The U.S. Supreme Court case Atascadero State Hospital et al. v. Scanlon, 1984 revolved around the issue of whether a state or its entities could be sued in federal court under Section 504 of the Rehabilitation Act of 1973 without explicit consent from the state itself. The plaintiff, Scanlon, was an employee at Atascadero State Hospital who claimed that he had been discriminated against due to his physical disability and sought damages under Section 504 which prohibits such discrimination by any program receiving federal financial assistance. However, the hospital argued that it was immune from such suits as per Eleventh Amendment immunity unless there is clear language waiving this right in law or if they voluntarily participated in federal programs knowing about potential liability for non-compliance with anti-discrimination provisions. The Supreme Court ruled in favor of Atascadero State Hospital stating that Congress did not express unequivocally that states would lose their constitutional immunity upon accepting funds under Rehabilitation Act; hence no waiver can be implied on part of states just because they accepted these funds.

In the dissenting opinion for Atascadero State Hospital et al. v. Scanlon, Justice Brennan argued that Congress had clearly intended to abrogate state immunity in cases of discrimination under Section 504 of the Rehabilitation Act of 1973. He pointed out that this was evident from both the language and legislative history of the statute, which explicitly prohibited any program receiving federal funds from discriminating on grounds of disability. Furthermore, he contended that by accepting federal funds, states implicitly consented to waive their Eleventh Amendment immunity rights as they were aware such funding came with conditions attached including compliance with anti-discrimination laws. Therefore, according to Justice Brennan's interpretation, a private individual should be able to sue a state entity for damages under Section 504 if it violated these provisions.