In the case of Lake Coal Co., Inc. v. Roberts & Schaefer Co., 1985, the U.S Supreme Court was asked to review a decision made by the United States Court of Appeals for the Sixth Circuit regarding a contract dispute between two companies. The plaintiff, Lake Coal Company, had entered into an agreement with Roberts & Schaefer Company for them to construct and deliver coal processing equipment at one of their mines in Kentucky. However, due to delays in delivery and alleged defects in performance by Roberts & Schaefer Company, Lake Coal sued for breach of contract seeking damages. The main issue before the court was whether federal or state law should apply when determining if punitive damages were recoverable under this type of commercial contract dispute involving interstate commerce. The lower courts ruled that federal common law applied which did not allow recovery for punitive damages under these circumstances. However, upon review by Supreme Court it held that state law should govern such disputes unless there is a significant conflict between some federal policy or interest and use of state law; hence remanded back to lower court.

The dissenting opinion in the case of Lake Coal Co., Inc. v. Roberts & Schaefer Co., disagreed with the majority's ruling that a contract dispute between two companies should be resolved by arbitration, even though one company had not explicitly agreed to it. The dissent argued that this decision was inconsistent with federal law and previous court decisions which require clear and unequivocal agreement for arbitration to be enforced. They contended that forcing a party into arbitration without their explicit consent undermines the voluntary nature of this process, potentially leading to unjust outcomes.