. 27; American Ry. Exp. Co. v. Kentucky, 1927, 273 U.S. 269, 274, 47 S.Ct. 353, 355, 71 L.Ed. 639; Mooney v. Holohan, 1935, 294 U.S. 103, 112, 113, 55 S.Ct. 340, 341, 342, 79 L.Ed. 791, 98 A.L.R. 406; Hansberry v. Lee, 1940, 311 U.S. 32, 41, 61 S.Ct. 115, 117, 85 L.Ed. 22, 132 A.L.R. 741.

15 And see Standard Oil Co. v. Missouri, 1912, 224 U.S. 270, 281, 282, 32 S.Ct. 406, 409, 56 L.Ed. 760, Ann.Cas. 1913D, 936; Hansberry v. Lee, 1940, 311 U.S. 32, 61 S.Ct. 115, 85 L.Ed. 22, 132 A.L.R. 741.

16 Brown v. Mississippi, 1936, 297 U.S. 278, 56 S.Ct. 461, 80 L.Ed. 682; Chambers v. Florida, 1940, 309 U.S. 227, 60 S.Ct. 472, 84 L.Ed. 716; Ashcraft v. Tennessee, 1944, 322 U.S. 143, 64 S.Ct. 921, 88 L.Ed. 1192; Lee v. Mississippi, 1948, 332 U.S. 742, 68 S.Ct. 300.

17 See Mooney v. Holohan, 1935, 294 U.S. 103, 55 S.Ct. 340, 79 L.Ed. 791, 98 A.L.R. 406; Pyle v. Kansas, 1942, 317 U.S. 213, 63 S.Ct. 177, 87 L.Ed. 214.

18 Powell v. Alabama, 1932, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158, 84 A.L.R. 527; Williams v. Kaiser, 1945, 323 U.S. 471, 65 S.Ct. 363, 89 L.Ed. 398; Tomkins v. Missouri, 1945, 323 U.S. 485, 65 S.Ct. 370, 89 L.Ed. 407; DeMeerleer v. Michigan, 1947 329 U.S. 663, 67 S.Ct. 596.

19 In applying the rule of Erie R. Co. v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 144 A.L.R. 1487, it is clear that the common-law rules enunciated by state courts in judicial opinions are to be regarded as a part of the law of the State.

20 And see Bakery Drivers Local v. Wohl, 1942, 315 U.S. 769, 62 S.Ct. 816, 86 L.Ed. 1178; Cafeteria Employees Union v. Angelos, 1943, 320 U.S. 293, 64 S.Ct. 126, 88 L.Ed. 58.

21 And see Pennekamp v. Florida, 1946, 328 U.S. 331, 66 S.Ct. 1029, 90 L.Ed. 1295; Craig v. Harney, 1947, 331 U.S. 367, 67 S.Ct. 1249.

22 See Swain v. Maxwell, 1946, 355 Mo. 448, 196 S.W.2d 780; Koehler v. Rowland, 1918, 275 Mo. 573, 205 S.W. 217, 9 A.L.R. 107. See also Parmalee v. Morris, 1922, 218 Mich. 625, 188 N.W. 330, 38 A.L.R. 1180. Cf. Porter v. Barrett, 1925, 233 Mich. 373, 206 N.W. 532, 42 A.L.R. 1267.

23 Cf. Home Telephone and Telegraph Co. v. Los Angeles, 1913, 227 U.S. 278, 33 S.Ct. 312, 57 L.Ed. 510; Raymond v. Chicago Union Traction Co., 1907, 207 U.S. 20, 28 S.Ct. 7, 52 L.Ed. 78, 12 Ann.Cas. 757.

24 Bridges v. California, 1941, 314 U.S. 252, 62 S.Ct. 190, 86 L.Ed. 192, 159 A.L.R. 1346; American Federation of Labor v. Swing, 1941, 312 U.S. 321, 61 S.Ct. 568, 85 L.Ed. 855.

25 See Yick Wo v. Hopkins, 1886, 118 U.S. 356, 6 S.Ct. 1064, 30 L.Ed. 220; Strauder v. West Virginia, 1880, 100 U.S. 303, 25 L.Ed. 664; Truax v. Raich, 1915, 239 U.S. 33, 36 S.Ct. 7, 60 L.Ed. 131, L.R.A.1916D, 545, Ann.Cas.1917B, 283.

26 Restrictive agreements of the sort involved in these case have been used to exclude other than Negroes from the ownership or occupancy of real property. We are informed that such agreements have been directed against Indians, Jews, Chinese, Japanese, Mexicans, Hawaiians, Puerto Ricans, and Filipinos, among others.

27 See Bridges v. California, 1941, 314 U.S. 252, 261, 62 S.Ct. 190, 193, 86 L.Ed. 192, 159 A.L.R. 1346; Cantwell v. Connecticut, 1940, 310 U.S. 296, 307, 308, 60 S.Ct. 900, 905, 84 L.Ed. 1213, 128 A.L.R. 1352.

28 It should be observed that the restrictions relating to residential occupancy contained in ordinances involved in the Buchanan, Harmon and Deans cases, cited supra, and declared by this Court to be inconsistent with the requirements of the Fourteenth Amendment, applied equally to white persons and Negroes.

29 McCabe v. Atchison, Topeka & Santa Fe R. Co., 1914, 235 U.S. 151, 161—162, 35 S.Ct. 69, 71, 59 L.Ed. 169; Missouri ex rel. Gaines v. Canada, 1938, 305 U.S. 337, 59 S.Ct. 232, 83 L.Ed. 208; Oyama v. California, 1948, 332 U.S. 633, 68 S.Ct. 269.

30 Slaughter-House Cases, 1873, 16 Wall 36, 81, 21 L.Ed. 394; Strauder v. West Virginia, 1880, 100 U.S. 303, 25 L.Ed. 664. See Flack, The Adoption of the Fourteenth Amendment.

8.2.2 Clark v. Universal Builders, Inc. 8.2.2 Clark v. Universal Builders, Inc.

Sidney CLARK and Julia Clark et al., Plaintiffs-Appellants, v. UNIVERSAL BUILDERS, INC., et al., Defendants-Appellees.

No. 72-1655.

United States Court of Appeals, Seventh Circuit.

Argued Oct. 24, 1973.

Decided July 26, 1974.

Certiorari Denied Dec. 16, 1974.

See 95 S.Ct. 657.

*326Ronald S. Samuels, Thomas J. Boodell, Jr., Thomas P. Sullivan, and John C. Tucker, Chicago, 111., for plaintiffs-appellants.

Burton Y. Weitzenfeld, Chicago, 111., for defendants-appellees.

*327William J. McNally, Chicago, 111., for amicus curiae.

Before SWYGERT, Chief Judge, SPRECHER, Circuit Judge, and GRANT, Senior District Judge.*

SWYGERT, Chief Judge.

This appeal is from a grant of a directed verdict for defendants at the close of the plaintiffs’ case in chief. Plaintiffs are a class of black citizens who purchased newly constructed houses in Chicago from defendants under land installment contracts during the period from 1958 to 1968. Defendants include the building contractor of the houses and the various land companies through which the houses were sold to plaintiffs.1 In the district court plaintiffs claimed that as a result of intense racial discrimination in Chicago and its, metropolitan area there existed at all pertinent times a housing market for whites and a separate housing market for blacks, the latter confined to a relatively small geographical area in the central city. Plaintiffs contended that the demand among blacks for housing • greatly exceeded the supply of housing available in the black market and that the defendants exploited this situation by building houses in or adjacent to black areas and selling the houses to plaintiffs at prices far in excess of the amounts which white persons paid for comparable " residences in neighboring urban areas, and on onerous terms far less favorable than those available to white buyers of similar properties, all in violation of plaintiffs’ rights under the Thirteenth and Fourteenth Amendments and under the Civil Rights Act of 1866.2 Plaintiffs’ exploitation theory of liability was sustained by District Judge Hubert Will as stating a claim for relief under section 1982 of the Civil Rights Act of 1866. Accordingly, Judge Will denied defendants’ motion to dismiss plaintiffs’ complaint. Contract Buyers League v. F & F Investment, 300 F.Supp. 210 (1969), aff’d on other grounds, 420 F.2d 1191 (7th Cir. 1970), cert. denied, Universal Builders, Inc. v. Clark, 400 U.S. 821, 91 S.Ct. 40, 27 L.Ed.2d 49 (1970). The case then went to trial before District Judge Joseph Sam Perry, and plaintiffs, pursuant to Judge Will’s approval of their exploitation theory of liability under section 1982, presented evidence before a jury of defendants’ alleged exploitation of the discriminatory housing situation prevalent in Chicago during the period 1958 through 1968. Upon completion of plaintiffs’ case in chief, Judge Perry granted defendants’ motion for directed verdict, holding in opposition to Judge Will’s theory of the case that:

[Cjounsel for the plaintiffs have not painted a pretty picture of the defendants, but that picture is a picture of exploitation for profit, and not racial discrimination.
* . * * * * *
Nowhere in the six weeks’ trial is there one scintilla of evidence that the defendants or any of them or their agents ever refused to sell to a white person or a black person or a nonwhite person any house or refused to sell one or the other at a higher or lower price, absolutely no positive evidence of discrimination in this record.
-X- •* -X* * *x* #
Accordingly, for want of any evidence in support of the complaint, the motion for a directed verdict by all of *328the defendants now on trial is hereby granted, and the complaint of all of the plaintiffs is hereby dismissed as to all of the defendants.

Under Judge Perry’s theory of the case, absent evidence of defendants’ sales of the same or similar housing to whites on more favorable terms and prices, namely, the traditional theory of racial discrimination, plaintiffs failed to make out a case of liability under section 1982.

Plaintiffs raise numerous issues in this appeal the most important of which of course is the correctness of the grant of a directed verdict for the defendants. The other issues can broadly be categorized as challenges to the correctness of certain of the trial judge’s evidentiary rulings and other procedural rulings.

In judging the propriety of the grant of the directed verdict, we are confronted with two issues. We must first resolve the conflict as to the scope of section 1982. That is, we must determine whether section 1982 covers only the so-called traditional type of discriminatory conduct, or whether a claim may be stated under section 1982 by proof of exploitation of a discriminatory situation already existing and created in the first instance by the action of persons other than defendants. If we determine that section 1982 is violated under the latter theory we then must determine whether the evidence, both the admitted evidence and erroneously excluded evidence, when viewed in the light most favorable to plaintiffs, together with all inferences that may be reasonably drawn therefrom, is such that it can be found that plaintiffs have made out a prima facie case.

I

Section 1982 of the Civil Rights Act of 1866 provides:

All citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property.3

Plaintiffs’ “exploitation” theory of liability under this section can briefly be restated as follows: As a result of racial discrimination there existed two housing markets in Chicago, one for whites and another for blacks, with the supply of housing available in the black market far less than the demand. Defendants entered the black market selling homes for prices far in excess of their fair market value and far in excess of prices which whites pay for comparable homes in the white market and on more onerous terms than whites similarly situated would encounter. Plaintiffs contend that by so acting defendants seized upon and took advantage of the opportunity created by racial residential segregation to exploit blacks in violation of section 1982.

It is asserted that to countenance such actions by the defendant would be in direct contravention of the express language of section 1982 which provides by clear implication that black citizens “shall have the same right as is enjoyed by white citizens . to . . . purchase . . . real . . . property.” Moreover, plaintiffs claim *329that a ruling which would hold defendants’ asserted acts of exploitation to be outside of the coverage of section 1982 would be contrary to the Supreme Court’s declaration in Jones v. Mayer Co., 392 U.S. 409, 443, 88 S.Ct. 2186, 2205, 20 L.Ed.2d 1189 (1968), and that section 1982 was meant to be a vehicle through which “to assure that a dollar in the hands of a Negro will purchase the same thing as a dollar in the hands of a white man.”

Defendants contend that absent a showing of the traditional form of discrimination, namely, that defendants refused to sell to blacks because of their race, or offered to sell the same houses to whites at lower prices or on more favorable terms than they offered to sell to blacks, plaintiffs have not made out a case under section 1982. Defendants assert that the houses they sold to plaintiffs in the black market were available to whites and would have been sold on the same terms and for the same prices as sales to the black plaintiffs. Therefore, defendants argue, plaintiffs enjoyed “the same right” as enjoyed by white citizens to purchase houses in the black market. Moreover, it is urged that other sellers and not defendants discriminated against plaintiffs in the first instance by refusing to sell to plaintiffs housing in other urban areas, thereby excluding them from the white market. The defendants claim that an extension of section 1982 so as to proscribe their alleged acts of exploitation would be tantamount to holding defendants liable for the discrimination of others without a showing of any discrimination by defendants. With respect to the Supreme Court’s decision in Jones v. Mayer Co., the defendants suggest that it lends no support to the plaintiffs’ desired interpretation of section 1982. Rather, defendants view Jones v. Mayer Co. as authority for their contention that section 1982 prohibits only the so-called traditional type of discrimination and does not encompass plaintiffs’ theory of exploitation liability. Also, defendants urge that plaintiffs’ interpretation of section 1982 would render that section unconstitutionally vague and would expose defendants to risk or detriment without fair warning of the nature of the proscribed conduct. It is on the basis of these arguments that defendants claim that no case can be made under section 1982 for exploitation absent a showing that defendants offered to sell the same or similar homes to whites at lower prices and on more favorable terms than they made available to blacks. We do not agree.

At the outset we note that section 1982 is framed in broad yet clear language. It provides that:

All citizens of the United States shall have the same right as is enjoyed by white citizens thereof to . purchase . . . real . property.

Facially, therefore, the scope of section 1982 would appear to be rather far reaching; indeed such a reading of the statute is supported by the Supreme Court’s interpretation of section 1982 in Jones v. Mayer Co., 392 U.S. 409, 88 S.Ct. 2186, 20 L.Ed.2d 1189 (1968). In that case the Court was confronted with questions as to the scope and constitutionality of section 1982. The plaintiff in that case, a black person, brought an action pursuant to section 1982 claiming that the defendants refused to sell him a house on the basis of his race. The district court dismissed the plaintiff’s complaint, and the court of appeals affirmed, concluding that section 1982 applied only to state action and not private action. The Supreme Court rejected the argument for a narrow construction of section 1982, holding in broad language:

[T]hat § 1982 bars all racial discrimination, private as well as public, in the sale or rental of property, and that the statute, thus construed, is a valid exercise of the power of Congress to enforce the Thirteenth Amendment. 392 U.S. 413, 88 S.Ct. 2189 [Emphasis in original].

