In the 1942 case of Great Lakes Dredge & Dock Co. et al. v. Huffman, Administrator, Division of Employment Security, Louisiana Department of Labor, the U.S Supreme Court ruled in favor of Great Lakes Dredge & Dock Company and its co-plaintiffs. The company was involved in dredging operations off the coast of Louisiana and had been assessed unemployment compensation taxes by the state for workers who were not residents there but were temporarily employed on these projects. The court held that under federal law (the Social Security Act), states could only tax services performed within their borders if such service is localized or if it's part of a worker’s base period employment while they are residents there; neither condition applied to this situation as per majority opinion led by Justice Frank Murphy. Therefore, Louisiana did not have jurisdiction to impose unemployment compensation taxes on wages paid to non-resident employees working temporarily within its waters.

In the dissenting opinion for the case of Great Lakes Dredge & Dock Co. et al. v. Huffman, it was argued that Louisiana's unemployment compensation law should not apply to maritime employees working on navigable waters outside the state's boundaries because such application would infrally upon federal jurisdiction over admiralty and maritime matters as per Article III, Section 2 of the U.S Constitution. The dissenting justices believed that this case involved a conflict between state and federal powers where federal power should prevail due to its constitutional basis in regulating interstate commerce and navigation laws. They contended that allowing states to impose their own employment security regulations on maritime workers could lead to inconsistent rules across different states, creating confusion and potential conflicts with federally regulated labor standards in these industries.