While many colleges bar discrimination against gay people, many religious colleges do not, because their anti-bias regulations do not cover sexual orientation. Seton Hall University, a Roman Catholic institution, is an exception. Its anti-bias policy specifically covers sexual orientation. And that set the stage for an unusual legal dispute over the university’s right to assert its religious identity in denying recognition to a gay student group. A New Jersey court had been poised to allow a suit against the university go forward. But an appeals court ruled Wednesday that Seton Hall was within its rights to deny recognition to the...