In the case of Franchise Tax Board of California v. Alcan Aluminium Ltd., the U.S Supreme Court ruled in 1989 that a state could not tax an out-of-state corporation on income derived from another subsidiary operating within its borders, unless there was a clear connection between the parent company and the subsidiary's operations in that state. The court found that Alcan Aluminium Limited, a Canadian corporation with subsidiaries operating in California, did not have such connections to justify taxation by California's Franchise Tax Board. This decision reinforced principles of federalism and interstate commerce protection under U.S law by limiting states' power to impose taxes on foreign corporations without sufficient nexus or business presence within their jurisdiction.

In the dissenting opinion for Franchise Tax Board of California v. Alcan Aluminium Ltd., Justice Blackmun, joined by Justices Brennan and Marshall, disagreed with the majority's view that federal courts lack jurisdiction over this case under 28 U.S.C §1331. They argued that a state tax dispute involving foreign commerce does raise a substantial federal question because it implicates significant national interests in maintaining harmonious international relations and ensuring uniform treatment of taxpayers nationwide. The dissent also criticized the majority's reliance on principles of comity to justify its decision, arguing that these considerations should not override Congress' clear intent to provide a federal forum for cases arising under federal law. Furthermore, they contended that denying access to federal courts could potentially violate due process rights by forcing nonresident defendants into an unfamiliar state court system without any connection to their home jurisdiction.