In the 1938 case Clark, Director of Department of Motor Vehicles, et al. v. Paul Gray, Inc., et al., the United States Supreme Court ruled on a dispute involving automobile dealerships and their right to sell cars in California without being licensed by the state's Department of Motor Vehicles (DMV). The DMV had attempted to enforce a law requiring out-of-state car sellers to obtain licenses before selling vehicles within California borders. However, Paul Gray Inc., an Arizona-based company that sold cars in both states but was only licensed in Arizona, challenged this requirement as unconstitutional under the Commerce Clause. The Supreme Court sided with Paul Gray Inc., ruling that while states have broad powers to regulate businesses for public safety or welfare reasons under their police power authority; they cannot interfere with interstate commerce unless authorized by Congress. This decision reaffirmed previous rulings limiting state regulation over interstate commerce and clarified how these principles apply specifically within auto sales industry.

In the dissenting opinion for Clark, Director of Department of Motor Vehicles, et al. v. Paul Gray, Inc., et al., Justice Black argued that the majority's decision to uphold a California law requiring out-of-state car dealers to pay a fee before selling cars in California was unconstitutional. He believed it violated the Commerce Clause by discriminating against interstate commerce and favoring local businesses over those from other states. Furthermore, he disagreed with the majority's interpretation of what constituted "doing business" within a state and felt that occasional sales did not meet this threshold. Lastly, he expressed concern about how such laws could lead to retaliatory measures between states and hinder free trade among them.