In the case of Kansas City Southern Railway Company v. Ellzey, the U.S Supreme Court ruled in favor of the railway company. The plaintiff, Ellzey, was a passenger on one of their trains when he suffered injuries due to an accident caused by negligence from a train employee. He sued for damages under Mississippi law which allowed double recovery if it could be proven that the defendant acted with gross negligence or willful misconduct. However, this state law conflicted with federal laws governing interstate commerce and railways which only permitted single recovery for damages regardless of degree of fault. The court held that while states have power to regulate matters within their jurisdiction such as safety measures on railroads operating solely within its borders; they cannot interfere with Congress's exclusive authority over interstate commerce including liability rules for accidents occurring during such operations. Therefore, despite finding evidence supporting gross negligence by railroad employees causing injury to Mr.Ellzey; his claim for double compensation was denied because it violated federal regulations limiting damage awards in these circumstances.

In the dissenting opinion for Kansas City Southern Railway Company v. Ellzey, it was argued that the majority's decision to dismiss the case based on lack of jurisdiction was incorrect. The dissenting justices believed that federal courts did have jurisdiction over this matter because it involved a dispute between citizens of different states and thus met the requirements for diversity jurisdiction under Article III, Section 2 of the U.S Constitution. They contended that even though one party in this case was a corporation, corporations are considered "citizens" under law and therefore their state of incorporation should be taken into account when determining whether there is diversity among parties. Furthermore, they disagreed with majority’s interpretation about “principal place of business” as an additional factor to determine corporate citizenship arguing such notion does not exist in legislation or precedent cases at that time.