In the 1913 case of Erie Railroad Company v. Williams, the U.S Supreme Court ruled in favor of the Erie Railroad Company. The State of New York had imposed a tax on foreign corporations for each mile of track they operated within its borders, and this was challenged by the railroad company as unconstitutional. The court held that while states have broad powers to tax businesses operating within their boundaries, these taxes must not discriminate against interstate commerce or unduly burden it. In this case, since domestic companies were not similarly taxed per mile of track operated within New York state's borders, it constituted discrimination against out-of-state entities engaged in interstate commerce which is prohibited under the Commerce Clause of Constitution. Therefore, such taxation was deemed unconstitutional.

The dissenting opinion in the case of Erie Railroad Company v. Williams, as Commissioner of Labor of the State of New York, argued that the majority's decision was a misinterpretation and overreach into state law. The dissenters believed that it was not within the jurisdiction or authority of federal courts to interpret or interfere with state laws unless there is an explicit conflict with federal legislation. They contended that New York’s labor law did not infringe upon any rights granted by Congress to interstate commerce companies such as Erie Railroad Company. Instead, they viewed this law as a legitimate exercise by the state to protect its workers' welfare and safety without impeding on interstate commerce operations significantly enough for it to be considered unconstitutional under Commerce Clause grounds.