A California appellate court issued a dangerous precedent last month when it ruled that a private, religiously based school could expel two girls it believed to be lesbians.

The three-judge panel on the 4th District Court of Appeal found that California Lutheran High School, in Riverside County, was not a business and therefore was exempt from complying with the Unruh Civil Rights Act, a state law barring discrimination based on sexual orientation.

Local attorney Kirk Hanson, who represented the two girls, plans to ask the California Supreme Court to overturn the unanimous ruling.

The Unruh Civil Rights Act prohibits “businesses of every kind whatsoever” from engaging in bias based on, among other things, “sexual orientation.” Courts have long held that the act applies to religious groups engaged in commerce, such as providing educational services to the public. However, if the ruling stands it will mean that religious schools have the right to prohibit anyone they deem does not meet their religious tenets, including black, Jewish, disabled or Hispanic students, from attending.

California Lutheran High School claims that it is not a business establishment, even though it offers educational services to the public, charges tuition, is accredited by a public accrediting agency (Western Association of Schools and Colleges), and offers secular courses that the University of California accepts. Critical also is that it does not require student applicants to be Lutheran or to be members of any other faith.

The panel, however, concluded that the school is a private religious group similar to the Boy Scouts of America (BSA). It cited a 1998 California Supreme Court decision that (in a case that also involved discrimination based on sexual orientation) said the BSA was a social organization not a business establishment and, consequently, reasoned that the BSA did not have to comply with the Unruh Civil Rights Act.

Equally disturbing, the justices concluded that the two girls had engaged in “homosexual” and “immoral” conduct by simply kissing and hugging. Yes, it’s that absurd!

What the media hasn’t bothered to report is that the judicial panel consists of three conservative Republicans, two of whom graduated from Pepperdine University School of Law, the only law school in California that engages in blatant discrimination based upon sexual orientation. Two years ago, Pepperdine honored the justice who wrote the lead opinion.

California law requires justices to consider reversal when it might “reasonably appear to the public” that a justice has a bias. This is one of those instances, and the appellate court decision needs to be de-published as precedent in California.

Here’s why. The decision doesn’t just apply to sexual orientation, but to every other group protected by the Unruh Act. As long as private business has a religious basis for its “whites-only” policy, this case could allow such.

If California Lutheran wants to be a purely private school and engage in all kinds of bias it certainly can under the Constitution. However, it cannot simultaneously ask Californians to give it the privilege of corporate status, non-profit status and tax-exempt status.

If the California Supreme Court does not overturn this decision, then the California Legislature needs to amend the California Corporations Code. Groups seeking consent from the California Secretary of State to obtain the privileges of operating in this state must agree that they will not engage in bias based upon race, gender and sexual orientation, among other classes.

Let’s be clear: GLBT taxpayers in California subsidize Pepperdine and California Lutheran. These schools don’t pay income taxes, or property taxes. You’re subsidizing the salary of Pepperdine Dean Kenneth Starr, who volunteered to lead the fight against the Proposition 8 challenge.

Sorry, Dean Starr. In 2009, it’s quite unfair to require gays or other groups that don’t adhere to your ideas of what’s religiously correct to support groups that perpetuate negative stereotypes and discriminate against them.

Last year, the California Supreme Court upheld the right of public entities to deny discriminatory groups “subsidies” and “privileges.” Let’s hope, when it hears the appeal for this case, it will overturn the appellate decision.