In the 1971 case Moose Lodge No. 107 v. Irvis et al., the U.S. Supreme Court ruled that a private club's racially discriminatory guest policy did not constitute state action and therefore was not subject to constitutional scrutiny under the Equal Protection Clause of the Fourteenth Amendment. The plaintiff, K. Leroy Irvis, an African American man who was denied service at Moose Lodge No. 107 due to his race, argued that because Pennsylvania’s liquor licensing board had granted a license to this lodge which practiced racial discrimination in its membership policies, it constituted state involvement or "state action". However, the court held in a majority decision that while states cannot facilitate racial discrimination through their regulatory powers over liquor licenses, merely issuing such licenses does not make them complicit in any discriminatory practices by those they regulate.

In the dissenting opinion for Moose Lodge No. 107 v. Irvis, Justice Douglas argued that the lodge's racially discriminatory membership policies were a violation of the Equal Protection Clause of the Fourteenth Amendment because they were supported by state action. He contended that since Moose Lodge operated under a state liquor license and was subject to extensive regulation by Pennsylvania's Liquor Control Board, it was essentially functioning as an arm of the state government. Therefore, its racial discrimination constituted unconstitutional state action. Furthermore, he asserted that private clubs should not be allowed to discriminate on grounds such as race or religion simply because they are considered "private." The majority’s decision allowing this practice would set a dangerous precedent where any organization could potentially claim itself as “private” in order to evade anti-discrimination laws.