The Court went on to note that section 1982 was an attempt by Congress to *330provide “that the right to purchase and lease property was to be enjoyed equally throughout the United States by Negro and white citizens alike” and that Congress “plainly meant to secure that right against interference from any source whatever, whether governmental or private.” 392 U.S. at 423-424, 88 S.Ct. at 2195. The Court concluded its analysis by stating that section 1982 must be accorded “ ‘a sweep as broad as its language.’ ” 392 U.S. at 437, 88 S.Ct. at 2202. Observing that “when racial discrimination herds men into ghettos and makes their ability to buy property turn on the color of their skin, then it too is a relic of slavery,” the Court proceeded to uphold the constitutionality of section 1982 stating:

Negro citizens, North and South, who saw in the Thirteenth Amendment a promise of freedom — freedom to “go and come at pleasure” and to “buy and sell when they please”— would be left with “a mere paper guarantee” if Congress were powerless to assure that a dollar in the hands of a Negro will purchase the same thing as a dollar in the hands of a white man. At the very least, the freedom that Congress is empowered to secure under the Thirteenth Amendment includes the freedom to buy whatever á white man can buy, the right to live wherever a- white man can live. If Congress cannot say that being a free man means at least this much, then the Thirteenth Amendment made a promise the Nation cannot keep. 392 U.S. 443, 88 S.Ct. 2205.

Clearly the Court’s decision in Jones v. Mayer Co. does not, contrary to defendants’ assertions, detract from plaintiffs’ contention as to the scope of section 1982. Rather, the decision is support for plaintiffs’ theory for in Jones the Court viewed section 1982 as a broad based instrument to be utilized in eliminating all discrimination and the effects thereof in the ownership of property. Accordingly, Jones v. Mayer Co. does not stand as an obstacle to plaintiffs’ case, but supports it.

Defendants insist that section 1982 cannot be construed to encompass other than the traditional type of discrimination, that is, that defendants offered to sell to whites on more favorable terms and prices than to plaintiffs. Keeping in mind the Supreme Court’s admonition in Lane v. Wilson, 307 U.S. 268, 275, 59 S.Ct. 872, 876, 83 L.Ed. 1281 (1939), that the Constitution and statutes promulgated in its enforcement nullify “sophisticated as well as simpleminded modes of discrimination,” we reject defendants’ notion of adherence to a strict, rigid, and traditional type of discrimination. We need not resort to a la-belling exercise in categorizing certain activity as discriminatory and others as not of such character for section 1982 is violated if the facts demonstrate that defendants exploited a situation created by socioeconomic forces tainted by racial discrimination. Indeed, there is no difference in results between the traditional type of discrimination and defendants’ exploitation of a discriminatory situation. Under the former situation blacks either pay excessive prices or are refused altogether from purchasing housing, while under the latter situation they encounter oppressive terms and exorbitant prices relative to the terms and prices available to white citizens for comparable housing.

To avoid this conclusion, defendants contend that even though the results obtained under both the traditional and exploitation theories ' are similar, they come about through significantly different means. Under the traditional theory a black man is dehied the “same right” as a white man in that the seller offers to sell the same house to each but at different prices and terms due to the differences in race of the prospective buyer. It is defendants’ position that they offered the plaintiffs the same terms and prices they would offer whites. Therefore it is asserted that plaintiffs had the same right as white citizens *331This argument ignores current realities of racial psychology and economic practicalities. Defendants can find no justification for their actions in a claim that they would have sold on the same terms to those whites who elected to enter the black market and to purchase housing in the ghetto and segregated inner-city neighborhoods at exorbitant prices, far in excess of prices for comparable homes in the white market. It is no answer that defendants would have exploited whites as well as blacks. To accept defendants’ contention would be tantamount to perpetuating a subterfuge behind which every slumlord and exploiter of those banished to the ghetto could hide by a simple rubric: The same property would have been sold to whites on the same terms.

Defendants urge that other sellers and not they were the active agents of discrimination. That is, blacks were excluded from the white market by other sellers who refused to sell to plaintiffs and that accordingly plaintiffs’ action lies solely against those other owners and real estate operators and not the defendants. But, we repeat, defendants cannot escape the reach of section 1982 by proclaiming that they merely took advantage of a discriminatory situation created by others. We find repugnant to the clear language and spirit of the Civil Rights Act the claim that he who exploits and preys on the discriminatory hardship of a black man occupies a more protected status than he who created the hardship in the first instance. Moreover, defendants’ actions prolong and perpetuate a system of racial residential segregation, defeating the assimilation of black citizens into full and equal participation in a heretofore all white society.4 Through the medium of exorbitant prices and severe, long-term land contract terms blacks are tied to housing in the ghetto and segregated inner-city neighborhoods from which they can only hope to escape someday without severe financial loss. By demanding prices in excess of the fair market value of a house and in excess of what whites pay for comparable housing, defendants extract from blacks resources much needed for other necessities of life, thereby reducing their standard of living and lessening their chances of escaping the vestiges of a system of slavery and oppression.5 Indeed, defendants’ activity encourages overt discrimination by others since it deflects or forestalls a frontal attack on such discrimination by offering the long-oppressed black an unattractive yet alternative choice to that of a confrontation for equal buyers’ rights in a white neighborhood.

Defendants in effect contend that this is solely a matter of economics and not. of discrimination. We cannot accept this contention for although the laws of supply and demand may function so as to establish a market level for the buyer in the black housing areas, it is clear that these laws are affected by a contrived market condition which is grounded in and fed upon by racial discrimination- — -that is, the available supply of housing is determined by the buyer’s race. In other contexts the law has prevented sellers from charging whatever the market will, bear when special circumstances have occasioned market shortages or superior bargaining posi*332tions. In such instances sellers were denied the opportunity to exploit others merely because the opportunity existed.

Contrary to the trial court’s stance, the shortage of housing here was triggered not by an economic phenomenon but by a pattern of discrimination that has no place in our society.6 Accordingly, neither prices nor profits— whether derived through well-intentioned, good-faith efforts or predatory and unethical practices — may reflect or perpetuate discrimination against black citizens. We agree with Judge Will’s statement that “there cannot in this country be markets or profits based on the color of a man’s skin.” Contract Buyers League v. F & F Investment, 300 F.Supp. 210, 216 (N.D.Ill.1969).7 Price and profit differentials between individual buyers may be justified on a multitude of grounds; for example, the prospective purchaser’s reputation or his financial position and potential earning power. But price or profit may not turn on whether the prospective buyer has dark or light pigmentation.8

Defendants urge that acceptance of plaintiffs’ asserted interpretation of section 1982 would render the statute unconstitutional and that the standards of liability utilized to deploy such an expanded interpretation would be unconstitutionally vague and indefinite. They argue that a narrow interpretation is compelled so as to sustain the constitutionality of the statute and to prevent the exposure of “a potential actor to some risk or detriment without giving him fair warning of the nature of the *333proscribed conduct.” Rowan v. Post Office Dept., 397 U.S. 728, 740, 90 S.Ct. 1484, 1492, 25 L.Ed.2d 736 (1970). Defendants’ argument misses the mark for we have not here a penal statute to be strictly construed. Rather, we have a civil statute which is remedial in nature and, as viewed by the Supreme Court, is to be accorded “ ‘. . . a sweep as. broad as its language.’ ” Jones v. Mayer Co., 392 U.S. 409, 437, 88 S.Ct. 2186, 2202, 20 L.Ed.2d 1189 (1968) citing United States v. Price, 383 U.S. 787, 801, 86 S.Ct. 1152, 16 L.Ed.2d 267 (1966).

With respect to the standard of liability upon which a violation of the statute may be predicated within the factual context here depicted, we hold that the benchmark, for guiding a seller’s conduct in the black market is reasonableness. That this is a constitutionally sufficient standard by which to gauge one’s conduct in the real estate market was long ago recognized by the Supreme Court in Levy Leasing Co. v. Siegel, 258 U.S. 242, 42 S.Ct. 289, 66 L.Ed. 595 (1922). In that case the Court held that the usage of a standard prohibiting “ . . . reserving unjust, unreasonable and oppressive” rent and terms of renting was constitutionally definite so as to satisfy the demands of due process. Commenting on the Levy Leasing Co. decision, the Court in Small Co. v. American Sugar Refining Co., 267 U.S. 233, 241-242, 45 S.Ct. 295, 298, 69 L.Ed. 589 (1925), stated:

Real property, particularly in a city, comes to have a recognized value, which is relatively stable and easily ascertained. It also comes to have a recognized rental value — the measure of compensation commonly asked and paid for its occupancy and use — the amount being fixed with due regard to what is just and reasonable between landlord and tenant in view of the value of the property and the outlay which the owner must make for taxes and other current charges. These are matters which in the course of business come to be fairly well settled and understood. A standard thus developed and accepted in actual practice, when made the test of compliance with legislative commands or prohibitions, usually meets the requirement of due process of law in point of being sufficiently definite and intelligible.

By demanding prices far in excess of a property’s fair market value and far in excess of prices for comparable housing available to white citizens the seller ventures into the realm of unreasonableness. The statute does not mandate that blacks are to be sold houses at the exact same price and on the exact same terms as are available to white citizens. Reasonable differentials due to a myriad of permissible factors can be expected and are acceptable. But the statute does now countenance the efforts of those who would exploit a discriminatory situation under the guise of artificial differences.

The practices that have befallen plaintiffs have long besieged other black citizens. In the year 1962 the United States Commission on Civil Rights recognized that:

Throughout the country large groups of American citizens — mainly Negroes, but other minorities too — are denied an equal opportunity to choose where they will live. Much of the housing market is closed to them for reasons unrelated to their ■ personal worth or ability to pay. New housing, by and large, is available only to whites. And in the restricted market that is open to them, Negroes generally must pay more for equivalent housing than do the favored majority. “The dollar in a dark hand” does not “have the same purchasing power as a dollar in a white hand.” 9

When a seller in the black market demands exorbitant prices and onerous sales terms relative to the terms and prices available to white citizens for comparable housing, it cannot be stated *334that a dollar in the hands of a black man will purchase the same thing as a dollar in the hands of a white man. Such practices render plaintiffs’ dollars less valuable than those of white citizens — a situation that was spawned by a discarded system of slavery and is nurtured by vestiges of that system. Courts in applying section 1982 must be vigilant in preventing toleration of this deplorable circumstance.

We hold accordingly that plaintiffs state a claim under section 1982 since they allege that (1) as a result of racial residential segregation dual housing markets exist and (2) defendant sellers took advantage of this situation by demanding prices and terms unreasonably in excess of prices and terms available to white citizens for comparable housing. If the plaintiffs sustain the burden of proof on these elements they make out a prima, facie case, whereupon, as recently made clear by the Supreme Court, the burden of proof shifts to the defendants “to articulate some legitimate, nondiscriminatory reason” for the price and term differential. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S.Ct. 1817, 1824, 36 L.Ed.2d 668 (1973).

II

Having determined the substantive framework upon which an action may be brought pursuant to section 1982 we address ourselves to the correctness of the directed verdict entered in favor of the defendants at the close of plaintiffs’ case in chief. Keeping in mind that we must view all the evidence, plus the reasonable inferences to be drawn therefrom, in the light most favorable to the plaintiffs, Hannigan v. Sears, Roebuck & Co., 410 F.2d 285, 287 (7th Cir.), cert. denied, 396 U.S. 902, 90 S.Ct. 214, 24 L.Ed.2d 178 (1969), we hold that the admitted evidence was sufficient to establish a prima facie case under section 1982 pursuant to the exploitation theory of liability and, accordingly, warranted submission of the issues to the jury for resolution. Moreover, we rule that on the basis of the evidence erroneously excluded by the trial judge the plaintiffs have made out a case for section 1982 liability under the so-called traditional theory of discrimination and that, therefore, a directed verdict for defendants on this separate ground was likewise improperly granted. To demonstrate the error committed we proceed to review the evidence adduced at trial.

There was sufficient evidence to establish, prima facie, the existence of dual housing markets in the Chicago metropolitan area as a result of racial residential segregation. Dr. Karl E. Taeuber, a professor of sociology, testified as an expert witness about the results of his extensive research on the dispersion of population in the city of Chicago. His statistical analysis indicated that Chicago was a highly segregated city and that there was a very high degree of reidential segregation between whites and blacks. Moreover, despite the decrease of white population in the city accompanied by a rapid increase of the black population, the supply of new housing available to whites was much greater than that available to blacks. Also, during the pertinent time period the expanding suburban housing market was limited almost completely to whites. Dr. Taeuber testified that the main obstacle to the movement of blacks into the white areas of Chicago and suburban residential areas was the high degree of discrimination against blacks in the white market. As a result the supply of housing available to whites was far greater in both absolute and relative terms to the supply of new housing available to blacks.

Plaintiffs produced additional proof concerning the existence of dual housing markets through the testimony of another expert witness, Scott Tyler, a real estate broker and appraiser with many years of experience in the real estate business in Chicago. Significantly, defendants seemingly concede the existence of a dual housing market in Chicago. Nor do we think it beyond the strictures of judicial notice to observe that there *335exists in Chicago and its environs a high degree of racial residential segregation. 10

We turn to the second element of the case, whether there was a sufficient pri-ma facie showing of an unreasonable differential in price and sale terms between the housing sold or offered by defendants to plaintiffs and comparable housing available to whites. With respect to this phase plaintiffs offered the appraisal testimony of five expert witnesses; the testimony of two, however, was excluded from the jury by the trial judge. Concerning the testimony of Scott Tyler and John Hank which the judge did allow, both witnesses utilized the market data method of appraisal in arriving at a fair market value of a sampling of plaintiffs’ homes. The fair market value appraisals were based on sales of comparable homes in all-white neighborhoods which were located in close geographical proximity to plaintiffs’ homes and had similar communal amenities such as transportation, schools, churches, and quality of neighborhood. Both witnesses testified that the comparable white housing was sold at prices substantially below the prices commanded by defendants. Expert witness Tyler’s appraisals demonstrated that on the average the contract prices charged by defendants exceeded the fair market value of the homes by $6,508, or 34.5 percent. Expert witness Hank was of the opinion that on the average defendants’ prices exceeded fair market value by $4,209, or 20.6 percent. Plaintiffs adduced additional appraisal testimony from Paul Underwood who had been an appraiser for a savings and loan association which had loaned money to one of the defendant land companies for construction of houses sold to plaintiffs. Pursuant to this financing arrangement Underwood appraised thirty of defendants’ houses for which he testified that the sales price charged by defendants, on the average, exceeded fair market value by $4,296, or 20.9 percent.11 Based on the foregoing we think a jury could reasonably reach the conclusion that defendants’ price differential was unreasonably in excess of fair market value and prices available to white citizens for comparable housing. Accordingly, there was sufficient evidence on the price differential to send the case to the jury.

