In the case of Atlas Life Insurance Co. v. W.I. Southern, Inc., 1938, the U.S Supreme Court was asked to determine whether a federal court in Oklahoma had jurisdiction over an insurance company incorporated and domiciled in that state but which conducted business across multiple states including Texas where it issued a policy on the life of one Mr. Southern who later died there as well. The plaintiff corporation (W.I Southern), being from Texas, filed suit against Atlas Life Insurance Company for recovery under said policy in Federal District Court claiming diversity jurisdiction since they were citizens of different states. However, Atlas argued that because its principal place of business was also within Oklahoma like its incorporation domicile - despite conducting interstate commerce - it should be considered only a citizen of Oklahoma thus negating diversity jurisdiction. The Supreme Court disagreed with this argument stating that for purposes of diversity jurisdiction under federal law, corporations are deemed to be citizens not just where they are incorporated or have their principal place of business but also any state wherein they conduct substantial operations; hence affirming lower courts' decisions allowing the lawsuit by W.I Southern against Atlas Life Insurance Company to proceed.

In the dissenting opinion for Atlas Life Insurance Co. v. W.I Southern, Inc., it was argued that the majority's decision to uphold a state law requiring out-of-state insurance companies to maintain reserves equal to their liabilities in each individual state was an undue burden on interstate commerce and thus unconstitutional. The dissenting justices believed that this requirement would effectively force these companies into insolvency by forcing them to hold redundant reserves across multiple states rather than one consolidated reserve at their home office as is customary practice in the industry. They also pointed out that such laws could potentially lead other states to enact similar legislation, further exacerbating this issue and creating a chaotic regulatory environment for insurance providers operating across state lines. Therefore, they felt that federal regulation of interstate commerce should supersede any conflicting state regulations in order not only protect businesses but also ensure uniformity and predictability within the national marketplace.