In the case of California Water Service Co. et al. v. City of Redding et al., 1937, the U.S Supreme Court ruled in favor of California Water Service Company (CWSC). The dispute arose when CWSC challenged a city ordinance that required it to pay for fire hydrant service as part of its franchise agreement with the City of Redding, arguing that this constituted an unlawful taking without just compensation under the Fifth and Fourteenth Amendments. The court agreed with CWSC's argument, stating that while municipalities have broad powers to regulate public utilities within their jurisdiction, they cannot impose fees or charges on these companies without providing fair compensation or due process rights. This decision set a precedent for future cases involving similar disputes between private utility companies and local governments over regulatory fees and charges.

In the dissenting opinion for California Water Service Co. et al. v. City of Redding et al., Justice Butler argued that the majority's decision to uphold a municipal ordinance allowing the city to provide water service within its boundaries was an unconstitutional violation of contract rights and due process protections under the Fourteenth Amendment. He contended that, by granting exclusive franchise rights to private companies and then later establishing a competing public utility, the city had effectively impaired those contracts in violation of Article I, Section 10 of the Constitution which prohibits states from passing laws impairing contractual obligations. Furthermore, he asserted that this action deprived these companies of their property without due process as it significantly reduced their customer base and revenue potential without any compensation or legal recourse available.