In the case of Erie Railroad Company v. Collins, 1919, the U.S Supreme Court ruled in favor of Erie Railroad Company. The plaintiff, Collins had sued for damages after being injured while working on a train owned by the defendant company in Ohio. However, he filed his lawsuit in New York where he resided and where the company was incorporated. The court held that since both parties were residents of New York State at the time when suit was brought up; therefore it did not violate due process clause under Fourteenth Amendment to subject railroad corporation to jurisdiction of courts of state wherein it has accepted service and is doing business even though cause arose from transaction occurring outside that state.

In the dissenting opinion for Erie Railroad Company v. Collins, Justice Oliver Wendell Holmes Jr. argued that the majority's decision to hold a railroad company liable for injuries sustained by an employee due to negligence of another employee was unjustified and inconsistent with previous rulings on similar cases. He contended that under federal law, employers should not be held responsible for accidents caused by their employees' carelessness unless it could be proven that they were aware of such behavior and did nothing to correct it or prevent its recurrence. In this case, he believed there was no evidence showing the employer knew about any negligent conduct from its workers prior to the accident occurring. Therefore, he disagreed with imposing liability on them based solely on their employment relationship with the person who acted negligently.