In Peterson et al. v. City of Greenville, the U.S Supreme Court ruled that a city ordinance requiring racial segregation in restaurants was unconstitutional and violated the 14th Amendment's Equal Protection Clause. The case arose when ten African American students were arrested for trespassing after refusing to leave a segregated lunch counter in South Carolina where they had been denied service due to their race. The defendants argued that they were not trespassing as they intended to purchase food and only sat at the counter after being refused service elsewhere in the restaurant. They also contended that enforcing such an ordinance constituted state action endorsing racial discrimination, which is prohibited by the Constitution. The court agreed with this argument, stating that while private individuals have some leeway regarding whom they serve or associate with, government entities cannot enforce laws mandating racial segregation because it infringes upon equal protection rights guaranteed by law. This decision marked another significant step towards dismantling Jim Crow laws across America.

In the dissenting opinion for Peterson et al. v. City of Greenville, Justice Harlan argued that the court's decision to strike down a local segregation ordinance was based on an incorrect interpretation of state action doctrine. He contended that private businesses should be allowed to enforce their own discriminatory policies without being considered as acting under color of law or performing a public function simply because they are regulated by city ordinances. According to him, such regulation does not convert these private acts into state actions subject to constitutional scrutiny unless there is significant involvement from the State in enforcing those practices. Therefore, he believed that it was inappropriate for the Supreme Court to intervene in this case since it involved privately owned restaurants rather than government entities and did not meet his criteria for constituting "state action".