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HomeEconomyThe Supreme Court’s ‘303 Creative’ Decision – Right Result but Not for the Best Reasons

The Supreme Court’s ‘303 Creative’ Decision – Right Result but Not for the Best Reasons

At the end of its current term, the Supreme Court issued several very important decisions, including that in 303 Creative v. Elenis.  That case involved the efforts by the Colorado Civil Rights Commission to compel Lorie Smith, the owner of a web-design firm, to make a public statement that she would serve all customers. She declined to do that because she does not want to help people celebrate some events, particularly gay weddings. Based on her religious convictions, she doesn’t want to enter into business dealings with people who are planning a gay wedding.

The State of Colorado finds that sentiment unacceptable. Its law compels nondiscrimination by everyone who enters into business, and declares that the purpose of its law is to eradicate the view that there is anything wrong with homosexual marriage. Knowing that she would be a target for enforcement of the law by the state, just as business owner Jack Phillips has been for declining to bake a wedding cake for a gay couple, Smith filed suit to block the law. She was unsuccessful in the lower courts and appealed a ruling in favor of Colorado by the Tenth Circuit to the U.S. Supreme Court.

Smith’s case was argued on the basis that her First Amendment rights to speech and religion were being violated by Colorado’s law. On June 30, the Supreme Court agreed in a 6-3 decision.

Justice Neil Gorsuch wrote the Court’s opinion in which he stated, “The First Amendment prohibits Colorado from forcing a web designer to create expressive designs speaking messages with which the designer disagrees.”

That’s correct. The right to freedom of speech includes the right not to be required to speak, and that right has constitutional priority over the state’s claimed interest in stamping out ideas its officials dislike.

Justice Gorsuch continued, “The First Amendment’s protections belong to all, not just to speakers whose motives the government finds worthy. In this case, Colorado seeks to force an individual to speak in ways that align with its views but defy her conscience about a matter of major significance.”

The decision was applauded by organizations that oppose the heavy hand of government trying to punish someone like Lorie Smith just because she declined to work with customers who wanted her to do something she found to be contrary to her convictions. For example, Kristin Waggoner, president of Alliance Defending Freedom, stated, “The U.S Supreme Court rightly affirmed that the government can’t force Americans to say things they don’t believe. The Court reiterated that it’s unconstitutional for the state to eliminate from the public square ideas it dislikes, including the belief that marriage is the union of husband and wife.”

As someone who opposes all governmental coercion, I’m in full support of the decision. The trouble is that it is too narrow. Cases like this one are only tangentially about freedom of speech or religion. What they are really about is whether people who go into business have the right to say “no” to offers they don’t want to accept, or can either be compelled to do work they don’t want to do or else suffer punishment by the government. Colorado insists that business people lose their contractual freedom, at least as far as state officials can declare their motives for declining a contractual offer to be “discriminatory.” I think that position is wrong.

The law of contract is (or at least ought to be) perfectly symmetrical. Anyone has the freedom to make an offer to another, and everyone has the right to either accept, thus creating a contract, or to decline, in which case the parties have no legal responsibilities toward each other. The reasons why the two parties want to deal with each other or don’t want to are not legally relevant. If no contract is agreed to, the disappointed party can seek out others who are willing to enter into a contract. Unfortunately, Colorado’s law injects coercion into the law; people like Lorie Smith can be punished for the peaceful act of saying “No, thanks.”

It just so happens that her website design service has something to do with expression and could therefore be argued as a First Amendment case, but what about other kinds of business owners who might also have reasons for not wanting to contract with a prospective customer?

Consider this hypothetical case. Jennifer Van Arsdale owns a business that rents out large tents, chairs, tables and related items for outdoor events – Jennifer’s Rentals. One day she is approached by a man named Bernard Sanderson, who asks about renting a tent on May 1. Jennifer asks, “Sure – what’s the event?”

Sanderson replies, “I’m with the International Socialist League and we are going to have a big May Day celebration.”

Jennifer replies, “Oh – I’m very sorry, but I oppose socialism. I don’t want do have anything to do with you or your event.”

Sanderson could just go find another place that rents large tents, but he sees the chance to take revenge on Jennifer.  He heads straight for the Colorado Civil Rights Commission and files a complaint against her. She has refused service to a customer for a non-business, discriminatory reason and will now face the power of the state.

Because Jennifer’s case has nothing to do with freedom of expression, the First Amendment won’t be any help to her.

Her case, however, is identical with that of Lorie Smith when looked at under the law of contracts. In both instances, the offeree declined an offer, which she is perfectly entitled to do.

At one time, the Supreme Court adamantly upheld the freedom of contract against state laws that interfered with it. Consider the famous 1905 case of Lochner v. New York, which arose when New York passed a law putting a limit on the number of hours bakers were permitted to work per week. Joseph Lochner and his employer wanted to work more hours than the statute allowed. The Court struck down New York’s law on the grounds that the 14th Amendment protects the liberty of citizens, including the liberty to contract for hours of labor.  (The case is famous for the dissent by Justice Oliver Wendell Holmes, who wrote that “the 14th Amendment does not enact Herbert Spencer’s Social Statics, but that is no answer to Justice Peckham’s point that the 14th Amendment does protect citizens against deprivation of liberty and the freedom to make whatever contracts they think best is a crucial element of that liberty.)

A few years later, the Court faced another case where a state law undermined freedom of contract, Coppage v. Kansas. The issue there was whether the state could ban “yellow dog” contracts whereby an employer would enter into labor contracts only with workers who declared that they would not seek unionization. Labor unions flexed their political muscles to have such contracts outlawed, but the Supreme Court ruled that the state could not do so.

Kansas claimed that “yellow dog” contracts were coercive, but the Court disagreed, stating, “A state cannot, be designative as ‘coercion’ conduct which is not such, render criminal any normal and innocent exercise of personal liberty, for to permit this would be to deprive the Fourteenth Amendment of effective force in this respect.” The Court’s opinion then drove home the point about the need for symmetry in the law: “There may not be one rule for labor organizers or its members and a different, more restrictive one for employers.”

Minimum wage laws were also struck down on freedom of contract grounds. In the 1923 case Adkins v. Children’s Hospital, the Court invalidated a Washington, DC law that set a minimum wage for women. Employers and employees were forbidden to agree to labor contracts where the pay was less then the minimum set by law. Again, the Court saw this as an unconstitutional attack on the freedom of people to make contracts. The Court’s opinion stated, “That the right to contract about one’s affairs is part of the liberty of the individual protected by the Fifth Amendment is settled by repeated decisions of this Court.”

But abruptly in 1937 the Supreme Court stopped defending freedom of contract following the switch by Chief Justice Hughes from the “traditionalist” side to President Franklin Roosevelt’s “progressive” side. Freedom of contract, property rights, and economic liberties in general became disfavored as advocates of big government got their way. That is why cases like 303 Creative have to be litigated under the First Amendment.

It would be much more coherent for the Court to revive constitutional protection for freedom of contract, making it clear that everyone has the same rights to propose contracts, agree to proposals, negotiate for better terms, or to just say no. That would spare a great deal of wasted resources in bureaucrats hunting for people who want to peacefully deal with others according to their own values and beliefs.

The Constitution already contains language pertaining to contracts: “No state shall impair the obligation of contracts.” I think we need a new Amendment, one reading, “No unit of government shall enact any law or regulation that compels any citizen to enter into a contract, forbids any citizen to enter into a contract, or dictates any term of a contract between citizens.”