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It has happened in Houston in front of a shopping center:
I had heard something similar about some shops and stores using similar signs and hate speeches in the 70s and before it in New York City and other big cities against Jews and Greeks, and before those against blacks. After years and years and changes in minds and behaviors by education and communication, it seems terribly ugly and unbelievable!
Is such religious discrimination legal in the United States today?
Some religious discrimination in the US is legal, but it depends on by whom it is being committed, and it what context. The first and 14th amendments prohibit discrimination based on religion (or, in the 14th amendment's case, in general) for the federal and state governments.
The First Amendment:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech
The Fourteenth Amendment:
No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.
Since Bolling v. Sharpe, a Supreme Court decision from 1954, the Fifth amendment has also been interpreted to imply equal protection under federal law. The fourtheenth amendment applies only to the states.
Religious discrimination by the government is subject to the standard of strict scrutiny, which means that the discrimination must be necessary to further a significant government interest, narrowly tailored to further that interest, and must be the least restrictive means of doing so. Otherwise, it's unconstitutional.
Private discrimination against religion is also regulated: the Civil Rights Act prohibits religious discrimination in hiring, payment, employment benefits, etc.
However, hate speech in the US, including hate speech targeted at religion, is legal in the US. The First Amendment guarantees freedom of speech, and the Supreme Court ruled in R.A.V v. City of St. Paul that the fact that laws against calls to violence were constitutional did not mean that laws against hate speech were constitutional, as hate speech did not constitute "fighting words".
There are 3 separate issues here:
Q: Is that specific sign "illegal" or even "discrimination"?
A1: According to the article, nobody admitted to posting the sign (and the store owner plans to remove it). Therefore, since the sign is not a factual policy of any public or private entity and merely someone's personal piece of paper, it's not illegal (see Avi's answer re: hate speech).
A2: Moreover, based on the facts in the article, it's nowhere near "discrimination". The owners indicated that they would tow EVERYONE's car who's not a customer, Muslim or not - which is a normal policy in pretty much every private parking lot of any store I've ever been in. The only way this could be "discrimination" would be if the towing policy explicitly excluded non-Muslims. Therefore, the premise of the question (is such discrimination legal) is wrong since no discrimination took place.
Q: Now, let's assume the sign WAS indeed officially posted by the store (which it wasn't as per the article), as the store's official policy. Would posting such a policy be illegal?
A: May be. This is a conflict between free speech and Civil Rights act. I'm not aware of any cases where it was decided, but absent discriminatory enforcement of this policy, the sign itself would likely still be legal. However, having such a sign might be a good way to be found in violation of #3.
Q. Let's say, it was an official policy (which it wasn't as per the article) AND it was enforced in such a discriminatory way.
A. That WOULD be illegal.
The Federal Civil Rights Act guarantees all people the right to "full and equal enjoyment of the goods, services, facilities, privileges, advantages, and accommodations of any place of public accommodation, without discrimination or segregation on the ground of race, color, religion, or national origin."
No, it is illegal
Houston, Texas is inside Harris County. The Texas Legislature passed the Bandit Sign Law in 2007 (House Bill 413 that added civil penalties and empowered the County Attorney and District Attorney to take legal action to collect those penalties.
The law prohibits posting a sign on property that is part of the road right of way. This includes signs nailed to utility poles, pasted to traffic control boxes, placed in medians and islands, or attached to traffic sign poles. Typically the public right of way extends beyond the paved portion of the road and includes sidewalks. Utility poles are usually in the public right of way.
Section 393 of the Transportation Code is the law that governs signs on public ways.
Sec. 393.002. SIGN PLACEMENT PROHIBITED. Except as provided by Sections 393.0025 and 393.0026, a person may not place a sign on the right-of-way of a public road unless the placement of the sign is authorized by state law.
