The U.S. Supreme Court case Detroit United Railway v. City of Detroit in 1918 revolved around a dispute between the city and a private railway company over streetcar fares. The city had granted the railway company permission to operate on its streets, but with an agreement that it would not charge more than three cents per ride without approval from the city council. However, due to rising operational costs during World War I, the railway sought to increase fares without obtaining this approval first. When sued by the city for violating their contract, they argued that such regulation was unconstitutional as it violated their rights under both state law and federal commerce laws. The Supreme Court ruled against them stating that cities have broad powers to regulate public utilities operating within their jurisdiction including setting fare rates if deemed necessary for public welfare or convenience; these regulations do not violate either state or federal constitution provisions unless they are unreasonable or arbitrary.

In the dissenting opinion for Detroit United Railway v. City of Detroit, Justice Louis Brandeis argued that the majority's decision was a departure from established principles of law and an unwarranted interference with local self-government. He contended that the city had acted within its rights in refusing to renew franchises for street railways operating within its limits unless they agreed to certain conditions aimed at protecting public interests. These conditions included fare reductions and improvements in service quality. According to Justice Brandeis, these were reasonable demands given the monopoly status enjoyed by these companies and their use of public streets for private profit. He also pointed out that such regulatory powers are typically vested in local authorities who are best positioned to understand and respond to community needs.