In the 1921 case Gooch v. Oregon Short Line Railroad Company, the United States Supreme Court ruled in favor of the railroad company. The plaintiff, Mr. Gooch, was an employee of a subcontractor hired by the defendant to perform construction work on its railway line. He sustained injuries while working and sought compensation from both his direct employer (the subcontractor) and indirectly from Oregon Short Line Railroad Company under Federal Employers' Liability Act (FELA). However, FELA only applies to employees directly employed by railroads involved in interstate commerce; it does not cover workers employed by independent contractors or subcontractors unless they are deemed as "borrowed servants" acting under direct control and supervision of the railroad company at time of injury. The court found that Mr. Gooch did not meet this criteria because he was supervised solely by his immediate employer - the subcontractor - rather than being subject to any direction or control from Oregon Short Line Railroad Company during his work activities when injured. Therefore, despite acknowledging that railroads could be held liable for negligence causing injury to their own employees under FELA provisions, this liability did not extend beyond those directly employed thus exempting them from responsibility towards injuries suffered by contractor's staff like Mr.Gooch.

In the dissenting opinion for Gooch v. Oregon Short Line Railroad Company, Justice McReynolds disagreed with the majority's interpretation of the Federal Employers' Liability Act (FELA). He argued that FELA was not intended to cover all injuries sustained by railroad employees while on duty but only those directly caused by their employment. In this case, he believed that Mr. Gooch’s injury from a rock falling into his bunk in a boarding car did not arise out of his employment as required under FELA because it could have happened to anyone and was unrelated to any specific risk associated with railway work. Therefore, he concluded that there should be no liability for the company under federal law.