In the case of Baltimore Contractors, Inc. v. Bodinger (1954), the U.S Supreme Court dealt with an issue concerning a construction contract for federal housing projects and whether it fell under state or federal jurisdiction. The plaintiff, Baltimore Contractors, claimed that they were not paid in full by the defendant for their work on a federally funded project managed by Philadelphia Housing Authority (PHA). They argued that since PHA was acting as an agent of the United States government during this project, any disputes should be resolved in federal court rather than state court. However, both lower courts ruled against them stating that PHA was not acting as a federal agency but rather as an independent contractor which made it subject to Pennsylvania law and thus within state jurisdiction. The Supreme Court reversed these decisions ruling 5-3 in favor of Baltimore Contractors stating that when public agencies are carrying out programs financed entirely by Federal funds then they act on behalf of the United States making such cases fall under exclusive Federal Jurisdiction.

In the dissenting opinion for Baltimore Contractors, Inc. v. Bodinger, Justice Robert H. Jackson argued that the majority's decision to allow a suit against a government contractor was inconsistent with previous rulings and could potentially expose contractors to excessive liability risks. He contended that allowing such suits would discourage private companies from contracting with the government due to fear of litigation, which in turn could hinder public works projects and other governmental operations reliant on these contracts. Furthermore, he expressed concern over potential conflicts between federal and state laws regarding contractor liabilities if this precedent were set by the court's ruling.