In the case of Home Telephone and Telegraph Company v. City of Los Angeles (1908), the U.S Supreme Court ruled in favor of the city, upholding its right to regulate public utilities. The dispute arose when Los Angeles granted a 50-year franchise to Pacific States Telephone and Telegraph Company for telephone services, but later also awarded a similar contract to Home Telephone & Telegraph Co., which offered lower rates. Pacific sued on grounds that this violated their exclusive rights under their original agreement with the city. However, both California courts and subsequently the Supreme Court disagreed, asserting that municipalities have an inherent power over streets for regulatory purposes including granting franchises for public utilities like telephones; thus they could grant multiple such contracts if it served public interest.

In the dissenting opinion for Home Telephone and Telegraph Company v. City of Los Angeles, Justice Harlan argued that the majority's decision violated principles of equal protection under the law. He contended that by allowing Los Angeles to grant a telephone franchise to one company while denying it to another, without any clear or reasonable basis for such discrimination, was unconstitutional. The city had not demonstrated that there were material differences between companies which would justify different treatment; thus, in his view, this constituted an arbitrary exercise of power inconsistent with constitutional guarantees. Furthermore, he disagreed with the majority's interpretation of 'due process,' arguing instead that due process should protect against unjust and oppressive legislation as well as from judgments rendered without proper legal procedures.