In the case of Holyoke Water Power Co. v. American Writing Paper Co., the Supreme Court was tasked with determining whether a water power company could be held liable for damages caused by changes in water levels due to its operations. The American Writing Paper Company sued Holyoke Water Power Company, claiming that their paper mill had been damaged as a result of these fluctuations in water level. The court ruled in favor of the defendant, stating that they were not responsible for any damage because they operated within their rights under state law and did not exceed those rights or act negligently. Furthermore, it was determined that there wasn't sufficient evidence to prove causation between the actions of Holyoke Water Power Company and the alleged damages suffered by American Writing Paper Company.

In the dissenting opinion for Holyoke Water Power Co. v. American Writing Paper Co., Justice Cardozo disagreed with the majority's decision to allow a lower court to determine whether or not a dam was causing harm by obstructing navigation on a river, arguing that this issue should be decided by Congress and federal agencies instead. He believed that it was inappropriate for courts to make such determinations because they lacked the technical expertise necessary to evaluate complex issues related to water flow and power generation. Furthermore, he argued that allowing courts to decide these matters could lead to inconsistent rulings across different jurisdictions, which would create uncertainty for businesses operating in those areas. Therefore, he concluded that disputes over navigable waters should be resolved through legislative action rather than judicial intervention.