Turning to the issue of the reasonableness of the sale terms differential the evidence at trial indicated that defendants refused to sell other than on land contract to plaintiffs.12 There was testimony to the .effect that defendants refused to participate in any sales *336through a deed and mortgage arrangement despite the prospective buyer’s ability to obtain mortgage financing. The evidence indicates that plaintiffs were of the equivalent economic status as many whites who routinely obtained mortgages to finance the purchase of houses and that a competing construction company in the black market sold the vast majority of its homes on deed and mortgage to blacks similarly situated economically to plaintiffs. Also, the evidence demonstrates that some plaintiffs made down payments of up to forty-five percent of the contract price— well above the amount needed to qualify for mortgages — and yet defendants refused to deal on terms other than contract.13 On the basis of this evidence it could reasonably be inferred that defendants utilized the contract method of sales to facilitate their exorbitant pricing practices14 and not because of significant differences between plaintiffs’ economic status and that of whites similarly situated who were able to utilize mortgage financing. Hence, a jury could find that the different treatment accorded plaintiffs by defendants’ sales terms was discriminatory.

Furthermore, plaintiffs offered evidence, which was erroneously excluded by the trial judge, sufficient to establish a prima, facie case pursuant to the traditional theory of discrimination. Under that theory there must be a showing of “treating, in similar circumstances, a member or members of one race different from the manner in which members of another race are treated.” Love v. DeCarlo Homes, Inc., 482 F.2d 613, 615 (5th Cir. 1973). That is, a black prospective buyer of a dwelling demonstrates discriminatory conduct if he proves that an owner utilizes different pricing policies with respect to blacks and whites similarly situated.

The proffered evidence which was rejected at trial involved the sales of new houses to white buyers in Deer-field, Illinois and Park Forest South, Illinois, both being suburban residential developments. The sellers of the houses in Deerfield were Universal Construction Company and a joint venture comprised of the Deerfield Home Development Company and Universal Builders, Inc., while the houses in Park Forest South were sold by the P. F. S. Development Company. The plaintiffs contended that these corporations were owned and managed by the same persons that owned and managed defendants and that these persons were engaged in discrimi*337natory conduct through the use of different pricing practices in Deerfield and Park Forest South from those used in pricing defendants’ houses. The trial judge excluded the evidence on two grounds: (1) the plaintiffs were not allowed to disregard the separate identities of the three corporations and (2) the lack of a basis of comparability for homes in Deerfield and Park Forest South with those of plaintiffs in Chicago. We rule that the trial court erred in excluding plaintiffs’ evidence on the Deerfield and Park Forest South pricing policies.

Defendants’ argument that the corporate formalities should not be disregarded in the context of the issues is without worth. As this court has stated, corporate formalities “may be disregarded in exceptional situations where it otherwise would present an obstacle to the due protection or enforcement of public or private rights.” Ohio Tank Car Co. v. Keith Ry. Equip. Co., 148 F.2d 4, 6 (7th Cir. 1945), cert. denied, 326 U.S. 730, 66 S.Ct. 38, 90 L.Ed. 434 (1945). In situations such as here, where common ownership and management exists, corporate formalities must not be rigidly adhered to when inquiry is made of civil rights violations. Accordingly, the objection raised by defendants presents no obstacles to the comparison of defendants’ pricing policies in Chicago with the pricing policies implemented in Deerfield and Park Forest South by the other selling organizations.

Turning to the second reason given for excluding the Deerfield and Park Forest South evidence we find that there was sufficient comparability between those operations and defendants’ sales in the relevant black market so as to render the exclusion an abuse of discretion. Factors such as geographical proximity, the date of the sale, type of construction, and materials used are factors going only to the weight to be accorded the evidence by the jury and do not go to its admissibility. See, e. g., Winston v. United States, 342 F.2d 715, 721 (9th Cir. 1965); United States v. 124.84 Acres of Land, Warrick County, Ind., 387 F.2d 912 (7th Cir. 1968). Plaintiffs met the requirement of sufficient comparability through the use of a comparative statistical analysis of accounting data reflecting defendants’ sales operations and pricing policies in Chicago with those of Deerfield and Park Forest South. We find plaintiffs’ statistical evidence to have been sufficiently competent; see United States v. Certain Interests in Property, etc., 326 F.2d 109 (2d Cir. 1964), cert. denied, 377 U.S. 978, 84 S.Ct. 1884, 12 L.Ed.2d 747 (1964), and probative of plaintiffs’ claim that defendants sold houses to blacks on price terms different from those they sold to white buyers similarly situated. Indeed, as the Eighth Circuit has stated, “statistical evidence can make a prima facie case of discrimination.” Carter v. Gallagher, 452 F.2d 315, 323 (8th Cir. 1972), cert. denied, 406 U.S. 950, 92 S.Ct. 2045, 32 L.Ed.2d 338 (1972).15

Plaintiffs’ expert witnesses testified that in the housing industry prices are established on the basis of direct costs, consisting generally of the investment in the land and the cost of construction, including materials. Once the direct costs are calculated, an allowance for overhead and profit is added to the direct costs to attain the sales price. The allowance for overhead and profit is the gross profit on sales which plaintiffs’ expert witness testimony indicated was generally found in the real estate industry to be from fifteen to nineteen per*338cent of the sales price.16 Defendants testified to the utilization of this method of pricing in their sales to plaintiffs; however, the statistical evidence presented by plaintiffs tends to refute that assertion.17

Viewing the evidence, first in absolute terms, it shows that defendants’ pricing policy in Chicago produced an average gross profit substantially in excess of that produced by the Deerfield and Park Forest South operations.18 In relative percentage terms defendants reaped a gross profit of 27.6 percent of sales, well above the industry figure of 14 to 19 percent and considerably in excess of the gross profit percentages of the Deerfield and Park Forest South operations.19 Second, analyzing the same data in terms of the mark-up of the sales price over the direct costs, it is clear that the mark-up — as a percentage of direct costs — was much higher in the sales to plaintiffs than in the sales to white buyers in Deerfield and Park Forest South.20

The statistical evidence substantiates the claim that defendant's priced plaintiffs’ houses much higher relative to direct costs than the houses sold in Deer-field and Park Forest South and belies any contention that defendants utilized *339comparable pricing policies in their sales to plaintiffs. Plaintiffs presented Dr. Richard Freeman, a Professor of Economics, who analyzed the statistical data pertaining to the difference in gross profits between defendants’ sales to plaintiffs and the suburban operations. His analysis demonstrated that the difference in pricing practices was due to the race of the buyer and not economic factors.21

In summary, it is difficult as a prima facie matter to infer that the substantial disparity between the pricing practices of defendants in the black real estate market and the pricing practices in the white market was attributable to some factor other than the race of the buyers. Whether defendants afforded plaintiffs the “same right” to purchase housing as offered white buyers was, based on the foregoing evidence, an issue to be properly submitted to the jury.

Ill

Plaintiffs also raise numerous procedural issues arising out of the course of this protracted litigation. They claim that the district court erred in: (1) denying plaintiffs’ motion to amend their complaint by adding additional defendants; (2) requiring class members affirmatively to request inclusion as plaintiffs; (3) dismissing with prejudice class members who failed to answer interrogatories or to appear for depositions; (4) the method of disposing of the second count of defendants’ amended counterclaim; and (5) erred in the assessment of costs against plaintiffs.

One month prior to when the trial was scheduled to begin and four months before its actual commencement the plaintiffs moved under Fed.R. Civ.P. 15(a) to amend their complaint adding as parties defendant certain persons who were the principal officers, directors, and shareholders of the defendants.22 The district court denied plaintiffs’ motion on the ground that it was not timely. We are not convinced that plaintiffs’ motion would have delayed the trial. Moreover, absent a showing of prejudice, a mere delay in the commencement of the action should not ordinarily operate to preclude a motion to amend the complaint. See Middle Atlantic Utilities Co. v. S. M. W. Development Co., 392 F.2d 380, 384 (2d Cir. 1968). Plaintiffs’ requested amendment would not have prejudiced the defendant corporations nor the persons sought to be added to the action as defendants. Those persons, as officers, di*340rectors, and shareholders of the closely held defendant corporations were on constructive notice of the action and indeed were active participants in it since its inception. Under these circumstances it was error to not grant plaintiffs leave to amend. See Gifford v. Wichita Falls and Southern Ry. Co., 224 F.2d 374, 376 (5th Cir. 1955), cert. denied, 350 U.S. 895, 76 S.Ct. 153, 100 L.Ed. 787 (1955).23

Plaintiffs next contend that it was error for the trial judge to require members of the plaintiff class to request inclusion in the class. Pursuant to Fed. R.Civ.P. 23, Judge Will ordered that all class members be notified that they would be included in the class unless they expressly requested exclusion. When the case came before Judge Perry a second notice was ordered to be sent to the plaintiffs advising them that unless they affirmatively requested inclusion in the class they would be excluded. It cannot be doubted that the sending of this second and conflicting notice was confusing to a class member and was an unsound practice. Moreover, the requirement of an affirmative request for inclusion in the class is contrary to the express language of Rule 23(c)(2)(B) that “the notice shall advise each member that . . . the judgment, whether favorable or not, will include all members who do not request exclusion.” In light of the confusion created by the conflicting notices and the clear language of Rule 23(c)(2)(B), the trial court erred in ordering the second notice requiring an affirmative response for inclusion. See Korn v. Franchard Corp., 456 F.2d 1206, 1210 (2d Cir. 1972). Accordingly, all members who did not request exclusion are proper parties to the judgment in this action.

Addressing ourselves to the issue of the propriety of dismissing with prejudice class members who failed to answer interrogatories or appear for; depositions, we think the district judge erred. In Brennan v. Midwestern United Life Ins. Co., 450 F.2d 999 (7th Cir. 1971), cert. denied, 405 U.S. 921, 92 S.Ct. 957, 30 L.Ed.2d. 792 (1972), we held that in appropriate circumstances absent class members may be propounded written interrogatories on a showing that the information requested is necessary to trial preparation and that the interrogatory is not designed “as a tactic to take undue advantage of the class members or as a stratagem to reduce the number of claimants.” 450 F.2d at 1005. The party seeking discovery has the burden of demonstrating its merits.

With respect to the written interrogatories propounded in the case at bar we fail to discern any attempt by the trial court in reaching á determination as to whether the information sought was necessary, or whether the interrogatories were a mere stratagem to diminish class membership. There was no showing on the merits of defendants’ request. More important, in view of the substantive nature of the questions propounded we do not believe that defendants could have met the burden of demonstrating the meritorious nature of their request.24

*341The taking of depositions of absent class members is — as is true of written interrogatories — appropriate in special circumstances. And, not unlike the use of interrogatories, the party-seeking the depositions has the burden of showing necessity and absence of any motive to take undue advantage of the class members. However, in light of the nature of the deposition process — namely, the passive litigants are required to appear for questioning and are subject to often stiff interrogation by opposing counsel with the concomitant need for counsel of their own — we are of the view that the burden confronting the party seeking deposition testimony should be more severe than that imposed on the party requesting permission to use interrogatories. The record in this action is devoid of any showing that defendants met that burden.

The plaintiffs contend that the district court erred in its disposition of the second count of defendants’ counterclaim. At the time the directed verdict for defendants was granted the district court, with defendants’ consent, ordered dismissal of defendants’ counterclaim subject to automatic reinstatement in the event plaintiffs appealed from the district court’s grant of directed verdict for defendants. Plaintiffs urge this conditional dismissal was improper and that the counterclaim should be dismissed with prejudice and without qualification.

We agree with plaintiffs that dismissal subject to reinstatement if plaintiffs appealed was a highly improper attempt at coercing plaintiffs into waiving their right to appeal and as such was error. See, e. g., Worcester v. C. I. R., 370 F.2d 713, 718 (1st Cir. 1966); North Carolina v. Pearce, 395 U.S. 711, 724, 89 S.Ct. 2072, 23 L.Ed.2d 656 (1969). In addition, the record indicates that, contrary to defendants’ assertion, plaintiffs’ objection to this conditional dismissal was timely.

Defendants’ counterclaim does not arise “out of the transaction or occurrence that is the subject matter of the opposing party’s claim . . . .” Fed.R.Civ.P. 13(a). The counterclaim invokes matters unrelated to plaintiffs’ civil rights claims, involving alleged tor-tious acts by certain of the plaintiffs which acts are claimed to have begun in 1968, post-dating the violations of plaintiffs’ civil rights by as much as ten years. Therefore the counterclaim was permissive under Fed.R.Civ.P. 13(b), rather than compulsory and as such must be supported by federal subject matter jurisdiction independent of the jurisdiction supporting plaintiffs’ complaint. Diamond v. Terminal Railway Alabama State Docks, 421 F.2d 228, 235-236 (5th Cir. 1970). There is here no discernible independent federal jurisdiction over defendants’ proffered counterclaim ; accordingly it should have been dismissed with prejudice.

Lastly, plaintiffs take issue with the trial judge’s statement on assessment of costs:

I am taking the matter of apportioning costs under advisement. If there is no appeal, I expect to order each of the parties to bear their own respective costs. If there is an appeal, I will enter the order as I see fit, in accordance with the law.

In response to an inquiry by plaintiffs’ counsel, the trial judge commented that, “there would be no costs assessed against those who do not appeal.”

Although the district court has discretionary power to assess costs, the action it took was improper and clearly an abuse of discretion. As we previously indicated, any attempt by a court at preventing an appeal is unwarranted and cannot be tolerated. The *342separate order of the district court on costs is reversed and, pursuant to Fed.R.Civ.P. 54(d), each side is directed to bear its own costs.

We reverse the judgment of the district court and remand for a new trial under Circuit Rule 23.

8.2.3 Girard v. 94th St & Fifth Ave Corp 8.2.3 Girard v. 94th St & Fifth Ave Corp

Barbara GIRARD, Plaintiff-Appellant, v. 94TH STREET AND FIFTH AVENUE CORPORATION et al., Defendants-Appellees.

