The opinion of the court was delivered by: FREEDMAN
The facts in this case are undisputed. They are drawn from the pleadings and stipulations of the parties.
Defendant Moose Lodge No. 107 is a non-profit corporation organized under the laws of Pennsylvania. It is a subordinate lodge chartered by The Supreme Lodge of the World, Loyal Order of Moose, a non-profit corporation organized under the laws of Indiana, which we permitted to intervene and argue as amicus curiae. The local Lodge conducts all its activities in Harrisburg in a building which it owns. It has never been the recipient of public funds. It is the holder of a club liquor license issued by the defendant Liquor Control Board of the Commonwealth of Pennsylvania, pursuant to the provisions of the Pennsylvania Liquor Code, Act of April 12, 1951, P.L. 90, as amended.
Under its charter from the Supreme Lodge the local Lodge is bound by the constitution and general by-laws of the Supreme Lodge.
The Constitution of the Supreme Lodge provides: "The membership of the lodges shall be composed of male persons of the Caucasian or White race above the age of twenty-one years, and not married to someone of other than the Caucasian or White race, who are of good moral character, physically and mentally normal, who shall profess a belief in a Supreme Being. * * *"
The lodges accordingly maintain a policy and practice of restricting membership to the Caucasian race and permitting members to bring only Caucasian guests on lodge premises, particularly to the dining room and bar.
On Sunday, December 29, 1968, a Caucasian member in good standing brought plaintiff, a Negro, to the Lodge's dining room and bar as his guest and requested service of food and beverages. The Lodge through its employees refused service to plaintiff solely because he is a Negro.
Plaintiff complained of the refusal of service to the Pennsylvania Human Relations Commission, which upheld his complaint. The Commission held that the dining room was a "place of public accommodation," within the definition of the Pennsylvania Human Relations Act of February 28, 1961, P.L. 47,
and that the local Lodge had been guilty of discrimination against defendant. On appeal by the local Lodge the Court of Common Pleas of Dauphin County reversed the Commission and held that the dining room was not a place of public accommodation within the meaning of the Act.
In the meanwhile plaintiff brought this action in the District Court for the Middle District of Pennsylvania, and this three-judge court was constituted under 28 U.S.C. § 2281 to determine whether the issuance or renewal by the Pennsylvania Liquor Control Board under the Pennsylvania Liquor Code of a club liquor license to the local Lodge despite its discrimination against Negroes violates the Equal Protection Clause of the Fourteenth Amendment.
Racial discrimination is undisputed in this case. It was not only practiced against plaintiff by the local Lodge but is required by the constitution of the Supreme Lodge.
The boundaries which define what is state action are not always clear.
This case presents a situation which is one of first impression. It comes to us surrounded by a mass of decisions which can serve as guides, although they do not authoritatively direct our conclusion.
We believe the decisive factor is the uniqueness and the all-pervasiveness of the regulation by the Commonwealth of Pennsylvania of the dispensing of liquor under licenses granted by the state. The regulation inherent in the grant of a state liquor license is so different in nature and extent from the ordinary licenses issued by the state that it is different in quality.
It had always been held in Pennsylvania, even prior to the Eighteenth Amendment, that the exercise of the power to grant licenses for the sale of intoxicating liquor was an exercise of the highest governmental power, one in which the state had the fullest freedom inhering in the police power of the sovereign.
With the Eighteenth Amendment which went into effect in 1919 the right to deal in intoxicating liquor was extinguished. The era of Prohibition ended with the adoption in 1933 of the Twenty-first Amendment, which has left to each state the absolute power to prohibit the sale, possession or use of intoxicating liquor, and in general to deal otherwise with it as it sees fit.
The issuance or refusal of a license to a club is in the discretion of the Liquor Control Board.
In order to secure one of the limited number of licenses which are available in each municipality
an applicant must comply with extensive requirements, which in general are applicable to commercial and club licenses equally. The applicant must make such physical alterations in his premises as the Board may require and, if a club, must file a list of the names and addresses of its members and employees, together with such other information as the Board may require.
He must conform his overall financial arrangements to the statute's exacting requirements
and keep extensive records.
He may not permit "persons of ill repute" to frequent his premises
nor allow thereon at any time any "lewd, immoral or improper entertainment."
He must grant the Board and its agents the right to inspect the licensed premises at any time when patrons, guests or members are present.