In January 2013, spouses Aaron and Melissa Klein declined to make a same-sex "wedding" cake for Rachel and Laurel Bowman-Cryer. The lesbian couple retaliated by filing a discrimination complaint with the Oregon Bureau of Labor and Industries.
In 2015, a judge ruled in favor of the homosexual couple and ordered the Christians to pay $135,000 for emotional damage and mental distress.
On Thursday, a panel of judges on the Oregon Court of Appeals upheld the fine.
The Kleins have had to close their bakery, "Sweetcakes by Melissa" outside Portland, during this legal battle.
The Christian couple was represented in the Court of Appeals by attorneys from the First Liberty Institute (FLI).
First Liberty Institute President Kelly Shackelford said in a statement Thursday, "Freedom of expression for ourselves should require freedom of expression for others. Today, the Oregon Court of Appeals decided that Aaron and Melissa Klein are not entitled to the Constitution's promises of religious liberty and free speech."
The Kleins' situation is extremely similar to a current Supreme Court case: Masterpiece Cakeshop v. Colorado Civil Rights Commission.
The Supreme Court case centers around a small bakery owned by a Christian family. The small business declined to design and bake a special cake for a gay couple, and the couple filed a discrimination lawsuit in return.
The nation's highest court heard oral arguments on December 5. The decision is likely to come out in June 2018.
The court's decision in the Masterpiece Cakeshop case would establish a precedent for the Kleins' case, provided they plan to continue fighting the stiff penalty in the courts.