No. 372, Docket 75-7443.

United States Court of Appeals, Second Circuit.

Argued Oct. 1, 1975.

Decided Jan. 13, 1976.

Certiorari Denied May 19, 1976.

See 96 S.Ct. 2173.

Oakes, Circuit Judge, filed a dissenting opinion.

*670. John Rogge, New York City, Bal-lon, Stoll & Itzler, New York City, of counsel, for plaintiff-appellant.

Martin I. Shelton, New York City (Geoffry R. Handler, James H. Schuyler, Shea, Gould, Climenko, Kramer & Casey, New York City, of counsel), for defendants-appellees.

Before WATERMAN, OAKES and MESKILL, Circuit Judges.

MESKILL, Circuit Judge:

This is an appeal from an order of the United States District Court for the Southern District of New York, Robert J. Ward, District Judge, granting defendants’ motion for summary judgment by dismissing plaintiff’s 42 U.S.C. § 19831 claim for failure to establish the necessary “state action,” dismissing plaintiff’s 42 U.S.C. § 1985(3)2 claim because plaintiff did not establish the actionable “conspiracy” required, and dismissing plaintiff’s pendent state claim. Girard v. 94th Street and Fifth Avenue Corp., 396 F.Supp. 450 (S.D.N.Y., 1975).

*68In 1968, during their marriage, plaintiff’s former husband purchased 497 shares of stock from 94th Street and Fifth Avenue Corporation (“the corporation”), the owner and manager of a cooperative apartment building in New York City. As part of that transaction, Mr. Girard obtained a proprietary lease to the fourth floor of the building. The Stock Certificate contains a restriction that the shares represented thereby may be sold only to the corporation or to an assignee of the proprietary lease after compliance with certain provisions of the proprietary lease, which required that Mr. Girard obtain the written consent of the board of directors before any assignment of his interest in the apartment could become effective; in the event of a violation of this restriction, the corporation could terminate the lease.

In 1973, as part of a separation agreement between plaintiff and her husband, Mr. Girard assigned his interest in the apartment to plaintiff in lieu of alimony; the separation agreement was incorporated into the judgment of divorce granted later that year. No consent to assignment from the board of directors had been solicited or received. When plaintiff subsequently requested that she be recognized as the lawful stockholder and tenant, the board of directors, giving no reason, refused its consent, rejected plaintiff’s demand that the stock be transferred from Stephen Girard to Barbara Girard and refused to register the transfer on the books of the corporation.

Plaintiff then initiated suit (“Action # 1”) in the Supreme Court of New York seeking both a declaration that the corporation’s refusal was arbitrary, capricious, and unreasonable and an order compelling the corporation to transfer the stock on its books to her and to consent to an assignment of the lease. The corporation commenced its own action (“Action # 2”) for possession and eviction because of the unauthorized assignment and the failure to pay maintenance costs. The state court granted defendant’s motion for summary judgment in Action # 1, finding that the consent provision of the lease was enforceable under state law and that “the cooperative apartment corporation had the right to refuse to consent to the transfer of the lease to plaintiff for any reason deemed satisfactory to it (except, of course, those prohibited by the Civil Rights Laws).” The Appellate Division, First Department, affirmed the order and judgment. 46 A.D.2d 848, 362 N.Y. S.2d 405 (1974). Plaintiff’s motion for leave to appeal to the New York Court of Appeals was denied.

Plaintiff then instituted this suit, alleging that the corporate defendant and the individual defendants, as its officers and board of directors, violated her rights under 42 U.S.C. § 1983 by refusing to consent to the assignment of the lease solely because she is female. She also alleged that defendants conspired to deprive her of her civil rights because of her sex, a violation of 42 U.S.C. § 1985(3). Finally, plaintiff alleged that defendants violated New York Executive Law § 296(5)(a)(l) (1972).3 Plaintiff sought a declaration of her rightful ownership of the stock and proprietary lease and an injunction preventing any wrongful interference with her peaceful possession of the premises.

I. Plaintiff’s Claim Under 42 U.S.C. § 1983

For the plaintiff to prevail under 42 U.S.C. § 1983 she must prove that the defendant, under color of any statute, ordinance, regulation, custom or usage of *69any state, has deprived her of a right secured by the Constitution and laws of the United States. Adickes v. Kress & Co., 398 U.S. 144, 150, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). An act chargeable to the state is a necessary element to be pleaded and proved. Plaintiff asserts that the judgments rendered by the state court in Action # 1 and Action # 2 constitute state action for § 1983 purposes.

Certainly a state court judgment can be state action. Shelley v. Kraemer, 334 U.S. 1, 68 S.Ct. 836, 92 L.Ed. 1161 (1948). We must decide if within the meaning and scope of § 1983 the state court’s enforcement of the lease provision is a deprivation by state action of a right secured to plaintiff by that statute and the Constitution. In Shelley v. Kraemer, supra, 334 U.S. at 4, 68 S.Ct. at 838, the Supreme Court defined the question before it as “the validity of court enforcement of private agreements, generally described as restrictive covenants, which have as their purpose the exclusion of persons of designated race or color from the ownership or occupancy of real property.” The white seller in that case had agreed to sell property to a black purchaser contrary to an agreement among property owners. Another owner sought to prevent the transfer by seeking enforcement of the agreement through court action. While stating that the private restrictive agreement itself did not violate Fourteenth Amendment rights, where the purposes of the agreements were secured only by judicial enforcement, the state was a participant within the meaning of the Fourteenth Amendment. Shelley v. Kraemer, supra, 334 U.S. at 13, 68 S.Ct. 836. The posture of the present case is significantly different from the situation in Shelley, however. The contested provision in Shelley was racially discriminatory on its face. The lease provision in question here, requiring consent of the board of directors before transfer is effective, can only be described as neutral; there is no suggestion of any prohibition of transfer of ownership on the basis of sex.

Summarizing prior holdings dealing with the state action concept, the Supreme Court has stated that “where the impetus for the discrimination is private, the State must have ‘significantly involved itself with invidious discrimina-tions,’ ... in order for the discriminatory action to fall within the ambit of the constitutional prohibition.” Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 173, 92 S.Ct. 1965, 1971, 32 L.Ed.2d 627 (1972). This Court has recognized the existence of a “double standard” of review for state action. In cases involving racial discrimination, a particularly offensive class-based discrimination, the court has used a “less onerous” test than for other claims. See Jackson v. Statler Foundation, 496 F.2d 623, 629 (2 Cir. 1974); Weise v. Syracuse University, 522 F.2d 397 (2 Cir. 1975); Barrett v. United Hospital, 376 F.Supp. 791, 797 (S.D.N.Y., 1974). In Weise v. Syracuse University, supra, 522 F.2d at 406, the court applied this less rigorous standard to a claim of sex discrimination, although the court was careful to note that it was not necessary to put sex discrimination in the same category as race discrimination in that case in order to do so.

Even applying this less burdensome standard, the district court below found that the state’s participation here was solely to provide a disinterested forum. Girard v. 94th Street and Fifth Avenue Corp., supra, 396 F.Supp. at 455. See also Stevens v. Frick, 372 F.2d 378, 381 (2 Cir. 1967). In McGuane v. Chenango Court Inc., 431 F.2d 1189, 1190 (2 Cir. 1970), cert. denied, 401 U.S. 994, 91 S.Ct. 1238, 28 L.Ed.2d 532 (1971), this Court noted that “[n]either, despite some language in Shelley v. Kraemer . can state action be found in New York [sic] providing defendant with the same right to secure the eviction of a tenant by a proceeding in its courts that it gives to almost all landlords; the one thing now almost universally agreed is that such a rationale for that landmark decision would be altogether too far-reaching.” Since it cannot be said that the state’s involvement in this case *70approves4 the allegedly discriminatory conduct, we affirm the dismissal by the district court of the § 1983 claim.

II. Plaintiff’s Claim Under 42 U.S.C. § 1985(3)

In 1971 the Supreme Court, in Griffin v. Breckinridge, 403 U.S. 88, 104, 91 S.Ct. 1790, 29 L.Ed.2d 338 (1971), held that § 1985(3) reached certain private conspiracies to deprive others of their legal rights. A legally sufficient § 1985(3) complaint must aver a conspiracy between two or more persons intended to deprive any person or class of persons of the equal protection of the laws or of equal privileges and immunities under the law and an act by one of the conspirators in furtherance of the conspiracy which injured another person or deprived him of exercising any right or privilege of a citizen of the United States. See Griffin v. Breckinridge, supra, 403 U.S. at 102-103, 91 S.Ct. 1790; Cameron v. Brock, 473 F.2d 608, 610 (6 Cir. 1973).

Plaintiff argues that her complaint satisfies the threshold requirement of a conspiracy between two or more persons. She has charged both a corporate defendant and individual defendants who constitute the officers and entire board of directors with conspiring to deprive her of her civil rights because of her sex; the individual defendants are alleged to “wholly dominate, operate and control” all of the business and financial affairs of the corporation. Plaintiff claims that as part of the conspiracy, the defendants advised the president and board of directors to deny plaintiff continued occupancy of the premises, refused to permit her to appear at any meeting of the board, refused to provide her with minutes of the meetings, rejected any payments offered or any guarantee of her debt, harassed plaintiff by commencing legal proceedings of eviction and maliciously telephoned her at unreasonable hours to harass and annoy her. Defendants contend that no conspiracy can exist in this case since the corporation’s decisions were formulated and carried out by its board of directors, the individual defendants, all of whom acted solely within their official capacities. Accepting plaintiff’s allegations as true, the district court found that plaintiff failed to allege facts sufficient to constitute a conspiracy within the meaning of § 1985(3). Girard v. 94th Street and Fifth Avenue Corp., supra, 396 F.Supp. at 455. Decisions in this and other circuits fully support the district court’s conclusion.

In Dombrowski v. Dowling, 459 F.2d 190 (7 Cir., 1972), plaintiff alleged that a realty corporation and its employee denied him rental space because many of his clients were members of minority groups. Noting that only one firm was involved and that the individual defendant acted within the scope of his authority as agent for that firm, the Court of Appeals for the Seventh Circuit held that

“ • • • the statutory requirement that ‘two or more persons conspire . . . ’ is not satisfied by proof that a discriminatory business decision reflects the collective judgment of two or more executives of the same firm. . . . ” 459 F.2d at 196.

Accord, Baker v. Stuart Broadcasting Company, 505 F.2d 181, 183 (8 Cir. 1974); Fallis v. Dunbar, 386 F.Supp. 1117, 1121 (N.D.Ohio, 1974); Cohen v. Illinois Institute of Technology, 384 F.Supp. 202, 205 (N.D.Ill., 1974). See also Nelson Radio & Supply Co. v. Motorola, 200 F.2d 911, 914 (5 Cir., 1952), cert. denied, 345 U.S. 925, 73 S.Ct. 783, 97 L.Ed. 1356 (1953), for a *71discussion of the conspiracy concept in an antitrust context.

Of the numerous authorities plaintiff cites, we find only Rackin v. University of Pennsylvania, 386 F.Supp. 992 (E.D. Pa., 1974) worthy of discussion.5 In Rac-kin, plaintiff alleged sex discrimination by the University, its officers, and certain tenured faculty members. The district court found the Dombrowski rationale inapplicable to the facts of the case because of the continuing and varied instances of discrimination and harassment: not only was plaintiff given tenure in a department other than the one in which it was earned, a decision clearly contrary to normal university policy, but subsequently she had been assigned only freshmen courses outside her area of specialty. The court found that these actions, more than a single decision by one business entity, supported a conspiracy allegation. 386 F.Supp. at 1005.

The situation at the University of Pennsylvania was unlike the situation here. Here there is but one single business entity with a managerial policy implemented by the one governing board, while at the University of Pennsylvania, each department had its own disparate responsibilities and functions so that the actions complained of by the plaintiff were clearly not actions of only one poli-cymaking body but of several bodies; thus the court correctly held that the allegations supported a claim of conspiracy among them. Here plaintiff’s allegations of multiple acts by the directors are not alleged to be other than the implementation of a single policy by a single policymaking body. Indeed, defendants here would seem to be safely within the area of the Dombrowski decision and quite outside that of Rackin.

In the instant case, the individual defendants comprise the board of directors through which the corporation acted. The lease agreement specifically required the consent of the board before any transfer of ownership interest could be effective. In claiming that defendants advised the board and president to deny her continued occupancy, refused to permit a personal appearance, provide her with minutes, accept payments or a debt guarantee and commenced legal action, plaintiff does not allege that any of the individual defendants acted in any other capacity than his official role of director. As found by the court below,

“Although the decision plaintiff challenges reflected the collective judgment of ‘two or more persons,’ the decision cannot be considered the product of a conspiracy when the board was merely carrying out the corporation’s managerial policy.” 396 F.Supp. at 455-56.

Plaintiff next argues that defendants conspired by maliciously telephoning her at unreasonable hours in order to harass her into giving up her struggle to maintain occupancy. Again, plaintiff does not assert that the individual defendants were acting other than as officers and directors; the complaint identifies them only by their corporate status. The fact that they were also shareholders and tenants of apartments in the defendant-corporation’s building does not aid plaintiff’s case, since she did not allege that the individual defendants were motivat*72ed by any independent personal stake in achieving the corporation’s objective. In Cole v. University of Hartford, 391 F.Supp. 888, 893 (D.Conn., 1975) the court stated that

“[sjimply joining corporate officers as defendants in their individual capacities is not enough to make them persons separate from the corporation in legal contemplation. The plaintiff must also allege that they acted other than in the normal course of their corporate duties. . . . ‘[I]t is not alleged that the individual defendants committed any act of a personal nature except in connection with the corporate affairs.’ ”

Accordingly, we hold that plaintiff’s § 1985(3) claim must be dismissed for failure to state an actionable conspiracy under the statute.

III. Plaintiff’s State Claim

Plaintiff also alleged a violation of New York Executive Law § 296(5)(a)(l). However, since we have dismissed plaintiff’s federal claims for failure to state a cause of action, we will avoid making “[n]eedless decisions of state law” and, exercising our discretion, dismiss her pendent state claim. United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 218 (1966).

Finally, the Court need not decide what effect the prior state court decision would have had upon the present action under the doctrine of res judicata.

The order of the district court is affirmed.

OAKES, Circuit Judge

(dissenting):

I respectfully dissent.

