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According to Justice Kennedy in Masterpiece Cakeshop, the baker was "entitled to ... neutral and respectful consideration of his claims." But, in light of Smith, why? Consider a hypothetical opinion by the Colorado Commission that said, "We are deeply sympathetic to your claims, but -- in our view unfortunately -- the Colorado legislature has denied us the power to make an exception from the general rule that all business owners may not discriminate, and Smith informs us that such a blanket rule is constitutionally permissible." Now suppose that one member of the Commission adds a separate opinion saying, "I disagree with my colleagues on that point. I am not at all sympathetic to your claims, and I am quite happy that the Colorado legislature has denied us the power to make an exception." I don't think that such a statement could possibly override Smith's applicability.
So, it seems to me, Justice Kennedy is (implicitly) assuming that the Commission has the power, under Colorado law, to make a discretionary exception to the otherwise general law. But then, it's not quite right to say that the Commission has to give the baker's claim (merely) "respectful consideration." Rather, under the rationale the Smith Court used to preserve the holdings in the unemployment compensation cases, the Commission would have to employ a Sherbert v. Verner-like test, which -- I think -- places a thumb on the scales in favor of the claimant. It's in this sense that Rick Hills's suggestion that Masterpiece Cakeshop might represent "the fraying of Smith" makes some sense -- except for the possibility that state anti discrimination commissions might say, "No, our state's law is truly general, and does not allow us to make discretionary exceptions."
Some additional observations: (1) That the interpretation of Colorado's law is implicit is pretty striking (if my analysis is correct), and probably does suggest, as Hills implies, that many Justices don't take Smith all that seriously, (2) Even if the outcome is an effort to confine the result pretty narrowly, one might have hoped for a bit more rigor in the opinion. (3) But then, no one really thinks that Justice Kennedy is a rigorous legal analyst -- he just happens to be the justice who sits in the middle of theCourt's spectrum, so his gauzy thinking becomes our constitutional law.