In the case of Jett v. Dallas Independent School District, 1988, the U.S. Supreme Court ruled that local government entities such as school districts could be held liable for monetary damages under federal law if they violated an individual's constitutional rights. The case was brought by a white athletic director who claimed he had been demoted to a lower-paying position because of his advocacy on behalf of black student athletes in violation of his First Amendment rights. The court found that the school district could be sued under Section 1983, a civil rights statute allowing individuals to sue governmental bodies for constitutional violations, but only if it was proven that the violation resulted from an official policy or custom within the organization itself and not just actions taken by individual employees or officials.

In the dissenting opinion for Jett v. Dallas Independent School District, Justice Brennan disagreed with the majority's interpretation of 42 U.S.C. §1983 and its application to local government entities like school districts. He argued that this statute should be read as a direct response to state violations of civil rights during Reconstruction, thus it should apply directly to states and their subdivisions without needing an intermediary 'person' who acted under color of law. Furthermore, he contended that Congress intended for municipalities to be held liable when they violated federally protected rights through official policy or custom - not just individual employees acting on behalf of the entity. The majority's decision in his view undermined Congressional intent by limiting liability only to individuals rather than holding institutions accountable for systemic issues leading to constitutional violations.