In the case of Cosmopolitan Shipping Co. v. McAllister, 1948, the U.S Supreme Court ruled in favor of Cosmopolitan Shipping Company against Captain John McAllister. The dispute arose when a ship owned by Cosmopolitan was damaged during World War II while under charter to the United States and commanded by Captain McAllister who was an employee of the United States but not of Cosmopolitan. After repairs were made on credit, creditors filed libel suits against both parties for payment which led to this litigation process. The court held that since Captain McAllister had complete control over navigation decisions as per his employment contract with the government and acted within those duties when damage occurred, he could not be personally liable for negligence causing said damages. Furthermore, it stated that even though a chartered vessel remains in ownership of its owner (Cosmopolitan), if total control is given to another party (the U.S Government) then they are responsible for any incurred liabilities during their possession period unless otherwise agreed upon beforehand.

In the dissenting opinion for Cosmopolitan Shipping Co. v. McAllister, Justice Jackson argued that the majority's decision to hold a shipowner liable for injuries sustained by an employee due to negligence of fellow employees was inconsistent with maritime law and precedent. He contended that this ruling would unfairly burden shipowners and potentially disrupt maritime commerce as it imposed liability without fault on employers who were not directly responsible for any negligent actions leading to injury or harm. Furthermore, he expressed concern over the potential implications of such a broad interpretation of employer liability in other areas of law beyond just maritime cases.