In the case of Kelleam et al. v. Maryland Casualty Co. Of Baltimore, MD., et al., 1940, the U.S Supreme Court was tasked with determining whether a federal district court in California had jurisdiction over an insurance company incorporated in Maryland and doing business in California when it came to enforcing a judgment obtained by residents of Oklahoma against one of its policyholders who was also based out of Oklahoma. The plaintiffs were seeking damages for injuries sustained from an automobile accident that occurred within their home state involving the insured party. The Supreme Court ruled that while the insurer did conduct business within California, this fact alone did not grant jurisdiction to enforce judgments related to incidents outside its borders where neither party involved resided there nor had any significant connection with it at all beyond being insured by a company operating therein. This decision clarified how far-reaching jurisdictions could be applied regarding corporations conducting interstate commerce and highlighted limitations on using such connections as grounds for legal action enforcement across state lines.

In the dissenting opinion for Kelleam et al. v. Maryland Casualty Co., Justice Black argued that the majority's decision was inconsistent with previous rulings and violated principles of federalism by allowing a federal court to intervene in a state legal matter. He contended that this case should have been handled exclusively within the jurisdiction of Oklahoma, where it originated, rather than being taken up by a federal court in Texas. Furthermore, he believed that there were no grounds for diversity jurisdiction because all parties involved were from Oklahoma; thus, there was no conflict between citizens of different states which would necessitate intervention by a federal court. Lastly, he criticized the majority's interpretation of an insurance contract clause as overly broad and not reflective of its original intent or language.