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Scardina v. Masterpiece Cakeshop, Inc.

2023 COA 8. No. 21CA1142. Colorado Anti-Discrimination Act—Discrimination in Places of Public Accommodation—Failure to Exhaust Administrative Remedies—First Amendment—Freedom of Speech—Freedom of Religion.

January 26, 2023

Scardina wanted to purchase a custom pink cake with blue frosting with no message or other design elements (the cake) from Masterpiece Cakeshop, Inc. (Masterpiece). Masterpiece initially agreed to make the cake but retracted the commitment when it learned that the cake was to celebrate Scardina’s birthday and her transition from male to female. Scardina filed a charge with the Colorado Civil Rights Division (CCRD) asserting that Masterpiece and its proprietor Phillips (collectively, defendants) violated the Colorado Anti-Discrimination Act (CADA) by refusing to sell her the cake because of her status as a trans woman. The CCRD found probable cause to conclude that defendants’ actions violated CADA and ordered the parties to attend mediation, which was unsuccessful. The Colorado Civil Rights Commission (Commission) then filed a complaint against defendants seeking equitable relief. Scardina intervened in the administrative proceeding. Before the evidentiary hearing could be held, Masterpiece sued the Commission in federal court. After Scardina unsuccessfully sought to intervene, the Commission agreed to dismiss its administrative complaint, and the federal lawsuit was dismissed. Scardina then filed this action asserting claims for violation of CADA and deceptive trade practices. The trial court dismissed the deceptive trade practices claim. After a bench trial, the court found that defendants violated CADA by refusing to serve Scardina and held that CADA did not violate defendants’ rights to free speech or religious expression. The court ruled in Scardina’s favor and assessed a fine of $500 against defendants. Defendants tried to tender a $500.01 check to Scardina, along with a denial of any CADA violation, by first moving to deposit the offered funds with the court under CRCP 67(a). The court rejected the request. Defendants then sent Scardina’s counsel a $500.01 check payable to Scardina, which she refused to accept. The trial court held that neither tender rendered Scardina’s claims moot.

On appeal, defendants argued that Scardina’s CADA claim was procedurally barred (1) for failure to exhaust administrative remedies, (2) for failure to meet statutory conditions precedent, and (3) by claim preclusion. First, defendants maintained that Scardina failed to exhaust her administrative remedies because she did not appeal the order dismissing the Commission’s complaint, which was entered pursuant to a settlement agreement between Masterpiece, Phillips, and the Commission. However, Scardina did not fail to exhaust administrative remedies because that dismissal does not have the indicia of a final order subject to appeal; Scardina did not sign or acquiesce in the agreement, no hearing was held on the merits of the discrimination charge, there was no adjudication of Scardina’s charge, and there was no determination of the legal claims or defenses. Second, defendants asserted that the Commission cannot lose jurisdiction after probable cause is found except as provided in CRS § 24-34-306(11), and none of the § 24-34-306(11) conditions existed in this case, so the Commission retained (and the trial court lacked) jurisdiction to hear the claim. However, CRS § 24-34-306(11) is not the exclusive means by which the Commission can lose its jurisdiction over a claim; § 24-34-306(14) allows an aggrieved person to bring a claim in district court if the person exhausts their administrative remedies. Accordingly, CRS § 24-34-306(11) did not bar Scardina’s claim. Third, claim preclusion requires a final judgment. As stated above, the dismissal order did not constitute a final judgment on Scardina’s district court claim, so claim preclusion does not apply. Therefore, Scardina’s CADA claim was not procedurally barred.

Defendants also contended that Scardina’s CADA claim became moot when they tendered the check and that the district court abused its discretion by declining to permit them to deposit the offered sum. In light of CADA’s central public policy of eliminating discrimination, the trial court here concluded it would not treat the conditional offer as an effective tender absent defendants’ admission of liability on the CADA claim. To treat an offer without a defendant’s admission of liability as an effective tender in a CADA case would frustrate the primary purpose of the legislation, and the precedential value of a liability finding is critical. Further, because the deposit of the offered funds would not have effectuated a tender, the trial court did not abuse its discretion in denying the request. Accordingly, the trial court did not err in concluding that defendants’ offer to pay did not moot Scardina’s claim.

On the merits, defendants argued that the trial court’s ruling compels them to speak in violation of their First Amendment rights. Here, the only issue presented is whether making a pink cake with blue frosting rises to the level of protected conduct. Creating a pink cake with blue frosting is not inherently expressive; any message or symbolism it provides to an observer would not be attributed to the baker but would be generated by the observer based on such factors as the observer’s understanding of the celebration’s purpose and the conduct of the persons gathered for the occasion. Thus, CADA does not compel defendants to speak through the creation and sale of the cake, and the trial court did not err.

Lastly, defendants argued that CADA violates their right to freely exercise their religious faith. The record established the sincerity of Phillips’s faith and that it informs the operation of Masterpiece. But in the context of providing public accommodations, a proprietor’s actions based on their religious beliefs must be considered in light of a customer’s right to be free from discrimination based on their protected status. Further, the Free Exercise Clause does not relieve a person from the obligation to comply with a neutral law of general applicability. CADA is a neutral law of general applicability that is rationally related to a legitimate governmental interest. Accordingly, CADA may be enforced against defendants without violating their right to the free exercise of religion.

The judgment was affirmed.

Official Colorado Court of Appeals proceedings can be found at the Colorado Court of Appeals website.

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