In Benz et al. v. Compania Naviera Hidalgo, S.A., the U.S Supreme Court ruled that American labor laws did not apply to foreign workers on a foreign ship docked in an American port. The case arose when German seamen picketed against their Panamanian employer while the vessel was docked in Portland, Oregon for repairs. They were protesting over unpaid wages and poor working conditions under their employment contract signed abroad. Their employer sued them for violating the Taft-Hartley Act which prohibits certain types of strikes and boycotts by unions or union members within US jurisdiction. The court held that applying U.S labor law would infringe upon the rights of other nations to regulate their own ships and could potentially disrupt international maritime commerce due to conflicting national regulations regarding labor relations aboard ships at sea or in foreign ports. Thus, it concluded that Congress had not intended such extraterritorial application of domestic legislation unless clearly expressed otherwise; henceforth establishing a precedent known as "the doctrine of territoriality" where local laws do not extend beyond its territory without explicit legislative intent.

In the dissenting opinion for Benz et al. v. Compania Naviera Hidalgo, S.A., Justice Frankfurter argued that the majority's decision to not apply U.S labor laws to foreign ships in American waters was a misinterpretation of legislative intent and precedent. He contended that Congress intended for these laws to protect all workers within U.S jurisdiction, regardless of nationality or location of employment contract signing. Furthermore, he pointed out that previous court decisions had applied domestic law on foreign vessels when they were within national boundaries and engaged with local commerce or industry activities. Therefore, he believed it was incorrect and inconsistent to exclude this case from such legal principles simply because it involved labor disputes rather than other types of commercial issues.