This is a Supreme Court case decided on June 8, 2015. The issue involved in the case is a rather unusual one for a Supreme Court case.
In 2002 Congress enacted a law mandating that American citizens born in Jerusalem can request that their place of birth be listed as "Israel" on their passports. Since the official position of the U.S. has always been that it recognizes no country's sovereignty over Jerusalem, the State Dept. records the place of birth in such instances not as "Israel", but rather as "Jerusalem". Plaintiff Zivotofsky filed suit to require that his passport reflect the Congressional mandate.
The majority interpreted this as requiring that the official U.S. policy on recognition of a foreign sovereign be changed. Since the Constitution does not specifically say that diplomatic recognition is solely the province of the executive, the majority ruled by analogy from other powers that the executive does have under the Constitution, such as the power to receive ambassadors from other sovereign countries. The court also looked at the historical record, beginning with Washington's recognition of the new government in France following the revolution there, and doing this without consulting with Congress. Based on both of these analytic threads, the majority concluded that the Congressional mandate in question was invalid, because the power to recognize foreign governments rests solely with the executive branch.
This was a 5-4 decision, with the conservatives dissenting, three of them dissenting completely and Thomas dissenting in part (he felt that it was OK for Congress to make its requirement for consular reports of birth abroad, but not for passports).
Roberts' dissent emphasizes that this is the first time the court "accepted a president's direct defiance of an Act of Congress in the field of foreign affairs". Roberts expressed doubt that the president's power of recognition is exclusive. But he then goes on to say that "even if the president does have exclusive recognition power, he still cannot prevail in this case, because the statute at issue does not implicate recognition".
Scalia filed a separate dissent in which he took apart the majority's position more systematically. Scalia notes that Congress has power over passports, due to the clause in the Constitution giving it power to establish a "uniform Rule of Naturalization". This really decides the issue, other than noting that putting "Israel" as the nation of birth on passports for kids born in Jerusalem does not equate to recognition of Israel's sovereignty over Jerusalem. Scalia's conclusion, then, is that "the court's decision does not rest on text or history or precedent".
Scalia vs. Thomas. Scalia and Thomas really sniped at each other in their respective dissents. They called each other by name over and over, in their attempts to specifically refute the other's arguments.
Kennedy again the swing vote. Kennedy wrote the opinion for the majority. This was one of many cases in which the four-member liberal bloc stuck together in this term, which was a very successful one for the liberal side. Part of this success is due to the four sticking together, and speaking with one voice rather than sniping at each other as the conservatives sometimes did. And they were happy to allow that "one voice" to be another justice, as in Kennedy here, with Roberts occasionally filling this role in other cases.
Breyer's position. Breyer filed a two-sentence concurrence stating that he believes the case presents a political question which the judicial system should stay out of. But he joined the majority because "precedent precludes resolving this case on political question grounds."
Roberts' deference to Congress. It has been noted that Roberts was the only justice to defer to the legislative branch on both the Obamacare and the gay marriage decisions. In this case, he again demonstrates that same deference to the legislative branch, which presumably is speaking the will of the people.
So who's right? This seems to be one of those hard cases that makes bad law. Jerusalem is such a sensitive issue on the international stage, that the majority felt it crucial that the U.S. speak with one voice on that issue. And the majority obviously agrees with the position of the executive branch here, rather than the legislative branch.
The idea that the relatively innocuous act of listing a kid's place of birth as "Israel" on his passport amounts to recognition of Israel's sovereignty over Jerusalem is silly. And, as Scalia points out, if there was indeed any real confusion about this, the president could easily issue a statement clarifying his administration's position on the matter. So, the dissent is legally correct.