In the case of Owen v. City of Independence, Missouri et al., 1979, the U.S Supreme Court ruled that local governments do not have immunity from liability for damages under Section 1983 when they violate constitutional rights. The case arose after James Owen was dismissed from his position as Chief of Police by the city council without a hearing or an opportunity to challenge their decision - a violation of his Fourteenth Amendment due process rights. He sued for reinstatement and monetary damages under Section 1983, which allows individuals to sue state and local officials who deprive them of constitutional rights while acting "under color" of law. The District Court found in favor of Owen but on appeal, it was held that municipalities were immune from such suits based on common-law tradition. However, upon reaching the Supreme Court, this ruling was overturned with Justice Brennan writing for majority stating that Congress intended no immunities under Section 1983 beyond those provided by statute itself.

In the dissenting opinion for Owen v. City of Independence, Missouri, Justice Powell argued that the majority's decision to deny municipalities immunity from liability under Section 1983 was a departure from common law principles and previous court rulings. He contended that this ruling could potentially expose cities to significant financial burdens due to lawsuits, which would ultimately be borne by taxpayers. Furthermore, he expressed concern over the potential chilling effect on city officials who might become overly cautious in their duties for fear of litigation. Justice Powell also disagreed with the majority's interpretation of Monroe v. Pape (1961), arguing it did not support stripping municipalities of immunity as they had decided.