Hodgson v. Butts was a case heard by the United States Supreme Court in 1805. The dispute arose when Hodgson, an Englishman living in Georgia, sued Butts for libel after he published false statements about him. At issue before the court was whether or not state law could be used to determine damages for libel committed against a non-citizen of that state. The court ultimately held that it could not and instead applied federal common law to resolve the matter between them. In its decision, the court noted that while states had jurisdiction over matters within their borders, they did not have authority over those outside of their boundaries unless Congress specifically granted it to them through legislation or treaty obligations with foreign nations. This ruling established precedent which has been followed ever since regarding how disputes involving citizens from different countries should be handled under U.S law

In Hodgson v. Butts, the Supreme Court was asked to decide whether a state court had jurisdiction over an action brought by a citizen of one state against another in which the cause of action arose from events that occurred outside both states. The majority opinion held that such cases were within the exclusive jurisdiction of federal courts and could not be tried in state courts. However, Justice Paterson dissented on this point, arguing that there is no constitutional provision explicitly granting exclusive jurisdiction to federal courts for out-of-state causes of action and thus it should remain with the states as part of their inherent sovereignty. He further argued that if Congress intended to grant such power exclusively to federal courts they would have done so expressly rather than leaving it open for interpretation or implication. Therefore he concluded that since there was no explicit language granting this authority solely to federal courts then it must remain with each individual state's judicial system as part of its sovereign powers granted by Article III Section 2 Clause 1 and Amendment 10 respectively