In the case of Dunbar-Stanley Studios, Inc. v. Alabama (1968), the U.S Supreme Court ruled in favor of Dunbar-Stanley Studios, a photography company based outside Alabama that had been taxed by the state for doing business within its borders. The court held that under the Due Process and Commerce Clauses of the Constitution, a state cannot tax an out-of-state corporation unless it has a substantial nexus with that state. In this case, Dunbar-Stanley's activities in Alabama were limited to taking photographs at military bases and sending them out-of-state for processing before they were returned to customers in Alabama; thus these activities did not constitute sufficient connection or "nexus" with Alabama to justify taxation by it.

In the dissenting opinion for Dunbar-Stanley Studios, Inc. v. Alabama, the justice argued that the state of Alabama's tax on out-of-state photographers was not discriminatory and did not violate the Commerce Clause of the U.S Constitution. The justice contended that all businesses operating within Alabama were subject to a license tax, regardless if they were in-state or out-of-state entities. Therefore, it wasn't an unfair burden placed specifically on interstate commerce but rather a general business obligation applicable to all enterprises functioning within state borders. Furthermore, he pointed out that there was no evidence presented showing this taxation had any detrimental impact on interstate commerce or created any commercial advantage for local businesses over their non-resident counterparts.