In the case of Ferguson v. St. Louis-San Francisco Railway Co., the U.S Supreme Court ruled in favor of the railway company, stating that it was not liable for injuries sustained by a worker on its premises due to negligence under Missouri's Employer's Liability Act because he was an independent contractor and not an employee at the time of his injury. The plaintiff, Mr. Ferguson, had been employed as a carpenter by another company which had contracted with St.Louis-San Francisco Railway Co., to repair their boxcars at their yard in Springfield, Missouri when he got injured during work hours from falling off a ladder provided by his employer (the other contracting firm). He sued both companies but lost against them in lower courts before appealing to the Supreme Court where they affirmed these decisions based on evidence showing that there were no control or supervision exercised over him or his co-workers' activities by representatives from St.Louis-San Francisco Railway Co.

In the dissenting opinion for Ferguson v. St. Louis-San Francisco Railway Co., Justice Frankfurter argued that the Court had overstepped its bounds by interpreting a state law, which he believed was not within their jurisdiction. He contended that it is up to the states themselves to interpret and apply their own laws unless there is a clear violation of federal law or constitutional rights, neither of which were present in this case according to him. Furthermore, he expressed concern about setting a precedent where federal courts could interfere with state legal matters without just cause. This interpretation would lead to an imbalance between state and federal powers as defined by the Constitution.