Facts
- Delaware created the Wilmington Parking Authority (Authority), a state agency, to build and operate public parking facilities.
- The Authority constructed the Midtown Parking Center with public funds and revenue bonds and owned and operated the building for public purposes.
- To support the facility financially, the Authority included commercial storefronts and leased one space to Eagle Coffee Shoppe, Inc. (Eagle) under a long-term lease.
- Eagle refused to serve William H. Burton, a Black customer, solely because of his race.
- The lease did not require nondiscriminatory service, and state law did not impose a general duty on restaurants to serve all comers.
- Burton sought declaratory and injunctive relief against both Eagle and the Authority, arguing the exclusion violated the Fourteenth Amendment because it was attributable to the State.
Issues
- Whether a private restaurant’s racial discrimination is “state action” when the restaurant leases premises in, and is physically and financially integrated with, a publicly owned and operated facility.
- Whether the State’s failure, through its agency, to prohibit discrimination in the lease and continued support of the enterprise makes the State a joint participant in the discriminatory conduct.
Decision
- The Supreme Court dismissed the appeal for want of jurisdiction but treated the papers as a petition for certiorari, granted certiorari, and reached the merits.
- The Court reversed the state judgment.
- It held that, in the circumstances presented, Eagle’s refusal to serve Burton was discriminatory state action violating the Equal Protection Clause.
- The Court concluded the Authority and Eagle were interdependent such that the State was a joint participant in the challenged activity.
Legal Principles
- State action may be found only by examining the totality of facts and circumstances to determine whether the State’s involvement in ostensibly private conduct is sufficiently close.
- A private entity’s conduct can be attributable to the State where the State, through ownership, financing, and ongoing interdependence, becomes a joint participant in the private enterprise.
- When the State leases public property in a way that makes the private operation an integral part of a public facility serving public purposes, the Fourteenth Amendment’s nondiscrimination requirements apply to the lessee as if written into the lease.
- Governmental inaction can constitute participation when a state agency knowingly permits discrimination in publicly owned premises from which it derives continuing financial and operational benefits.
- The holding is fact-specific and does not make the State responsible for all discriminatory acts by private parties merely because they are licensed, regulated, or receive some governmental benefit.
Conclusion
Because the restaurant operated within a publicly owned facility under a mutually beneficial, financially interdependent arrangement with a state agency, the State was a joint participant in the enterprise, making the restaurant’s racial exclusion attributable to the State and unconstitutional under the Equal Protection Clause.