In my view the complaint alleges facts which are sufficient to state a substantial claim under 42 U.S.C. § 1985(3). Since appellant has also raised a claim under the laws of New York, we have pendent jurisdiction over the state law claim so long as “the relationship between [the federal] claim and the state claim permits the conclusion that the entire action before the court comprises but one constitutional ‘case.’ ” United Mine Workers of America v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966). See also Van Gemert v. Boeing Co., 520 F.2d 1373, 1382 (2d Cir. 1975), cert. denied, 423 U.S. 947, 96 S.Ct. 364, 46 L.Ed.2d 282 (1975).1 Appellant’s complaint cites New York Executive Law § 296(5)(a)(l) (McKinney 1974) as the source of her state law claim.2 However, this section of the New York Human Rights Law is not enforceable in federal court, but is part of an administrative scheme which is administered by the state Division of Human Rights. The Division investigates complaints, has hearings and issues orders upon complaints filed by persons who claim their rights have been violated. Id. § 297. These orders are subject to judicial review in the state courts. Id. § 298. Obviously the federal courts cannot take jurisdiction over the state remedy with its administrative procedures, exhaustion of which is essential.

But New York Civil Rights Law § 19-a (McKinney 1975-1976 Supp.) provides a basis for a pendent state claim *73which is inherent in the appellant’s pleaded allegations. That section provides that

No corporation formed for the purpose of the cooperative ownership of real estate within the state shall withhold its consent to the sale or proposed sale of certificates of stock or other evidence of ownership of an interest in such corporation because of the race, creed, national origin, or sex of the purchaser.

Id. It is obvious that the claim arising under this state statute3 has the same “common nucleus of operative fact” as appellant’s federal claim. Therefore, “considerations of judicial economy, convenience and fairness to litigants,” United Mine Workers of America v. Gibbs, supra, 383 U.S. at 726, 86 S.Ct. at 1139, appear at this stage of the case to weigh in favor of resolution of the state claim in the federal court proceedings.

It is well to remember that federal jurisdiction is conferred here by 28 U.S.C. § 1343(1), (3), (4), and 28 U.S.C. § 1331(a).4 Resort is had to 42 U.S.C. § 1985(3) only to determine whether a claim is stated thereunder, since it creates the cause of action. See McNeese v. Board of Education, 373 U.S. 668, 671 & n. 1, 83 S.Ct. 1433, 10 L.Ed.2d 622 (1963) (§ 1983 action); Byrd v. Sexton, 277 F.2d 418 (8th Cir.) (Blackmun, Circuit Judge), cert. denied, 364 U.S. 818, 81 S.Ct. 49, 5 L.Ed.2d 48 (1960); Campbell v. Glenwood Hills Hospital, Inc., 224 F.Supp. 27, 29 (D.Minn.1963).

Where, as here, allegations in a complaint are sufficient to state a § 1985(3) conspiracy claim, the trial court may resolve both the § 1985(3) claim and the state claim, or, which may be preferable, avoid resolving the § 1985(3) claim on the merits if the pendent state claim permits disposition of the case. Here, as in Siler v. Louisville & Nashville Railway Co., 213 U.S. 175, 191, 29 S.Ct. 451, 455, 53 L.Ed. 753 (1909), once a federal question is substantially alleged, the court has

the right to decide all the questions in the case, even though it decided the Federal questions adversely to the party raising them, or even if it omitted to decide them at all, but decided the case on local or state questions only.

To put it another way, resolution of the state law claim here alone is proper, and would permit avoidance of an “avoidable” decision under federal civil rights law. See P. Bator, P. Mishkin, D. Shapiro and H. Wechsler, Hart and Wechsler’s The Federal Courts and the Federal System (2d ed. 1973) at 922-23; C. Wright, Law of Federal Courts (1970) § 19, at 62-65. See generally Note, UMW v. Gibbs and Pendent Jurisdiction, 81 Harv. L.Rev. 657 (1968).

The complaint names three individual defendants as well as the corporate defendant and alleges that they have conspired with each other to deprive appellant of her civil and property rights. The court below found that appellant’s complaint did not state a claim under § 1985(3) because the court interpreted the complaint as failing to assert that the individual defendants were acting outside their official capacity as directors of the defendant corporation. Thus, the court reasoned, the actions of the indi*74vidual defendants “cannot be considered the product of a conspiracy when the board was merely carrying out the corporation’s managerial policy.” 396 F.Supp. 450, 456.

It is, to be sure, basic conspiracy law that a corporation cannot conspire with its agents or employees acting within the scope of their employment, Pearson v. Youngstown Sheet & Tube Co., 332 F.2d 439 (7th Cir.), cert. denied, 379 U.S. 914, 85 S.Ct. 262, 13 L.Ed.2d 185 (1964). And it has been said that if the conspiratorial conduct challenged is essentially a “single act of discrimination by a single business entity,” the fact that two or more agents participated in the decision or act will “normally not constitute” a § 1985(3) conspiracy. Dombrowski v. Dowling, 459 F.2d 190, 196 (7th Cir. 1972). But here the individual defendants were not alleged to be simply agents or employees of the corporate defendant, nor to be acting in the scope of their employment, nor to be acting for the corporate benefit. A closer reading of the complaint indicates that appellant explicitly alleges that the injurious acts of the individual defendant conspirators were indeed committed in their individual, not their corporate, capacities.

Here the complaint alleges that the individual defendants “constitute the officers and the entire Board of Directors of the corporate defendant, and wholly dominate, operate and control all its business and financial affairs.” (Emphasis added.) These allegations alone serve to distinguish this case from Dombrowski, supra. As recognized by Judge McMillen in Cohen v. Illinois Institute of Technology, 384 F.Supp. 202, 205 (N.D. Ill.1974), the case is entirely different when the individual officers or directors are “alleged to have controlled [the corporate defendant] or to have personally committed acts of discrimination . .”5 In such a case, as here, the individuals are not acting at the direction of their corporate employer or necessarily for its benefit.

Further, the complaint alleges that the defendants, “in furtherance of the said design and conspiracy,”

[a]dvised, caused, permitted and allowed the President and the Board of Directors of the corporate defendant to deny plaintiff permission and authority to continue occupancy of the subject premises.

Surely the implication of such an allegation is not that the defendants in their capacity as corporate agents advised themselves to act in their capacity as corporate agents. Rather, it is that defendants in their individual capacities determined according to personal motives that they would cause managerial action by the president and the board of directors to serve their individual interests. The crux of this allegation is that defendants acted, albeit behind the screen of their corporate roles, in an individual and not an official capacity.

Here, indeed, the complaint also alleges that “the purpose, intent and result” of the conspiracy “was to enable, permit and allow the said defendants to receive for their own use and benefit and not for the benefit of plaintiff the sole and exclusive right to determine who shall own said shares of stock and the proprietary lease in the subject premises . .” (Emphasis added.) As shareholders in the cooperative corporation and as leaseholders in the building it would be to their individual financial benefit to have the Girard apartment revert to the corporation and it might very well be to their personal benefit to acquire the apartment for themselves. These allegations as to personal motives alone further serve to distinguish this case from the corporate-agent cases referred to above. See Nelson Radio & Supply Co. v. Motorola, 200 F.2d 911, 914 *75(5th Cir. 1952), cert. denied, 345 U.S. 925, 73 S.Ct. 783, 97 L.Ed. 1356 (1953).

Moreover, acts engaged in as a part of the conspiracy by defendants allegedly include deliberate and malicious “telephone calls to plaintiff at unreasonable hours solely for the purpose of harassing and annoying her in order to force plaintiff to vacate said premises . . . .” Such conduct, if established, would surely be individual and noncorporate in nature; nor are these allegations to be lightly disregarded or passed off as being de minimis. Cf. Rackin v. University of Pennsylvania, 386 F.Supp. 992 (E.D. Pa.1974).

All of these factors in my view make the question whether the alleged § 1985(3) conspiracy existed one that certainly is substantial, so as to supply, even if it does not succeed on its own merits, clear pendent jurisdiction of the state law claim.

There is, to be sure, another question, left open in Griffin v. Breckinridge, 403 U.S. 88, 102 n. 9, 91 S.Ct. 1790, 1798, 29 L.Ed.2d 338 (1971), “whether a conspiracy motivated by invidiously discriminatory intent other than racial bias would be actionable” under § 1985(3). A series of recent Supreme Court cases, perhaps the foremost of which is Taylor v. Louisiana, 419 U.S. 522, 95 S.Ct. 692, 42 L.Ed.2d 690 (1975), point the way toward an affirmative answer in cases involving bias on account of sex. One would estimate that deprival of valuable property rights on account of a person’s gender would constitute a denial “of the equal protection of the laws” within § 1985(3), as well as within the Fourteenth Amendment. See Stanton v. Stanton, 421 U.S. 7, 95 S.Ct. 1373, 43 L.Ed.2d 688 (1975); Weinberger v. Wiesenfeld, 420 U.S. 636, 95 S.Ct. 1225, 43 L.Ed.2d 514 (1975); Frontiero v. Richardson, 411 U.S. 677, 93 S.Ct. 1764, 36 L.Ed.2d 583 (1973).

There is, in short, a claim under this federal civil rights statute to warrant federal jurisdiction under 28 U.S.C. § 1331(a) or § 1343(1), and under the principles of pendent jurisdiction above enumerated clearly to support consideration of the state law claim under the New York Civil Rights Law. I would reverse and remand for that consideration.6

8.3 ECOA 8.3 ECOA

8.3.1 Matthews v. New Century Mortgage Corp. 8.3.1 Matthews v. New Century Mortgage Corp.

Hazel Jean MATTHEWS, et al., Plaintiffs, v. NEW CENTURY MORTGAGE CORP., et al., Defendants.

No. 00-CV-1332.

United States District Court, S.D. Ohio, Eastern Division.

Feb. 8, 2002.

*877Joseph F. Murray, Murray Murphy Moul & Basil — 2, Kimberly M. Skaggs, Equal Justice Foundation' — 2, Columbus, OH, for Hazel Jean Matthews, et al., Ruth D. Morgan, Marie I. Summerall, Plaintiffs.

Michael J. Garvin, Hahn, Loeser & Parks, Cleveland, OH, Sidney Williams, Hahn Loeser & Parks — 2, Irving Barry Marks, Columbus, OH, for New Century Mortgage Corp., Central Mortgage Inc., Equibanc Mortgage Corporation, Defendants.

OPINION AND ORDER

CHATIGNY, District Judge.

I. INTRODUCTION

This matter is before the Court on the Defendant’s Motion to Dismiss the Plaintiffs’ Second Amended Complaint. Jurisdiction is proper under 28 U.S.C. § 1331. Based on the following analysis, the Court GRANTS the Defendant’s Motion in part and DENIES the Defendant’s Motion in part.

II. FACTS

A. Ruth Morgan

Plaintiff Ruth Morgan,1 then an 87-year-old single woman, was contacted in October 1997 by an employee of Century 21 Home Improvement and Incredible Exteriors, Inc. (“Century 21”). The Century 21 employee told Ms. Morgan that the siding on her home had to be replaced because it was dirty and not up to code. Approximately one week later, Ms. Morgan signed a contract with Century 21 for new siding costing $17,325 after assurances by a different Century 21 employee, Antonio Barrett, that Ms. Morgan could obtain a loan to finance her new siding. *878Mr. Barrett also indicated that the loan would finance other home repairs and a used car.

On November 7, 1997, Mike Lewis, an employee of Century Mortgage, Inc. (“Century Mortgage”), met with Ms. Morgan in her home regarding her loan, although Ms. Morgan had neither contacted Central Mortgage, nor sought Central Mortgage’s services in any way. Mr. Lewis brought to the meeting papers for Ms. Morgan to sign regarding what she believed was an application for a home-improvement loan to cover the cost of her new siding. Ms. Morgan signed numerous papers, but did not receive copies of what she signed. At that meeting, Ms. Morgan was not informed of her right to cancel her loan application.

On November 24, 1997, Mr. Mark Hanna, then the manager of Southeast Equity Title Agency (“Southeast Equity”), met with Ms. Morgan and Mr. Barrett at Ms. Morgan’s home so that she could sign closing papers for her loan. According to Ms. Morgan, she had no opportunity to review the loan documents before she signed them, nor did she receive copies of the loan documents for review either prior to or at closing. Nonetheless, she felt obligated to agree to the terms of the loan, as the siding had already been removed from her house.2 Ms. Morgan was not informed at this meeting of her three-day right to cancellation. Ms. Morgan’s closing statement listed the Defendant, New Century Mortgage Corp. (“New Century”), as the lender of a $49,000 loan.

In December 1997, Ms. Morgan received, at her request, copies of the paperwork that Mr. Hanna had brought to her house. The copies, however, were not signed by Ms. Morgan. The paperwork included a “Notice of Right to Cancel” that was neither filled out nor signed. The documents did not include a Truth-in-Lending statement, a Loan Agreement Contract with the lender, employment verification forms, or Final Uniform Residential Loan Application.

Along with the paperwork, Southeast Equity sent a check payable to Ms. Morgan in the amount of $2345.07. Ms. Morgan cashed the check, and then gave it to Mr. Barrett, who had informed her that he would use the money to take care of her home repairs, other than the siding, and to buy her a used car. Ms. Morgan, however, has not had contact with Mr. Barrett since she gave him that money, and she never received either the promised home repairs or the used car.

In January 1998, Ms. Morgan began making monthly payments on the loan in the amount of $459.97. Shortly thereafter, Ms. Morgan received notice that the amount of her monthly payments would increase. Then, in December 1998 and January 1999, New Century returned Ms. Morgan’s payment checks, stating that $459.97 did not represent the total amount due. In March 1999, New Century, through its trustee, U.S. Bank Trust National Association, filed a complaint against Ms. Morgan for foreclosure of her home.

Despite her prior efforts, Ms. Morgan did not learn the actual terms of the loan she had obtained from New Century until it filed for foreclosure. Thus, she learned that the loan that she had believed was intended only to finance her home repairs for $17,325.00 was actually for the refinancing of her home for $49,000.00. It was also at this time that she learned for the first time that her occupation had been listed as “quilt-maker” on the loan application forms, and that a business card stat*879ing that Ms. Morgan was a quilt-maker with American Quilts was a part of her mortgage file. In actuality, Ms. Morgan was never involved in a quilt-making business, nor did she have business cards to that effect. Finally, Ms. Morgan learned that her monthly income had been stated as $1500.00 on the loan application form, with quilt-making as her source of income, when, in actuality, her total monthly income was $713.00 in social security benefits.

