http://lawprofessors.typepad.com/files/07-5291_complete_opn.pdfThe church was challenging a school board decision to prohibit the use of the school for worship services. The school board instituted their prohibition as a safeguard against violating the Establishment clause. The 2nd Circuit ruled that the school board wasn't engaging in religious discrimination or abridging the church's free-speech rights and that the board's action was a fair preventative measure.
Lemon is referenced in the Circuit court decision:
In discussing the second prong of the Lemon test, the Supreme Court has warned that violation of the Establishment Clause can result from perception of endorsement. “The Establishment Clause, at the very least, prohibits government from appearing to take a position on questions of religious belief or from ‘making adherence to a religion relevant in any way to a person’s standing in the political community.’” Cnty. of Allegheny, 492 U.S 573, 593-94 (1989) (emphasis added) (quoting Lynch v. Donnelly, 465 U.S. 668, 687 (O’Connor, J., concurring)); see also Lynch, 465 U.S. at 690 (O’Connor, J., concurring)) observing that the second prong of the Lemon test “asks whether, irrespective of government’s actual purpose, the practice under review in fact conveys a message of endorsement or disapproval”); Skoros, 437 F.3d at 17-18. It was certainly not unreasonable for the Board to conclude that permitting the conduct of religious worship services in the schools might fail the second and third prongs of the Lemon test, and that the adoption of the “worship services” branch of SOP § 5.11 was a reasonable means of avoiding a violation of the Establishment Clause.
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bold emphasis mine)