UPDATE 5-U.S. Supreme Court leans toward web designer with anti-gay marriage stance

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Case centers on U.S. Constitution's First Amendment

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Colorado says plaintiff is seeking license to discriminate

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Court, with 6-3 conservative majority, due to rule by June

(Recasts first paragraph, adds quotes from Justices Alito and Jackson)

By Andrew Chung and Nate Raymond

WASHINGTON, Dec 5 (Reuters) - The U.S. Supreme Court's conservative majority on Monday appeared ready to rule that a Christian web designer has a right to refuse to provide services for same-sex marriages in a case the liberal justices said could empower certain businesses to discriminate based on constitutional free speech protections.

The justices heard feisty arguments in Denver-area business owner Lorie Smith's appeal seeking an exemption from a Colorado law that bars discrimination based on sexual orientation and other factors. Lower courts ruled in Colorado's favor.

The conservative justices indicated support for Smith's view that businesses offering creative services like web design are protected by the U.S. Constitution's First Amendment guarantee against government abridgment of free speech from being forced to express messages through their work that they oppose. The court has a 6-3 conservative majority.

Smith, an evangelical Christian whose web design business is called 303 Creative, has said she believes marriage should be limited to opposite-sex couples. She preemptively sued Colorado's civil rights commission and other state officials in 2016 because she feared she would be punished for refusing to serve gay weddings under Colorado's public accommodations law.

Colorado's Anti-Discrimination Act bars businesses open to the public from denying goods or services to people because of race, gender, sexual orientation, religion and certain other characteristics.

The liberal justices offered various scenarios aimed at showing how a ruling embracing Smith's arguments could enable businesses claiming artistic rights to freely discriminate, not only against LGBT people but on the basis of race, sex, disabilities and other factors.

Conservative Justice Clarence Thomas questioned how public accommodations laws can regulate speech, noting that Smith's business is "not a hotel, this is not a restaurant, this is not a riverboat or a train."

Public accommodations laws exist in many states, banning discrimination in areas such as housing, hotels, retail businesses, restaurants and educational institutions.

The case gives the Supreme Court's conservatives another chance to exert their power following major recent rulings curbing abortion rights and expanding gun and religious rights.

'BLACK SANTA'

Liberal Justice Ketanji Brown Jackson suggested that a ruling backing Smith could allow a professional photographer to exclude Black children from a nostalgic Christmas photo with Santa Claus styled after the 1940s - a time of racial segregation in parts of America - because "they're trying to capture the feelings of a certain era."

Kristen Waggoner, the lawyer representing Smith, doubted such a scenario would merit a free speech exemption, but said, "There are difficult lines to draw and that may be an edge case."

Conservative Justice Samuel Alito asked whether a "Black Santa" could be required under Colorado's law to have his picture taken with a child wearing the outfit of the Ku Klux Klan white supremacist group. Colorado Solicitor General Eric Olson rejected that example, saying such outfits are "not protected characteristics under public accommodation laws."

After liberal Justice Elena Kagan pointed out that the analysis would be the same whether regardless of the child's race, Alito quipped: "You do see a lot of Black children in Ku Klux Klan outfits, right?"

Businesses that would warrant a free speech exemption from anti-discrimination laws include photographers, painting services, calligraphy and video services, Waggoner said. She told the court in a written brief that bartenders, caterers and tailors generally would not because they do not create speech, "though that is of course not always the case."

Olson said Smith is seeking a "license to discriminate" and that her arguments would allow exemptions not just for religious beliefs but "all sorts of racist, sexist and bigoted views." Olson said the Colorado law targets discriminatory sales by businesses like Smith's.

"The company can choose to sell websites that only feature biblical quotes describing marriage as only between a man and a woman, just like a Christmas store can choose to sell only Christmas-related items. The company just cannot refuse to serve gay couples, as it seeks to do here, just as a Christmas store cannot announce, 'No Jews allowed,'" Olson said.

Waggoner said Colorado's law forces Smith "to create speech not simply sell it."

Liberal Justice Sonia Sotomayor suggested that any businesses engaging in artistic expression also could decline service if they objected to marriages between interracial or disabled people.

"Where's the line?" Sotomayor asked Waggoner.

Alito asked about an instance in which someone offered customizable speeches or wedding vows.

"Can they be forced to write vows or speeches that espouse things they loathe?" Alito asked.

The court has become increasingly supportive of religious rights and related free speech claims in recent years even as it has backed LGBT rights in other cases such as its landmark 2015 decision legalizing gay marriage nationwide.

President Joe Biden's administration backed Colorado in the case. A ruling is expected by the end of June.

The Supreme Court in 2018 ruled in favor of Jack Phillips, a Christian Denver-area baker who refused on religious grounds to make a wedding cake for a gay couple. But in that case it stopped short of creating a free speech exemption to anti-discrimination laws. Like Phillips, Smith is represented by the Alliance Defending Freedom, a conservative religious rights group.

(Reporting by Andrew Chung in Washington and Nate Raymond in Boston; Editing by Will Dunham)