The Lynch v. Donnelly case in 1983 revolved around a Christmas display funded by the city of Pawtucket, Rhode Island. The display included both secular and religious symbols such as Santa Claus and a nativity scene respectively. A group of residents sued the city, arguing that this violated the Establishment Clause of the First Amendment which prohibits government endorsement or promotion of religion. However, in a 5-4 decision, the Supreme Court ruled that despite including religious elements, Pawtucket's Christmas display did not violate this clause because it also had legitimate secular purposes like celebrating holidays and promoting retail commerce. The court reasoned that there was no intent to promote or favor any particular religion over others; rather it was part of broader holiday celebration reflecting cultural diversity.

In the dissenting opinion for Lynch v. Donnelly, Justice Brennan argued that the city's nativity scene display violated the Establishment Clause of the First Amendment, which prohibits any law respecting an establishment of religion. He contended that government should not appear to endorse or disapprove of a particular religious belief and this principle is crucial in maintaining religious liberty in a diverse society like America. The majority’s argument about historical acceptance was dismissed by him as he believed it did not justify violation of constitutional principles. Furthermore, he disagreed with their view on secular symbols reducing overall religious message; instead asserting they amplified it by highlighting Christmas' Christian origins over other holidays'. Lastly, he criticized them for failing to apply Lemon test correctly (a three-pronged approach used to determine if government action violates Establishment Clause), stating they ignored its purpose - preventing governmental endorsement or disapproval of religion.