In the 1977 case of Monell v. Department of Social Services of the City of New York, the U.S Supreme Court ruled that local governments are "persons" who can be sued for constitutional violations under Section 1983 when such violations result from a governmental policy or custom, even if carried out by its employees. The case arose after female employees at the Department of Social Services and Board of Education in New York claimed they were forced to take unpaid leaves during their pregnancies, which was considered discriminatory and unconstitutional. This decision overruled Monroe v. Pape (1961), where it had been held that municipalities were not persons under Section 1983; thus, could not be sued for damages.

In the dissenting opinion for Monell v. Department of Social Services of the City of New York, Justice William Rehnquist argued that municipalities should remain immune from liability under Section 1983 unless Congress explicitly states otherwise. He contended that this case did not present a compelling reason to overturn Monroe v. Pape, which had established municipal immunity in 1961 based on an interpretation of Congressional intent when passing the Civil Rights Act in 1871. Rehnquist also disagreed with the majority's view that every act by a city employee could potentially make cities liable under Section 1983; he believed such broad liability would be financially burdensome and administratively unmanageable for local governments.