The U.S. Supreme Court case Louisville & Nashville Railroad Co. v. Sloss-Sheffield Steel & Iron Company in 1925 revolved around a dispute over freight rates for the transportation of iron ore between two companies, the Louisville and Nashville Railroad Co., and the Sloss-Sheffield Steel and Iron Company. The railroad company had increased its freight rates, which was challenged by Sloss-Sheffield as being unreasonable and discriminatory under the Interstate Commerce Act (ICA). The Interstate Commerce Commission (ICC) sided with Sloss-Sheffield, ruling that the new rates were indeed unjustly discriminatory against them compared to other customers of similar circumstances who received lower rates from L&N Railroad Co.. However, on appeal to federal court, this decision was reversed due to lack of substantial evidence supporting ICC's findings. This led to an appeal at Supreme Court level where it held that courts should not interfere with administrative decisions unless there is clear error or abuse of discretion involved; hence reinstating ICC's original decision favoring Sloss-Sheffield.

In the dissenting opinion for Louisville & Nashville Railroad Co. v. Sloss-Sheffield Steel & Iron Company, Justice Holmes argued that the railroad company should not be held liable for damages caused by sparks from its locomotives igniting a fire on adjacent property owned by Sloss-Sheffield Steel & Iron Company. He reasoned that the use of spark arresters or other similar devices was not an absolute guarantee against fires and thus it would be unreasonable to demand such perfection from railroads in their operations. Furthermore, he contended that if every industry were held to this standard of liability, economic progress could potentially be stifled due to excessive caution and fear of litigation. In his view, some risks are inherent in industrial activities and those who engage in them should bear these risks as part of doing business rather than seeking compensation through lawsuits.