In the case of District of Columbia v. Carter, 1972, the U.S. Supreme Court ruled that a resident of Washington D.C., who was suing for damages resulting from an alleged assault by two police officers, could not bring his suit in federal court based on diversity jurisdiction because D.C is not considered a state under this statute. The plaintiff had originally filed his lawsuit in federal court citing diversity jurisdiction - which allows cases to be heard in federal courts if they involve citizens from different states - arguing that as a citizen of D.C he should be treated as being from another state when compared with the defendants (the police officers). However, the Supreme Court disagreed and held that for purposes of diversity jurisdiction, Washington D.C does not count as a "state". Therefore it concluded that Mr. Carter's claim did not meet requirements needed to establish diversity jurisdiction and hence must be pursued through local rather than federal courts.

In the dissenting opinion for District of Columbia v. Carter, Justice Douglas argued that the majority's decision to exclude federal enclaves from Fourteenth Amendment protections was misguided and inconsistent with previous rulings. He contended that such a distinction between citizens living in federal enclaves and those residing in states is arbitrary and unjustified, as all U.S. citizens should be entitled to equal protection under the law regardless of their location within the country. Furthermore, he criticized the majority's reliance on outdated precedents which were established during an era when racial discrimination was more prevalent and accepted by society at large. In his view, these old cases do not reflect modern values or legal principles regarding civil rights and equality before law.