Blachana, LLC v. Or. Bureau of Labor & Indus.

• Decision Date: 23 September 2015
• Docket Number: 2513,A155228.
• Parties: BLACHANA, LLC, dba Twilight Room Annex, aka The P Club; and Christopher Penner, Petitioners, v. OREGON BUREAU OF LABOR AND INDUSTRIES, Respondent.
• Court: Oregon Court of Appeals

273 Or.App. 806

359 P.3d 574

BLACHANA, LLC, dba Twilight Room Annex, aka The P Club; and Christopher Penner, Petitioners

v.OREGON BUREAU OF LABOR AND INDUSTRIES, Respondent.

2513

A155228.

Court of Appeals of Oregon.

Argued and Submitted April 8, 2015.

Filed Sept. 23, 2015.

Jonathan M. Radmacher, Portland, argued the cause for petitioners. With him on the briefs was McEwen Gisvold LLP.

Leigh A. Salmon, Assistant Attorney General, argued the cause for respondent. With her on the brief were Ellen F. Rosenblum, Attorney General, and Anna M. Joyce, Solicitor General.

Before SERCOMBE, Presiding Judge, and HADLOCK, Judge, and TOOKEY, Judge.

Opinion

TOOKEY, J.

The Rose City T–Girls is an informal social group that includes straight people, married couples, nonmarried couples, males who identify as females, cross-dressers, males who have physically transitioned to females, lesbians, and gay males. Respondents,¹ Blachana, LLC, and Christopher Penner, own and manage a bar in North Portland formerly known as the P Club.² Respondents seek judicial review of an order of the Commissioner of the Bureau of Labor and Industries (BOLI) concluding that they denied equal accommodations to the T–Girls at the P Club because of their sexual orientation, in violation of ORS 659A.403,³ ORS 659A.406,⁴ and ORS 659A.409,⁵ when Penner left two voicemails for Cassandra Lynn, the founder of the T–Girls, in which he asked Lynn and the T–Girls not to come back to the P Club on Friday nights. Respondents challenge BOLI's conclusion that they violated ORS 659A.403 and ORS 659A.409 and contend that BOLI's order violated their rights under Article I, section 8, of the Oregon Constitution.⁶ Because all of respondents' arguments are unpreserved, undeveloped, or unavailing in light of BOLI's factual findings, we affirm.

Because respondents do not challenge BOLI's findings of fact, those findings are the facts for purposes of judicial review. ORS 183.482(7) (“[T]he court shall not substitute its judgment for that of the agency as to any issue of fact * * *.”); Meltebeke v. Bureau of Labor and Industries, 322 Or. 132, 134, 903 P.2d 351 (1995). The T–Girls gather regularly on Friday nights. They began frequenting the P Club on Friday nights around July 2010, when they were asked not to gather at another club where they had previously met. “Between September 2010 and January 2011, the T–Girls gathered intermittently on Friday nights at the P Club as they explored possible new Friday gathering spots. In January 2011, the T–Girls decided to make the P Club their ‘regular Friday nightspot.’ ” “From eight to 54 T–Girls gathered at the P Club every Friday night between January 2011 and June 18, 2012.” As BOLI explained in the final order:

“On June 18, 2012, Penner telephoned C. Lynn and left the following voicemail message:

“ ‘Hello, my name is Chris, I'm the owner of the P Club Bar and Grill on North Lombard. Um, unfortunately, uh due to circumstances beyond my control I am going to have to ask for you, Cass, and your group not to come back on Friday nights. Um, I really don't like having to do that but unfortunately it's the area we're in and it's hurting business a lot. If you have any questions, please feel free to give me a call * * *. Again I'm really sorry about having to do this but yeah give me a call. Thanks, bye.’“In response to Penner's voicemail, C. Lynn telephoned Penner and left a message asking what the ‘real reason’ was for Penner's request that the T–Girls not come back on Friday nights.

“On June 21, Penner telephoned C. Lynn and left the following voicemail message:

“ ‘Hello Cassandra, this is Chris from the P Club. Sorry it took me awhile to return your phone call. There is no underlying reason for asking you folks not to come back other than money. Um, sales on Friday nights have been declining at the bar for the last 18 months. Uh, about a year ago I was looking at asking you folks not to come in anymore and the girls said, “No, no, no don't,” so I gave it a while longer. Um, I own another bar in north Portland; sales are doing great on Fridays, and so I've done some investigating as to why my sales are declining and there's two things I keep hearing: People think that (a) we're a tranny bar or (b) that we're a gay bar. We are neither. People are not coming in because they just don't want to be there on a Friday night now. In the beginning sales were doing fine but they've been on a steady decrease so I have to look at what the problem is, what the reason is, and take care of it; that's my job as the owner. So unfortunately, I have to do what I have to do and that is the only reason. It's all about money. So I'll be back in town tonight; if you want to give me a call I should be answering my phone; I've been out of town for the past few days. So, there we are, take care. Bye bye.’