The Plaintiffs allege, based on the foregoing facts, that Ms. Morgan relied on the Defendant’s representations that she was receiving a home improvement loan that would result in lower monthly bill payments when, in fact, she paid high rates and fees for a loan that depleted the equity she had in her home. They contend that, as a result of the foreclosure proceedings, Ms. Morgan suffered extreme emotional and physical distress.

B. Hazel Jean Matthews

Some time during the summer of 1998, Plaintiff Hazel Jean Matthews, then a 69-year-old single woman, received a solicitation letter from Central Mortgage regarding loans for which she may be eligible. In response to the letter, Ms. Matthews called Central Mortgage about the possibility of obtaining a home improvement loan. Some time in August or September 1998, Mike Martinelli, a Century Mortgage employee, came to Ms. Matthews’ home to speak to her about a loan. During this meeting, Ms. Matthews informed Mr. Mar-tinelli that her monthly income consisted of approximately $2300.00 in social security and pension benefits. Ms. Matthews signed a loan application, but did not receive copies of what she signed at that time. On September 15, 1998, Ms. Matthews signed closing papers for her loan, but did not receive copies of the documents prior to closing, nor does she recall receiving such copies at the time of closing. The papers listed New Century as the lender of a $102,000.00 loan.

Soon thereafter, Ms. Matthews began making monthly payments of $891.36 on her loan. By August 2000, Ms. Matthews monthly payments increased to $1516.75. Around that time, Ms. Matthews learned for the first time, despite earlier efforts, the actual terms of her loan with New Century. She also learned that her occupation had been listed on her loan application as the owner of a business named “Crafts and Stuff,” and that a business card so stating was part of her mortgage file. In actuality, Ms. Matthews has never been involved in, either as owner or employee, a craft business. Ms. Matthews learned, additionally, that her monthly income had been listed on her loan application as $5400.00.

The Plaintiffs assert that Ms. Matthews relied on the Defendant’s representations that she was receiving a home improvement loan that would result in lower monthly bill payments when, in fact, she paid high rates and fees for a loan that depleted the equity she had in her home. The financial burden of her loan has allegedly caused Ms. Matthews physical harm and extreme emotional distress.

C. Marie I. Summerall

In September 1998, Plaintiff Marie I. Summerall, then a 62-year-old single woman, was approached about making some improvements to her home. Shortly thereafter, Sam Walsh, an employee of Equibanc Mortgage Corp., contacted Ms. Summerall about financing her home improvements. Ms. Summerall informed Mr. Walsh that her total monthly income was approximately $1000.00, consisting of social security benefits and money earned by babysitting for friends and family. Mr. Walsh completed a loan application for Ms. Summerall, which she then signed. Ms. *880Summerall did not receive copies of the papers she signed.

On October 23, 1998, Ms. Summerall signed closing papers on her loan. Ms. Summerall did not receive copies of the loan documents prior to closing, nor does she recall receiving such documents at the time of closing. Thus, Ms. Summerall had no opportunity to review the loan documents. Ms. Summerall was also never informed of her three-day right to cancellation. The loan documents listed New Century as the lender of a $50,250.00 loan.

Ms. Summerall began making monthly payments of $440.61 on her loan, though they subsequently increased to approximately $550.00. The Plaintiffs assert that some time later, despite Ms. Summerall’s previous due diligence, she learned the actual terms of her loan. She also learned that her occupation had been listed on her loan application as the owner of a business named “Marie’s In-Home Child Care,” and that her monthly income was listed as $1500.00. In actuality, although Ms. Sum-merall has engaged in informal babysitting, she has never been involved in a formal day care business.

The Plaintiffs allege that Ms. Summerall relied on the Defendant’s representations that she was receiving a home improvement loan that would result in lower monthly bill payments when, in fact, she paid high rates and fees for a loan that depleted the equity she had in her home. The Plaintiffs also claim that Ms. Summe-rall was led to believe that she was entering into a loan with a fixed interest rate when, in fact, the loan was for an adjustable rate mortgage, with an interest rate of 11.794%. They contend that she did not learn that her interest rate could change until October 2000.

The Plaintiffs contend that because Ms. Summerall has fallen behind in her loan payments, New Century has threatened foreclosure. They assert that the prospect of losing her home has caused Ms. Summe-rall extreme emotional distress and has exacerbated certain physical ailments.

D. Ella Mae Arnold

In the summer of 1999, Plaintiff Ella Mae Arnold, then a 72-year-old single woman, was contacted by a mortgage broker regarding a loan to finance some home improvements. Ms. Arnold was informed that the loan would consolidate her bills and lower her then-current monthly loan payment of approximately $540.00. At the time that she was contacted, Ms. Arnold’s income was approximately $650.00 in Social Security benefits.

On July 28, 1999, Ms. Arnold signed a Uniform Residential Loan Application along with closing documents for a new loan. Ms. Arnold did not receive copies of the loan documents prior to closing, nor does she recall receiving such documents at the time of closing. The documents listed New Century as the lender for a $60,000.00 loan.

Ms. Arnold began making monthly payments of approximately $560.00 on her new loan. In the fall of 2000, however, Ms. Arnold began having difficulties making her monthly payments. At that time, she learned for the first time, despite prior efforts, the actual terms of the loan she had received. She also learned that her occupation on her Uniform Residential Loan Application had been listed as “quilt-maker,” and the owner of “Arnold’s Quilts and Things.” In actuality, Ms. Arnold has never been involved in a quilting business. Ms. Arnold also learned that her monthly income had been listed on her loan application as $2800.00.

The Plaintiffs allege that Ms. Arnold relied on the Defendant’s representations that she was receiving a home improvement loan that would result in lower monthly bill payments when, in fact, she paid high rates and fees for a loan that *881depleted the equity she had in her home. Ms. Arnold also thought that she was receiving a fixed interest loan rather than the $60,000 variable rate interest loan she actually received at 12.952% interest.

On January 4, 2001, New Century sent Ms. Arnold a notice of its intent to foreclose on her home, and sent a second notice on February 2, 2001. The Plaintiffs contend that the threat of foreclosure has caused Ms. Arnold physical harm and extreme emotional distress.

Based on the foregoing events, the Plaintiffs filed a complaint with this Court on September 14, 2000. On October 18, 2000, the Plaintiffs filed an Amended Complaint, which named New Century as a Defendant. Subsequently, on May 18, 2001, the Plaintiffs filed a Second Amended Complaint, which is the subject of New Century’s Motion to Dismiss, now before this Court.

In their Second Amended Complaint, the Plaintiffs brought twelve claims against Defendants New Century, Central Mortgage, Equibanc Mortgage Corp., and K & R Equity, Inc.3 The Plaintiffs’ Complaint, in conjunction with Exhibit N attached thereto, a search warrant and accompanying affidavit in support of the warrant to search New Century’s corporate office, sets forth the Plaintiffs’ theory for New Century’s liability. Specifically, the Plaintiffs allege that Central Mortgage referred a number of “stated income loans,” high risk loans with high interest rates, to New Century. Numerous such loan packages referred to New Century contained false and fraudulently obtained information. The Plaintiffs contend that New Century obtained such loans with respect to each of the Plaintiffs.

The Plaintiffs allege, furthermore, that Rebecca Blankenship, the former president of Central Mortgage, had close personal ties with various employees at New Century (including her brothers and her husband, Kevin Blankenship, Jeff Snyder, and Robert Banhagel). They claim that, in the course and scope of their employment, Kevin Blankenship, Jeff Snyder, and Robert Banhagel all processed loans for New Century that had been referred to them by Central Mortgage. The Plaintiffs contend that New Century’s relationships with Central Mortgage, Equibanc Mortgage, and K & R Equity constituted associations which engaged in a common, ongoing course of conduct to induce borrowers to enter into highly inflated loans with their common motivation being profit. The Plaintiffs contend that each of the Defendant mortgage brokers was acting in concert with New Century, and that all of the Defendants engaged in a pattern or practice of targeting single, elderly females for unfair loan practices. Finally, the Plaintiffs allege that the Defendants knew or should have known that the Plaintiffs’ monthly incomes were insufficient to take on the debt obligations that were effectively forced upon them by the Defendants’ fraudulent conduct, and that New Century, specifically, made the loans to the Plaintiffs despite the fact that New Century knew or should have known that the Plaintiffs had no ability to repay the loans.

Based on the foregoing, the Plaintiffs asserted against New Century claims under or of: (1) the Federal Fair Housing Act; (2) the Equal Credit Opportunity Act; (3) the Truth-in-Lending Act; (4) Ohio Rev.Code § 4112.02; (5) civil conspiracy; (6) common law fraud; (7) Ohio Rev.Code *882§ 2923.31 et seq., the Ohio RICO statute; and (8) unconscionability. Defendant New Century has filed a Motion to Dismiss all of the Plaintiffs’ claims against it pursuant to Fed.R.Civ.P. 12(b)(6), for failure to state a claim.

III. STANDARD OF REVIEW

In considering a Rule 12(b)(6) motion to dismiss, this Court is limited to evaluating whether a plaintiffs complaint sets forth allegations sufficient to make out the elements of a cause of action. Windsor v. The Tennessean, 719 F.2d 155, 158 (6th Cir.1983). A complaint should not be dismissed under Rule 12(b)(6) “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Lillard v. Shelby County Bd. of Educ., 76 F.3d 716, 724 (6th Cir.1996). This Court must “construe the complaint liberally in the plaintiffs favor and accept as true all factual allegations and permissible inferences therein.” Lillard, 76 F.3d at 724 (quoting Gazette v. City of Pontiac, 41 F.3d 1061, 1064 (6th Cir.1994)). While the complaint need not specify every detail of a plaintiffs claim, it must give the defendant “fair notice of what the plaintiffs claim is and the grounds upon which it rests.” Gazette, 41 F.3d at 1064. While liberal, this standard of review does require more than the bare assertion of legal conclusions. In re DeLorean Motor Co., 991 F.2d 1236, 1240 (6th Cir.1993) (citation omitted). A complaint must contain either direct or inferential allegations with respect to all the material elements necessary to sustain a recovery under some viable legal theory. Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 437 (6th Cir.1988).

IV. ANALYSIS

A. Statutes of Limitations

New Century argues that the Plaintiffs’ claims brought pursuant to the Fair Housing Act (“FHA”), Equal Credit Opportunity Act (“ECOA”), and Truth-in-Lending Act (“TILA”), are all time-barred by the applicable statutes of limitations. The Court determines this issue by referring to the date on which the First Amended Complaint was filed, October 18, 2000. The Court looks to the date of the First Amended Complaint, rather than the earlier filing date of the original complaint, because New Century was first listed as a Defendant in the First Amended Complaint. See Fed. R. Civ. P. 15(c)(3). Rule 15(c)(3) provides that an amendment of a pleading adding a party relates back to the date of the original pleading only if:

within the period provided by Rule 4(m) for service of the summons and complaint, the party to be brought in by the amendment (A) has received such notice of the institution of the action that the party will not be prejudiced in maintaining a defense on the merits, and (B) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party.

Interpreting this rule, the Sixth Circuit has held that an amendment that adds a new party creates a new cause of action and does not relate back. In re Kent Holland Die Casting & Plating, Inc., 928 F.2d 1448, 1449-50 (6th Cir.1991) (citation omitted). Accordingly, the Court looks to the date of the First Amended Complaint because New Century was a newly added party that could not have known that an action would have been brought against it by the Plaintiffs but for a mistake concerning the identity of the proper party.

*883 1. Fair Housing Act and Equal Credit Opportunity Act

Both the FHA and ECOA have two-year statutes of limitations. See 42 U.S.C. § 3613(a)(1)(A); 15 U.S.C. § 1691e(f). Therefore, if the Plaintiffs’ FHA and ECOA claims accrued before October 18, 1998, they are barred by the statute of limitations, absent some reason for tolling the statutory period.

New Century asserts that this statutory period began to run when the Plaintiffs signed their applications for the loans at issue, as that is when they first had notice of the allegedly violative, predatory loan terms. Thus, the Defendants argue that the claims of Plaintiffs Morgan, Matthews, and Summerall are time-barred.4 The Plaintiffs, however, allege that the statutory period did not begun to run at least until the time of closing, or later, based on a theory of equitable tolling.

Equitable tolling applies to keep a statute of limitations period from running when inequitable circumstances prevent a plaintiff from suing before the statutory period runs. In particular, in cases of fraudulent concealment, the statute of limitations can be tolled when the plaintiff demonstrates that: “(1) the defendant took affirmative steps to conceal the plaintiffs cause of action; and (2) the plaintiff could not have discovered the cause of action despite exercising due diligence.” Jarrett v. Kassel, 972 F.2d 1415, 1423 (6th Cir.1992) (citation omitted).

The Plaintiffs allege: (1) that New Century fraudulently concealed both the actual terms of their loans, and the fact that it targets single, elderly women for allegedly predatory loans; and (2) that they could not have discovered the terms of their loans any earlier than they did, despite their having exercised due diligence. Through the facts set forth in their Complaint, the Plaintiffs have made these allegations with the specificity called for by Fed.R.Civ.P. 9(b), which requires that “the circumstances constituting fraud ... be stated with particularity.” Therefore, the Court finds that equitable tolling applies to prevent the FHA and ECOA two-year statutes of limitations from beginning to run until the dates the Plaintiffs allege they learned of the actual terms of their loans, and the alleged fraud committed upon them. Applying equitable tolling, none of the Plaintiffs’ FHA and ECOA claims are time barred, as they each learned of the alleged fraud and statutory violations less than two years before the filing of their First Amended Complaint on October 18, 2000: Ms. Morgan learned of the alleged violations in March 1999; Ms. Matthews learned of the alleged violations in August 2000; and Ms. Summerall learned of the alleged violations in the fall of 2000. Because those dates all fall within the two-year statutory period, the Court finds that the Plaintiffs’ FHA and ECOA claims are not time-barred.

Therefore, the Court DENIES the Defendant’s Motion to Dismiss the Plaintiffs’ FHA and ECOA claims as barred by the applicable statutes of limitations.

2. Truth-in-Lending Act

New Century argues that the Plaintiffs’ TILA claims are barred to the extent that the claims seek damages, though not with respect to the Plaintiffs’ claims for rescission of their contracts. TILA actions for damages are subject to a one-year statute of limitations that begins to run at the time the alleged violation occurs. 15 U.S.C. § 1640(e). Thus, if the Plaintiffs’ *884damages claims accrued before October 18, 1999, they are barred by the statute of limitations, absent some reason for tolling the statutory period.

