After deciding that Michael Newdow had standing to bring his case and that it was possible for him and his daughter to be harmed by the state-endorsed recitation of the Pledge of Allegiance, the Court considered whether or not the Pledge passed the "Endorsement Test" formulated by Justice O'Connor in Lynch v. Donnelly. According to the majority opinion, the Pledge definitely endorses religion and religious belief:
...the phrase "one nation under God" in the context of the Pledge is normative. To recite the Pledge is not to describe the United States; instead, it is to swear allegiance to the values for which the flag stands: unity, indivisibility, liberty, justice, and - since 1954 - monotheism. ...A profession that we are a nation "under God" is identical, for Establishment Clause purposes, to a profession that we are a nation "under Jesus," a nation "under Vishnu," a nation "under Zeus," or a nation "under no god," because none of these professions can be neutral with respect to religion.
Clearly, if "under no god" would entail a discouragement of religion and religious belief, then "under god" entails an encouragement of religion and religious beliefs. If "under no god" is unconstitutional, then "under god" must also be unconstitutional - they are two sides of the same question. Use of "under no god" would tell theists that they are outsiders; similarly, the Court held that the phrase "under god" sends a message to unbelievers "that they are outsiders, not full members of the political community, and an accompanying message to adherents that they are insiders, favored members of the political community." (quoted in the decision from Lynch)
The Court further held that the Pledge fails the Coercion Test, as used in Lee v. Weisman. Just as in the Lee case, the Pledge forces students to choose between participating in an exercise with religious content or protesting - not something which the government should be permitted to do.
Although the Pledge could be invalidated on either of the above points, the Court then proceeded to apply the Lemon Test. To survive the Lemon Test and be found constitutional, a law must: (1) have a secular purpose, (2) have a principal or primary effect that neither advances nor inhibits religion, and (3) not foster an excessive government entanglement with religion.
According to the Court, the Pledge readily fails the first prong because the legislative history makes it clear that the purpose of the words "under God" was to advance religion. The defendants argued that the whole Pledge was not religious, but the Court recognized that this wasn't relevant due to the fact that the problematic words "under God," were specifically inserted long after the Pledge as a whole was formulated.
The school district's policy itself failed the second prong of the Lemon Test because "the policy is highly likely to convey an impermissible message of endorsement to some and disapproval to others of their beliefs regarding the existence of a monotheistic God."
The Court applied every possible test to the Pledge and the policy of reciting the pledge, finding that none of the tests were successful. As a result, the Court held that both the addition of the words "under God" and the school district's policy itself were violations of the Establishment Clause.
The decision of this panel of three judges was not unanimous. According to the dissent, the conclusions reached above would end up being problematic because:
...we will soon find ourselves prohibited from using our album of patriotic songs in many public settings. "God Bless America" and "America The Beautiful" will be gone for sure, and while use of the first and second stanzas of the Star Spangled Banner will still be permissible, we will be precluded from straying into the third.
It does not appear as though the dissent really understands the decision because neither of the aforementioned songs have had their lyrics dictated by law, and it is such laws which are at question.
The plaintiff, Michael Newdow, successfully represented himself in this case.