Here are a list of precedents for the case.
Lemon v. Kurtzman (1971): A governmental practice must : 1)reflect a clearly secular purpose, 2)have a primary effect that neither advances nor inhibits religion, and 3)avoid excessive government entanglement with religion.
Lynch v. Donnelly (1984): The Court concluded that a nativity display in a public park did not violate the Lemon test since its purpose was to celebrate the Holiday and to depict the origins of that Holiday, advancement of religion was indirect, remote and incidental, and the city erected and maintained the display without any contact with religious authorities.
Allegheny County v. ACLU (1989): The Court ruled that a nativity scene in the county courthouse violated the Establishment Clause because: there were no other non-religious symbols nearby, the display's location meant it was occupying the most beautiful and prominent place in the seat of the county government, and a banner which read "Glory to God in the Highest" made its religious significance manifest to anyone.