In the case of Director General of Railroads v. Kastenbaum, 1923, the U.S Supreme Court ruled in favor of the government's control over railroads during World War I. The plaintiff, Kastenbaum had sued for damages after a railroad accident while he was employed by Pennsylvania Railroad Company which at that time was under federal control due to wartime legislation. The defendant argued that as an agent of the United States operating under war powers granted by Congress, it could not be held liable for injuries sustained by employees in railway accidents unless negligence on its part could be proven beyond doubt. The court agreed with this argument and reversed a lower court decision awarding damages to Mr.Kastenbaum stating that there were no grounds for such claims against federally controlled railroads unless clear evidence showed they failed to exercise all possible care and diligence.

In the dissenting opinion for Director General of Railroads v. Kastenbaum, Justice McReynolds argued that the majority's decision was inconsistent with previous rulings and failed to adequately consider relevant statutes. He contended that under federal law, a railroad company operating in bankruptcy is not liable for injuries sustained by employees during their employment if those injuries were caused by fellow workers' negligence rather than the company's own fault or neglect of duty. In this case, he believed that there was no evidence showing any negligence on part of the employer (the railroad), but only on part of a co-worker whose actions led to Mr. Kastenbaum’s injury. Therefore, according to him, it should be considered as an accident arising from risks inherent in such work environment which does not make an employer liable under Federal Employers’ Liability Act (FELA). Thus, he disagreed with majority’s view and held that judgment should have been directed for defendant notwithstanding verdict.