Because TILA requires lenders to provide certain information to a consumer before making a loan, a failure to provide such information will usually mean that a TILA claim accrues at the time of closing, or, at the latest, when the contract is performed, as that is when the violation occurs. See Jones v. TransOhio Sav. Ass’n, 747 F.2d 1037, 1041 (6th Cir.1984). In cases of fraudulent' concealment of TILA information, however, the statute of limitations is equitably tolled, and the one-year period does not begin to run until the borrower discovers, or had reasonable opportunity to discover, the fraud involving the complained of TILA violation. Id. (citation omitted). Here, the Plaintiffs allege that New Century fraudulently concealed the actual terms of the Plaintiffs’ loans until well after they had closed, and the Plaintiffs had begun payments. They assert, furthermore, that they could not learn the actual terms of their loans, despite their due diligence. Thus, assuming that the Plaintiffs’ well-pleaded claims are true, which the Court must do in deciding a motion to dismiss, the statute of limitations on their claims did not begin to run until they discovered, or had reasonable opportunity to discovery, the fraud of which they complain.

Applying equitable tolling, Ms. Matthews’ TILA claim is not time-barred, as she did not learn of the alleged TILA violations until August 2000, well within the one-year period. Similarly, neither Ms. Summerall’s nor Ms. Arnold’s claims are barred, as they allege that they did not learn of the TILA violations until the fall of 2000. Finally, Ms. Morgan’s TILA claim for damages is also not time-barred, despite the fact that she learned of the alleged TILA violations in March 1999, more than one year before the filing of the First Amended Complaint. Ms. Morgan’s claim is not barred because, although the statute of limitations began to run in March 1999, it was tolled again on April 23,1999, when Ms. Morgan filed an answer and third-party complaint in the state foreclosure action brought against her by New Century, through its trustee, U.S. Bank Trust National Association. See Farrell v. Automobile Club of Michigan, 870 F.2d 1129, 1133 (6th Cir.1989) (holding that the statute of limitations of the plaintiffs’ ERISA claim was tolled by the filing of a similar claim in a state court that had concurrent jurisdiction over the claim); Fox v. Eaton Corp., 615 F.2d 716, 719 (6th Cir.1980) (holding that equitable tolling of the statute of limitations on a Title VII claim was appropriate when the plaintiff had timely filed her claim in a state court that arguably had jurisdiction over the case before she filed a claim based on the same set of facts in district court). Both Ms. Morgan’s answer and her third-party complaint gave New Century notice and knowledge of the claims being asserted against it, including the TILA claim, by setting forth the specific allegations that provide the basis for the claims herein. See Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 352, 103 S.Ct. 2392, 76 L.Ed.2d 628 (1983) (finding that statutes of limitations are generally intended to put defendants on notice of adverse claims); Farrell, 870 F.2d at 1133 (finding that it was fair to require the defendant to defend against claims in federal court when the plaintiffs’ state court action provided notice and knowledge of the allegations). Thus, the statute of limitations as to Ms. Morgan’s TILA claim was tolled during the pendency of the state court action. Since she dismissed her third-party complaint only two days before the filing of this action, the statutory period did not run, and her claim is not time-barred.

*885Therefore, the Court DENIES the Defendant’s Motion to Dismiss the Plaintiffs’ TILA claims as time-barred.

B. Fair Housing Act

The Plaintiffs allege that New Century’s conduct in connection with their mortgages constitutes discrimination on the basis of gender, age, and marital status in violation of sections 804(b) and 805 of the FHA, 42 U.S.C. §§ 3604(b), 8605. New Century contends that the Plaintiffs have failed to state a claim against it under either of these provisions of the FHA.

1. 4% U.S.C. § 3604(b)

Section 804(b) of the FHA states, in pertinent part:

[I]t shall be unlawful—
(b) To discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of ... sex ... [or] familial status ....

42 U.S.C. § 3604.

The Plaintiffs assert that their Complaint states a valid claim under this provision because the Defendant’s actions, though not amounting to a literal “sale or rental,” nonetheless relate to the sale or rental of a dwelling. The Court finds the Plaintiffs’ argument to be without merit.

Section 804 of the FHA, 42 U.S.C. § 3604, is to be read liberally, so that its terms reach transactions that fall beyond the literal scope of selling or renting housing. Michigan Protection and Advocacy Service, Inc. v. Babin, 18 F.3d 337, 344 (6th Cir.1994) (stating that “Congress intended § 3604 to reach a broad range of activities that have the effect of denying housing opportunities to a member of a protected class”) (citations omitted); see Nationwide Mutual Ins. Co. v. Cisneros, 52 F.3d 1351 (6th Cir.1995) (holding that § 3604 applies to discrimination in the provision of insurance); Eva v. Midwest National Mortgage Bank, 143 F.Supp.2d 862, 886 (N.D.Ohio 2001) (declaring that a literal sale or rental is not required for § 3604 to apply). Despite the breadth of the provision, however, it does not reach the particular transactions at issue in this case. To the contrary, this Court has specifically stated that transactions such as these, involving financial assistance requested for the purpose of improving, repairing, or maintaining a dwelling that the owner had previously acquired, fall outside the scope of § 3604. Laufman v. Oakley Bldg. & Loan Co., 408 F.Supp. 489, 492 (S.D.Ohio 1976); see also Eva, 143 F.Supp.2d at 886 (stating that it is clear that § 3604 covers transactions related to acquiring a home, as opposed to § 3605, which covers “the making or purchasing of loans or providing other financial assistance for maintaining a dwelling previously acquired”).

As the transactions at issue in this case relate to the allegedly discriminatory provision of mortgages on homes that were previously acquired by the Plaintiffs, the Court finds that 42 U.S.C. § 3604(b) does not apply, and GRANTS the Defendant’s Motion to Dismiss this claim.

2. 42 U.S.C. § 3605

The Plaintiffs have also alleged that New Century violated § 805 of the FHA, 42 U.S.C. § 3605. That provision reads, in relevant part:

(a) In general
It shall be unlawful for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of ... sex ... [or] familial status ....
(b) “Residential real estate-related transaction” defined
*886As used in this section, the term “residential real estate-related transaction” means ... (1) The making or purchasing of loans or providing other financial assistance—(A) for purchasing, constructing, improving, repairing, or maintaining a dwelling ....

The Plaintiffs’ claim brought under this provision essentially amounts to a claim that New Century engaged in “reverse redlining.” “Reverse redlining” is the situation in which a lender unlawfully discriminates by extending credit to a neighborhood or class of people (typically living-in the same neighborhood) on terms less favorable than would have been extended to people outside the particular class at issue. See Frank Lopez, Using the Fair Housing Act to Combat Predatory Lending, 6 Geo. J. Pov. L. & Pol’y 73, 77 (1999). In like fashion, the Plaintiffs in this case allege that New Century violated the FHA by granting them a loan on grossly unfavorable terms based on their age, sex, and marital status, and that such terms would not have been extended to credit applicants who were not elderly, unmarried women.

Although the issue has not been directly addressed by the Sixth Circuit,5 other courts have held that reverse redlining claims are cognizable under the FHA. See, e.g., Honorable v. Easy Life Real Estate System, 100 F.Supp.2d 885, 892 (N.D.Ill.2000) (citing NAACP v. American Family Mut. Ins. Co., 978 F.2d 287, 301 (7th Cir.1992)); Hargraves v. Capital City Mortgage Corp., 140 F.Supp.2d 7, 20 (D.D.C.2000) (recognizing that predatory loan practices can make housing unavailable by putting borrowers at risk of losing the real property that secures their loans). The elements of a reverse redlining claim brought under the FHA, 42 U.S.C. § 3605, are a variation of the elements that typically must be shown for a claim of discrimination under § 3605. A plaintiff invoking § 3605 must demonstrate the same factors that she would have to demonstrate for a Title VII claim. See Babin, 18 F.3d at 346 (finding that the plaintiffs must show: (1) that they were members of a protected class; (2) that they attempted to engage in a “real estate-related transaction” with the defendant and met all relevant qualifications for doing so; (3) that defendant lender refused to transact business with the plaintiffs despite their qualifications; and (4) that the defendant lender continued to engage in that type of transaction with other parties with similar qualifications).

To set forth a cognizable a reverse redlining claim under § 3605, essentially the same elements must be established, except that the plaintiff need not show that the lender refused to transact business, but only that the lender refused to transact business on fair terms. Specifically, to establish a prima facie case of discrimination in violation of § 3605 based on reverse redlining, the plaintiff must show: (1) that she is a member of a protected class; (2) that she applied for and was qualified for loans; (3) that the loans were given on grossly unfavorable terms; and (4) that the lender continues to provide loans to other applicants with similar qualifications, but on significantly more favorable terms. See Frank Lopez, Using the Fair Housing Act to Combat Predatory Lending, 6 Geo. J. Pov. L. & Pol’y 73, 99 (1999). In the alternative, if the plaintiff presents direct evidence that the lender intentionally targeted her for unfair loans on the basis of sex and marital status, the plaintiff need *887not also show that the lender makes loans on more favorable terms to others. See Hargraves, 140 F.Supp.2d at 20 (finding that such a requirement would allow an injustice to continue so long as it was visited exclusively on one class of people).

This Court finds that the Plaintiffs have alleged sufficient facts to survive the motion to dismiss their claim under § 3605. First, the Plaintiffs clearly are members of a protected class. Second, they applied for and were qualified for loans. Third, the Plaintiffs have alleged that New Century gave them their loans on grossly unfavorable terms. Finally, while the Defendant is correct that the Plaintiffs have not alleged that other similarly situated people were given loans on more favorable terms, the Plaintiffs have nonetheless presented a cognizable claim, as they allege and may be able to show directly that New Century intentionally targeted them for unfair loans on the basis of their sex and marital status, thus eliminating the necessity of proving the fourth element of the prima facie case.

Therefore, the Court DENIES the Defendant’s Motion to Dismiss the Plaintiffs’ claim for violation of 42 U.S.C. § 3605.

C. Equal Credit Opportunity Act

The Equal Credit Opportunity Act (“ECOA”) states, in pertinent part:

It shall be unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction—
(1) on the basis of ... sex or marital status, or age ....

15 U.S.C. § 1691(a)(1). ECOA claims of discrimination are evaluated using the same framework and burden allocation system that is applied to Title VII cases. Lewis v. ACB Business Services, Inc., 135 F.3d 389, 406 (6th Cir.1998). Thus, for the Plaintiffs to establish a prima facie case for violation of ECOA, they must show: (1) that they are members of a protected class; (2) that they applied for credit from the Defendant; (3) that they were qualified for the credit; and (4) that their credit applications were denied despite their qualifications. Mays v. Buckeye Rural Elec. Co-op., Inc., 277 F.3d 873 (6th Cir.2002) (citation omitted).6

The elements for a prima facie case under ECOA can be adapted to the Plaintiffs’ reverse redlining claims. See Hargraves v. Capital City Mortgage Corp., 140 F.Suppüd 7, 23 (D.D.C.2000) (finding that the plain language of the statutory provision indicates that it is not limited to loan applicants who were rejected). The plain language of the statute indicates that it applies to discrimination with respect to “any aspect of a credit transaction.” A “credit transaction” has been deemed to include not only the extension of credit itself, but also terms of credit, along with various other matters. See 12 C.F.R. § 202.2(m). Thus, to survive the Defendant’s Motion to Dismiss, the Plaintiffs need not allege that they were denied credit, so long as they allege that they were discriminated against in the terms of their credit based on the sex, marital status, or age.

It is undisputed that the Plaintiffs allege that they are members of a protected class who applied for and were qualified for credit. The Court finds that the Plaintiffs *888have also alleged that, although they were not denied credit, they were discriminated against in the terms of the loans they were granted on the basis of their sex, marital status, or age.

Therefore, the Court DENIES the Defendant’s Motion to Dismiss the Plaintiffs’ ECOA claims.

D. Truth-in-Lending Act

The Plaintiffs’ Complaint asserts that New Century violated “various provisions” of the Truth-in-Lending Act (“TILA”), 15 U.S.C. § 1601, et seq. New Century, however, asserts that the TILA claim must fail because the Plaintiffs have failed to plead it with the specificity that is necessary to give notice of the claim that is being asserted.

TILA was designed to increase the information available to consumers in credit transactions. Cornist v. B.J.T. Auto Sales, Inc., 272 F.3d 322, 326 (6th Cir.2001). Among the information that must be available to a consumer in a credit transaction is the consumer’s right to rescind. Specifically, 15 U.S.C. § 1635(a) provides, in pertinent part:

in the case of any consumer credit transaction ... in which a security interest ... is or will be retained or acquired in any property which is used as the principal dwelling of the person to whom credit is extended, the obligor shall have the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms required under this section together with a statement containing the material disclosures required under this subchapter, whichever is later

The failure of a creditor to provide the consumer with notice of this right to rescind is actionable under the statute. See Turoff v. May Co., 531 F.2d 1357, 1362 (6th Cir.1976) (recognizing the existence of a valid TILA action where a creditor fails to give notice of the right to rescind in transactions that fall within the ambit of 15 U.S.C. § 1635(a), but granting the defendant’s motion to dismiss because the plaintiffs failed to show that the transaction at issue involved a security interest in their dwelling); Eveland v. Star Bank, NA, 976 F.Supp. 721, 726 (S.D.Ohio 1997) (denying the defendant’s motion for summary judgment on the plaintiffs TILA claim where a genuine issue of fact remained as to whether the plaintiff received notice of her right to rescind).

Both Ms. Morgan and Ms. Sum-merall specifically allege that they were not given notice of their three-day right to cancel the loan agreement. Similarly, Ms. Matthews and Ms. Arnold allege that they did not receive copies of their loan documents (which would include notice of the right to rescind) prior to closing.7 Thus, the Court finds that each of the Plaintiffs has properly alleged an actionable TILA violation against New Century.

Therefore, the Court DENIES the Defendant’s Motion to Dismiss the Plaintiffs’ TILA claims.

E. Ohio Rev.Code § 4112.02(H)

In addition to their FHA claim, the Plaintiffs have brought a claim under Ohio’s analogous statute. New Century argues that the claim should be dismissed for the same reasons that the FHA claim should be dismissed.

