In Borden's Farm Products Co., Inc. v. Baldwin, the U.S Supreme Court ruled on a case involving the regulation of milk prices by New York State in 1934. The court upheld that states have the right to regulate industries within their borders for public welfare purposes under their police power, even if it interferes with interstate commerce. In this case, Borden’s Farm Products Company challenged a law enacted by New York State which set minimum and maximum retail prices for milk sold within its jurisdiction as unconstitutional because it violated the Commerce Clause of the Constitution by interfering with interstate trade. However, Justice Benjamin Cardozo writing for majority held that while state laws affecting interstate commerce would normally be invalid under Dormant Commerce Clause jurisprudence; such laws could be upheld if they were designed to protect vital interests of health and safety - an exception known as "the Milk Exception". This decision reaffirmed states' rights to enact legislation protecting public health and welfare.

In the dissenting opinion for Borden's Farm Products Co., Inc. v. Baldwin, Justice McReynolds argued that the New York law in question was unconstitutional because it violated the Due Process Clause of the Fourteenth Amendment. He believed that by forcing milk producers to sell their products at a fixed minimum price, this law interfered with free trade and individual liberty of contract without providing any substantial public benefit or promoting general welfare in return. Furthermore, he contended that such regulation should be left to Congress rather than state legislatures as it involved interstate commerce issues which could lead to conflicting state laws and disrupt national economy if each state were allowed to set its own rules regarding pricing and distribution of goods crossing its borders.