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The teens initially sued the Riverside County school in 2005 based on a state anti-discrimination law.
The California Supreme Court is letting stand a lower court ruling that allowed a private religious school to expel two girls for an alleged lesbian relationship.
The state's highest court this week declined a request from the girls' attorney to review the case.
The 4th District Court of Appeal in Riverside in January had upheld California Lutheran High School's right as a private, religious organization to exclude students based on their sexual orientation.
The teens initially sued the Riverside County school in 2005 based on a state anti-discrimination law.
Advocates for religious freedom called it the right decision but the girls' attorney, Mike Grace, said he fears the decision could open the door to more religious discrimination.