*889Ohio’s statutory provision prohibiting discrimination in housing closely parallels the language of the FHA, and reads in relevant part:

It shall be an unlawful discriminatory practice ... for any person to ... [discriminate against any person in the making or purchasing of loans or the provision of other financial assistance for the ... rehabilitation, repair, or maintenance of housing accommodations, or any person in the making or purchasing of loans or the provision of other financial assistance that is secured by residential real estate, because of ... sex [or] familial status ....

Ohio Rev. Code § 4112.02(H)(3).

The parties have cited no Ohio authority, and the Court is not aware of any, that has set forth the elements that must be shown to establish a prima facie case under this specific provision of the Ohio Code. Because the provision so closely parallels the FHA, however, the Court may presume that Ohio courts would interpret their statute to grant the Plaintiffs at least as much protection as the FHA grants. See Eva v. Midwest National Mortgage Bank, 143 F.Supp.2d 862, 890-91 (N.D.Ohio 2001) (recognizing that both federal and Ohio fair housing claims may be analyzed using federal case law) (citation omitted); Toledo Fair Hous. Ctr. v. Nationwide Mut Ins. Co., 94 Ohio Misc.2d 14, 703 N.E.2d 338, 340 (1993) (recognizing that, while the language of the Ohio statute closely parallels the language of the FHA, “the Ohio Civil Rights Act appears to contain language more favorable for maintaining a housing discrimination suit than the federal Fair Housing Act”). Thus, as the Court finds that the Plaintiffs have set forth sufficient evidence to survive the Defendant’s Motion to Dismiss their FHA claim, see supra Part IV.B., so does it find that the Plaintiffs have set forth sufficient evidence to survive the Motion to Dismiss the analogous state claim.

Therefore, the Court DENIES the Defendant’s Motion to Dismiss the Plaintiffs’ claims brought under Ohio Rev.Code § 4112.02(H)(3).

F. Civil Conspiracy

Under Ohio law, the tort of civil conspiracy is “a malicious combination of two or more persons to injure another in person or property, in a way not competent for one alone, resulting in actual damages.” Williams v. Aetna Fin. Co., 83 Ohio St.3d 464, 700 N.E.2d 859, 868 (1998) (citations omitted). A plaintiff alleging civil conspiracy must demonstrate an underlying unlawful act for the conspiracy claim to succeed. Id. (citations' omitted). In a conspiracy, the acts taken in furtherance of the conspiracy by one co-conspirator can be attributed to every co-conspirator, making each equally liable for the other’s acts. Id. (citing 323 Prosser & Keeton, Torts § 46 (5th ed.1984)).

In Williams, the Supreme Court of Ohio examined a claim of civil conspiracy on strikingly similar facts to those presented here. There, a “pitchman” actively pursued business in a neighborhood where he knew there were many elderly people had owned their homes for a long time, free of mortgages. He encouraged these people, including the plaintiff, to get repairs done on their homes, and then arranged for them to get a loan from the defendant lender to finance the repairs. The pitchman took them to the defendant lender, even though other lenders were available, because certain employees at the lender’s branch office had contacted the pitchman seeking referrals of loan customers. Under these circumstances, the court found that employees of the lender had conspired with the pitchman to defraud the plaintiff, and that the lender could be held liable for the torts of its employees. Williams, 700 N.E.2d at 868. The court further concluded that the lender’s role in the conspiracy *890was to “allow [the pitchman] to have access to loan money that was necessary to further his fraudulent actions against customers such as [the plaintiff].” Id. at 868-69. Thus, the court found that the lender’s employees “affirmatively committed fraud by the very acts of making loans to [the plaintiff] and others,” and that the lender was liable for that fraud by virtue of the conspiracy. Id.

New Century argues that the Plaintiffs’ conspiracy claim must be dismissed because the Plaintiffs have failed to allege sufficiently that New Century engaged in any underlying tortious conduct. New Century asserts that the Plaintiffs allege only that the mortgage brokers, such as Century Mortgage and its agents, committed fraudulent acts, not that New Century itself did so.

The Court finds that the Plaintiffs have adequately set forth a claim for civil conspiracy against New Century. First, the Complaint sets forth facts tending to show that New Century, or some of its employees, maliciously combined with various mortgage brokers to commit fraud upon the Plaintiffs in a way that resulted in actual damages. Specifically, the fact that New Century approved the allegedly fraudulent loan applications of each of the Plaintiffs, along with the fact that agents of New Century who processed loan applications had close personal ties with at least one of the mortgage brokers involved in the transactions at issue herein, is sufficient to meet the Plaintiffs’ pleading requirements. The Court recognizes, in regard to this finding, that New Century can be held liable for the intentional torts of its employee loan agents committed within the scope of their employment. Williams, 700 N.E.2d at 868 (citing Osborne v. Lyles, 63 Ohio St.3d 326, 587 N.E.2d 825, 828-29 (1992) and Byrd v. Faber, 57 Ohio St.3d 56, 565 N.E.2d 584, 587 (1991)). Second, contrary to the Defendant’s assertions, the Plaintiffs sufficiently allege that New Century itself engaged in fraudulent and discriminatory conduct, by knowingly lending money for fraudulent and discriminatory loans. As in Williams, assuming the Plaintiffs can prove the existence of a conspiratorial agreement, as they allege, the Plaintiffs have properly alleged that New Century can be liable for the underlying tortious, fraudulent conduct of the mortgage brokers, as well as for the fraudulent conduct of its own loan agents.

Therefore, the Court DENIES the Defendant’s Motion to Dismiss the Plaintiffs’ civil conspiracy claim.

G. Common Law Fraud

Under Ohio law, a claim of common law fraud requires a plaintiff to plead: “ ‘(a) a representation or, where there is a duty to disclose, concealment of a fact, (b) which is material to the transaction at hand, (c) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred, (d) with the intent of misleading another into relying upon it, (e) justifiable rebanee upon the representation or concealment, and (f) a resulting injury proximately caused by the reliance.’ ” Cohen v. Lamko, Inc., 10 Ohio St.3d 167, 462 N.E.2d 407, 409 (1984) (quoting Friedland v. Lipman, 68 Ohio App.2d 255, 429 N.E.2d 456 (1980)).

New Century argues that the Plaintiffs’ fraud claim must fab because the Plaintiffs have failed to allege either that New Century made an affirmative misrepresentation or that New Century concealed a material fact while under a duty to disclose that fact to the Plaintiffs. Their argument hinges primarily on the fact that the only alleged material misrepresentations or concealments of fact, the falsification of the Plaintiffs’ income and employment status on their loan applications, were attributed to the individual *891brokers, not New Century, the lender. New Century also contends that, even as to the mortgage brokers, the Plaintiffs have failed to set forth their fraud allegations with the particularity necessitated by Fed. R. Civ. P 9(b), which requires a plaintiff pleading fraud to “allege the time, place, and content of the alleged misrepresentation on which he or she relied; the fraudulent scheme; the fraudulent intent of the defendants; and the injury resulting from the fraud.” Coffey v. Foamex L.P., 2 F.3d 157, 161-62 (6th Cir.1993) (quoting Ballan v. Upjohn Co., 814 F.Supp. 1375, 1385 (W.D.Mich.1992)).

First, the Court finds that, as to the mortgage brokers involved in the transactions herein, the Plaintiffs have alleged fraud with sufficient particularity, as the Plaintiffs have set forth the specific details of their meetings with the mortgage brokers, including the time and place thereof. They have set forth the content of the misrepresentation that each broker made regarding the Plaintiffs’ income and employment status, as well as the brokers’ misrepresentations that the Plaintiffs would be able to comply with the terms of their loans. Furthermore, they have alleged that the brokers were involved in a scheme to target target single, elderly women in an unfair manner, with the ultimate goal of defrauding them out of a substantial amount of money or equity. Finally, the Plaintiffs have alleged that as a result of the brokers’ actions, they have lost substantial amounts of money and the equity in their homes.

Second, the Court finds that the Plaintiffs have also properly set forth a claim of fraud against New Century. As the Court finds that the Plaintiffs have properly asserted a civil conspiracy claim against New Century, the Court also concludes that New Century can be held liable for any acts committed by its co-conspirators in furtherance of their conspiracy. See discussion supra Part IV.F. Thus, because the Plaintiffs have properly alleged that the individual mortgage brokers engaged in fraudulent acts, New Century itself can be liable for those actions if the Plaintiffs succeed in proving a conspiracy existed between New Century and the mortgage brokers.

Therefore, the Court DENIES the Defendant’s Motion to Dismiss the Plaintiffs’ common law fraud claim.

H. Ohio Pattern of Corrupt Activities Act

The Plaintiffs have alleged a claim against New Century for violation of the Ohio Pattern of Corrupt Activities Act (“PCA”), Ohio Rev.Code § 2923.31, et seq., which is patterned after the Federal Racketeering Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961, et seq. Ohio courts have found that the elements for a PCA violation are the same as those for a RICO claim. See Universal Coach, Inc. v. New York City Transit Auth., Inc., 90 Ohio App.3d 284, 629 N.E.2d 28, 32 (1993). Thus, a properly pleaded PCA claim must allege: “(1) conduct of the defendant which involves the commission of two or more of specifically prohibited state or federal criminal offenses; (2) the prohibited criminal conduct of the defendant constitutes a pattern of corrupt activity; and (3) the defendant has participated in the affairs of an enterprise or has acquired and maintained an interest in or control of an enterprise.” Id. (citing Sedima S.P.R.L. v. Imrex Co., 473 U.S. 479, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985)). Under the PCA, a “pattern of corrupt activity” consists of “two or more incidents of corrupt activity, whether or not there has been a prior conviction, that are related to the affairs of the same enterprise, are not isolated, and are not so closely related to each other and connected in time and place that they constitute a single event.” Ohio Rev. Code § 2923.31(E). *892The PCA defines an “enterprise” as “any individual, sole proprietorship, partnership, limited partnership, corporation ... or other legal entity, or any organization, association, or group of persons associated in fact although not a legal entity. ‘Enterprise’ includes illicit as well as licit enterprises.” Ohio Rev. Code § 2923.31(C).

The Court finds that the Plaintiffs have pled their PCA claim sufficiently to survive the Defendant’s motion for dismissal. First, the Plaintiffs allege that New Century has committed state or federal offenses that are specifically designated as predicate offenses by the PCA, including multiple acts of mail and wire fraud. See Ohio Rev. Code § 2923.31(I)(2); Eva v. Midwest National Mortgage Bank, 143 F.Supp.2d 862, 878-79 (N.D.Ohio 2001) (finding that the plaintiffs alleged that the defendants committed corrupt activity under the PCA when they alleged that the defendants committed multiple acts of conversion, mail fraud, and wire fraud). Second, the Plaintiffs sufficiently allege a pattern of corrupt activity. Specifically, they claim that New Century, through its alleged conspiracy with various mortgage brokers, committed separate instances of fraud against each of the Plaintiffs, which were tied to their general plan to defraud single, elderly women out of great sums of money and/or the equity in their homes. Third, the Plaintiffs allege that New Century participated in the affairs of the enterprise by serving as the lender on the allegedly fraudulent loans.

As the Court finds that the Plaintiffs have alleged each of the elements of a PCA violation with the specificity necessary to give New Century notice of the claim brought against it, the Court DENIES the Defendant’s Motion to Dismiss this claim.

I. Unconscionability

The Plaintiffs claim that the loan agreements involved here are unconscionable, and should be declared null and void by this Court. New Century moves to dismiss this claim on the ground that the Plaintiffs have failed to allege the facts necessary to support a claim of unconscio-nability.

The unconscionability doctrine consists of two prongs: (1) substantive un-conscionability, i.e., unfair and unreasonable contract terms, and (2) procedural unconscionability, i.e.,. individualized circumstances surrounding each of the parties to a contract such that no voluntary meeting of the minds was possible. Jeffrey Mining Prod., L.P. v. Left Fork Mining Co., 143 Ohio App.3d 708, 758 N.E.2d 1173, 1181 (2001) (quoting Dorsey v. Contemporary Obstetrics & Gynecology, Inc., 113 Ohio App.3d 75, 680 N.E.2d 240, 243 (1996)). Substantive unconscionability refers to the contract terms themselves and their commercial reasonableness, while procedural unconscionability refers to the relative bargaining positions of the parties, including their age, education, business acumen and experience, relative bargaining power, who drafted the contract, whether the terms were explained to the weaker party, whether alterations in the printed terms were possible, and whether there were alternative sources of supply for the goods in question. Id. (citations omitted). Both prongs must be satisfied for a contract to be found unconscionable. Id. (citing Collins v. Click Camera & Video, Inc., 86 Ohio App.3d 826, 621 N.E.2d 1294, 1299 (1993)).

The Court finds that the Plaintiffs have sufficiently pled facts necessary to withstand the Defendant’s Motion to Dismiss their unconscionability claim. First, the Plaintiffs’ Complaint asserts, as the facts as set forth therein indicate, that the terms of the contracts involved in these transactions were so one-sided in favor of New Century as to be unlawful. Second, *893the Plaintiffs properly allege that the contracts also were procedurally unconscionable, in that the individual mortgage brokers had significantly greater bargaining power, business acumen, and experience than the Plaintiffs. The mortgage brokers presented to the Plaintiffs contracts that they or their employers had drafted, which they apparently did not even allow the Plaintiffs to read before signing. While the Court recognizes that New Century did not directly participate in the negotiating process with the Plaintiffs, New Century cannot escape liability on that basis. As the Court finds that the Plaintiffs have properly alleged a claim of civil conspiracy against New Century, New Century may be found liable for the alleged unconscio-nability of its co-conspirators.

Because the Court finds that the Plaintiffs have properly alleged claims of substantive and procedural unconscionability, the Court DENIES the Defendant’s Motion to Dismiss this claim.

V. CONCLUSION

Based on the foregoing analysis, the Defendant’s Motion to Dismiss is GRANTED with respect to the Plaintiffs’ claims brought under the Fair Housing Act, 42 U.S.C. § 3604(b). The Defendant’s Motion to Dismiss is DENIED with respect to the Plaintiffs’ claims brought under the Fair Housing Act, 42 U.S.C. § 3605, the Equal Credit Opportunity Act, 15 U.S.C. § 1691(a)(1), the Truth-in-Lending Act, 15 U.S.C. § 1601, et seq, Ohio Rev.Code § 4112.02(H), the Ohio Pattern of Corrupt Activities Act, Ohio Rev.Code § 2923.31, et seq, and the Plaintiffs’ claims for civil conspiracy, common law fraud, and unconscio-nability.

IT IS SO ORDERED.

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