“C. Lynn understood Penner's voicemails to mean that the P Club ‘wasn't a tranny bar’ and ‘we're not allowed in there.’

“None of the aggrieved persons [, who are all members of the T–Girls,] visited the P Club after June 18, 2012.”

(Paragraph numbers, footnotes, and citations omitted.) “After C. Lynn received the voicemails, she posted a note on the T–Girls' website stating that Penner had asked the T–Girls not to come back to the P Club. Subsequently, she posted a transcription of the voicemails, [and] then the actual voicemails [,] on the website.” The 11 aggrieved persons in this case are members of the T–Girls who attended the Friday night gatherings before June 18, 2012, learned of and eventually heard the voicemails through Lynn and the T–Girls' website, and did not return to the P Club because of the voicemails.

On November 18, 2011, after the commissioner filed a complaint against respondents and BOLI's Civil Rights Unit found substantial evidence to support the complaint, BOLI formally charged both respondents with violating ORS 659A.403(3) and ORS 659A.409, and also charged Penner with violating ORS 659A.406 by aiding and abetting Blachana. BOLI sought damages of “at least $50,000” for each of the aggrieved persons and a civil penalty of $1,000 per violation against each respondent. After resolving discovery disputes that are not relevant to this appeal, an administrative law judge (ALJ) employed by BOLI heard the case in May 2013.

Because our resolution of respondents' contentions on review turns on their arguments before BOLI, we explain those arguments in some detail. Before doing so, however, we provide some background on the Supreme Court's interpretation of Article I, section 8.

In State v. Robertson, 293 Or. 402, 649 P.2d 569 (1982), the Supreme Court established three categories for analyzing a law under Article I, section 8. The court recently summarized those categories as follows:

“Under the first category, the court begins by determining whether a law is written in terms directed to the substance of any opinion or any subject of communication. If it is, then the law is unconstitutional, unless the scope of the restraint is wholly confined within some historical exception that was well established when the first American guarantees of freedom of expression were adopted and that the guarantees then or in 1859 demonstrably were not intended to reach. If the law survives that inquiry, then the court determines whether the law focuses on forbidden effects and the proscribed means of causing those effects include speech or writing, or whether it is directed only against causing the forbidden effects. If the law focuses on forbidden effects, and the proscribed means of causing those effects include expression, then the law is analyzed under the second Robertson category. Under that category, the court determines whether the law is overbroad, and, if so, whether it is capable of being narrowed. If, on the other hand, the law focuses only on forbidden effects, then the law is in the third Robertson category, and an individual can challenge the law as applied to that individual's circumstances.”

State v. Babson, 355 Or. 383, 391, 326 P.3d 559 (2014) (citations, internal quotation marks, and brackets omitted).

We return to respondents' arguments before BOLI. In their answer to the formal charges, respondents asserted a constitutional affirmative defense based on Article I, section 8. In their case summary, submitted before the hearing, they argued that they “have a right under Article I, section 8, of the Oregon Constitution to ‘speak freely * * * on any subject whatever.’ Application of ORS 659A.400, et seq., in this case, violates Respondents' rights thereunder.”⁷

The ALJ allowed the parties to submit memoranda on that defense after the hearing. In its memorandum, BOLI argued that, under the Robertson framework, ORS 659A.403 is directed against causing forbidden effects rather than expressly or obviously proscribing expression, that is, that the statute does not fall into the first Robertson category. Furthermore, BOLI asserted, because the provision does not mention speech, it falls into the third Robertson category and, accordingly, is not subject to facial challenges. BOLI further contended that ORS 659A.403 was not unconstitutional as applied to respondents because respondents were being punished only “because [respondents] committed the proscribed act of affirmatively barring the T–Girls from the club on the basis of their sexual orientation.” BOLI explained that respondents' argument—that they were being sanctioned based on the content of Penner's speech—“misconstrues the distinction between the content of speech impermissibly forming an element of an offense, and using the content of speech to prove an element of an offense. The former may be unconstitutional, the latter is not. See State v. Plowman, 314 Or. 157, 167, [838 P.2d 558 (1992)].”

In their response, respondents asserted that they “had a right to express their desire—motivated by business interest—that the Rose City T–Girls no longer meet at Respondents' place of business on Friday nights.” Rather than...