Alright, I'm gonna get a lot of heat from some of you on this one but no one has said it and it really needs to be said!
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Bottom line in the USA you can refuse to sell anything to anyone for any reason. Even if they want to file a lawsuit it will be so expensive for them and hard to prove anything and it will go nowhere real fast.
Now for the part some of you won't want to hear. I'm all about ethics, I'm also a religious person; but you are all missing the point.
The point is as a professional print provider your only business in looking at a customers job is for quality control. That's it, nothing more!
If a customer sends you a confidential novel that hasn't been released to the public, you have no right or business reading the novel whether it is for fun or for proofreading. Your job is to print it and print it well.
If the IRS or a state government agency hires you, or a medical customer to print variable data, such as w2 forms, 1099s, medical records, etc., it is none of your damn business looking at the information contained within other than for spot checking for consistent quality control.
Likewise, if a customer gives you a print job that contains nudity, it's none of your business or your right to critique the materials contained within other than for quality control.
The only absolute clear exceptions would be obviously child pornography (which little fact, child nudity is not illegal but children in a sexual act is) and counterfeiting of currency. For the tricky gray area stuff you should probably have a liability waiver of some sort; but you're not the police.
Of course you can refuse to print whatever work you want for whatever reason(s) and use whatever method you choose. But someone out there will print the work; and if you end up hurting sales wise, then don't wonder why.
Remember, the customer has a right for their works which are most likely copyrighted or confidential to be kept free from the judgment of their print provider. That includes employees making comments or keeping memento copies for themselves; which in my shop would get you fired.
But then again, we're one of a few printers that has a privacy policy for our customers.