In the 1960 case of Horton v. Liberty Mutual Insurance Co., the United States Supreme Court addressed whether a labor arbitrator had exceeded his authority by awarding damages for breach of contract that were not explicitly provided for in the collective bargaining agreement between an employer and union. The court held that when parties agree to submit all disputes to arbitration, they also implicitly agree to accept whatever remedy the arbitrator deems appropriate, unless it is specifically prohibited by their agreement or otherwise unlawful. Therefore, even though the collective bargaining agreement did not expressly provide for such damages, they could be awarded if justified under general principles of contract law. This decision affirmed broad powers for labor arbitrators and reinforced a policy favoring resolution of industrial disputes through arbitration.

In the dissenting opinion for Horton v. Liberty Mutual Insurance Co., Justice Hugo Black disagreed with the majority's interpretation of Section 14(a) of the National Labor Relations Act (NLRA). He argued that it was not intended to allow states to regulate labor disputes involving interstate commerce, but rather to preserve existing state laws regarding union security agreements. He also contended that Congress did not intend for this section to be used as a tool by employers against employees and unions in collective bargaining negotiations. Furthermore, he believed that allowing states such broad power over these matters would undermine federal authority and disrupt uniformity in national labor policy. Therefore, he dissented from the Court's decision which upheld a Massachusetts law prohibiting certain types of strikes during contract negotiations.