A federal district court in Sacramento has just held that reciting the Pledge of Allegiance in K-12 public school classes is unconstitutional, because it psychologically coerces students to say the "under God" and thus violates the Establishment Clause. Students aren't legally required to say any of the pledge, but the theory, which has pretty substantial foundations in the Supreme Court's precedents, is that they are in any event psychologically coerced, since omitting the "under God" will expose them to opprobrium from their peers.
Interestingly, the court held that this is so because of the binding effect of the Ninth Circuit decision a couple of years ago, the same one that was reversed by the Supreme Court. Recall that the Supreme Court reversed the Ninth Circuit decision on procedural grounds — because Michael Newdow didn't have custody of his daughter, the one who was supposedly being coerced by the Pledge recitation, the Court held that he wasn't entitled to sue. The Court, however, reversed the decision rather than vacating it, and the district court here held that "A decision that is reversed on other grounds may still have precedential value, whereas a vacated decision has no precedential authority." See Durning v. Citibank, N.A., 950 F.2d 1419, 1424 n.2 (9th Cir. 1991) ("A decision may be reversed on other grounds, but a decision that has been vacated has no precedential authority whatsoever."); Pines Land Co. v. U.S., 274 F.3d 881, 894 n.57 (5th Cir. 2001) ("This case illustrates the important difference between our treatment of a panel opinion after vacatur by the Supreme Court and our treatment when a judgment is reversed on other grounds. While our prior opinion in Leiter Minerals II did not bind the Little Lake panel because it was vacated, the opinion in Little Lake binds us because only the judgment was reversed on other grounds.").
This may sometimes be a plausible distinction: For instance, if a court of appeals makes two separate legal rulings in one decision, and the Supreme Court reverses the court as to one, there really hasn't been a reversal of the second legal ruling, and it may well still be properly seen as precedent.
But here the first ruling (about Newdow's standing) that the Court reversed had to do with whether the court of appeals should even have heard the case and made the second ruling (about the constitutionality of the Pledge recitation). The Court essentially ruled that the Ninth Circuit shouldn't have reached the substantive question of the Pledge's constitutionality. I would therefore think that the Ninth Circuit's substantive decision would therefore lose any precedential value it had, since in the Court's view this value was essentially ill-gotten.
Judge Karlton, though, took a different view. Now there'll almost certainly be an appeal, and a new Ninth Circuit panel will have to decide for itself whether it's bound by the prior panel's decision. I predict that the new panel will say that it's not bound (and thus disagree with Judge Karlton on this score). But, hey, I'd have predicted the same about Judge Karlton's decision, and I'd have been wrong. So we'll see what happens.