In the 1972 case of California et al. v. LaRue et al., the U.S Supreme Court upheld a decision by the State of California to regulate lewd behavior in establishments licensed to serve alcohol, including prohibiting explicit live entertainment and films. The plaintiffs, owners of such establishments, argued that these regulations violated their First Amendment rights to freedom of speech and expression. However, the court ruled in favor of California with a majority opinion delivered by Justice Rehnquist stating that while states have limited control over private conduct under the Twenty-first Amendment (which ended Prohibition), they do have broad authority when it comes to regulating liquor sales and can impose restrictions on activities within businesses selling alcohol if those activities could potentially lead to moral or social harm.

In the dissenting opinion for California v. Larue, Justice William O. Douglas argued that the majority's decision was an overreach of government power and a violation of First Amendment rights. He contended that while states have the right to regulate alcohol consumption, they do not have unlimited authority to restrict freedom of expression in places where alcohol is served. The regulations imposed by California on establishments serving liquor were seen as overly broad and restrictive by Douglas; he believed these rules infringed upon protected forms of speech and expression without sufficient justification or evidence showing harm caused by such expressions in bars or nightclubs. Furthermore, he criticized the court's reliance on unproven assumptions about potential harms rather than concrete facts when making their ruling.