In the Golden State Transit Corp. v. City of Los Angeles case in 1985, the Supreme Court ruled that a city could not refuse to renew a taxi company's franchise because it was involved in a labor dispute. The court held that federal law preempts local government from conditioning the renewal of a business license on settling such disputes, as this interferes with federally protected rights under National Labor Relations Act (NLRA). Golden State Transit Corporation had been denied its franchise renewal by LA City Council due to an ongoing strike and labor dispute with Teamsters Union Local 572. The council argued they were acting for public welfare reasons - maintaining peace during contentious strikes - but the court found their actions violated NLRA protections for both employers and employees' right to engage in collective bargaining without undue interference from local or state governments.

In the dissenting opinion for Golden State Transit Corp. v. City of Los Angeles, Justice White argued that the city's refusal to renew Golden State's franchise did not violate federal labor law because it was a legitimate exercise of its regulatory power over local businesses. He contended that while federal law preempts state and local regulation of labor disputes, this case involved a business dispute rather than a labor dispute since the disagreement centered on whether or not to renew a taxi franchise license. Furthermore, he noted that there was no evidence showing that the city intended to interfere with collective bargaining rights or processes by refusing to renew the license; instead, they were merely exercising their authority as regulators in response to public complaints about service disruptions caused by ongoing strikes at Golden State.