In the case of Gonzalez v. Automatic Employees Credit Union et al., 1974, the U.S. Supreme Court dealt with a dispute over whether federal courts had jurisdiction to hear cases involving state-chartered credit unions under Section 1349 of Title 28 in United States Code. The plaintiff, Mr. Gonzalez, filed a class-action lawsuit against Automatic Employees Credit Union and its board members alleging that they violated California's usury laws by charging excessive interest rates on loans to their members. The defendants argued that since they were incorporated under California law rather than federal law, the suit should be dismissed for lack of subject matter jurisdiction. The District Court initially agreed with this argument and dismissed the case; however, upon appeal by Mr.Gonzalez ,the Ninth Circuit reversed this decision stating that because credit unions are regulated at both state and national levels it was appropriate for federal courts to have jurisdiction over such disputes. However,the U.S Supreme court disagreed with Ninth circuit's ruling.In an unanimous opinion written by Justice William O.Douglas,the supreme court held that only corporations primarily regulated by Federal Law can invoke section 1349 as basis for Jurisdiction.The judgement concluded saying "since respondents are not federally chartered or federally insured financial institutions but entities created under state law",they cannot avail themselves of section 1349.Therefore,it affirmed district court's dismissal due to lack of subject-matter Jurisdiction.

In the dissenting opinion for Gonzalez v. Automatic Employees Credit Union, Justice William O. Douglas argued that the majority's decision to uphold a California law allowing wage garnishment without prior notice or hearing violated due process rights under the Fourteenth Amendment. He contended that such laws could lead to serious financial hardship for individuals whose wages were suddenly seized, potentially leaving them unable to meet basic living expenses or support their families. Furthermore, he criticized the majority's reliance on Sniadach v. Family Finance Corp., which upheld similar laws in Wisconsin, arguing it was wrongly decided and should not be used as precedent here.