Each year the City of Pawtucket, Rhode Island, erects a Christmas display. The display is located in a park owned by a nonprofit organization and located in the heart of the downtown shopping district. The city acts in cooperation with the downtown retail merchants' association.
The display includes a Santa Claus house, reindeer pulling Santa's sleigh, candy-striped poles, a Christmas tree, carolers, cutout figures representing characters such as a clown, an elephant, and a teddy bear, hundreds of colored lights, a large banner that reads "SEASONS GREETINGS," and a crèche.
The crèche, which has been included in the display for forty or more years, consists of the traditional figures including the Infant Jesus, Mary and Joseph, angels, shepherds, kings, and animals, all ranging in height from five inches to five feet. In 1973 the city acquired the present crèche at a cost of $1,365. It is now valued at $200. The erection and dismantling of the crèche costs the city about $20 per year. Nominal expenses are incurred in lighting it. All components of the display are owned by the city.
Pawtucket residents who are individual members of the Rhode Island affiliate of the American Civil Liberties Union, together with that affiliate, brought this action in the United States District Court for the District of Rhode Island. The suit challenged the city's inclusion of the crèche in the annual display.
The District Court held that the city's inclusion of the crèche in the display violates the Establishment Clause. The court found that by including the crèche the city had tried to endorse and promulgate religious beliefs. It found that erection of the crèche had the real and substantial effect of affiliating the city with the Christian beliefs that the crèche represents. The appearance of official sponsorship conferred more than a remote and incidental benefit on Christianity. Although the court acknowledged the absence of administrative entanglement, it found excessive entanglement as a result of the political divisiveness of including the crèche. The court permanently enjoined the city from including the crèche in the display.
A divided panel of the Court of Appeals for the First Circuit affirmed. The Supreme Court granted certiorari.
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