The U.S. Supreme Court case London Guarantee & Accident Company, Ltd., v. Industrial Accident Commission of California et al., 1928, revolved around the issue of workers' compensation for a seaman who was injured while working on a ship that was docked in California but owned by an English company. The worker sought compensation under Californian law; however, the employer argued that as they were an English company and the contract was made in England, only English law should apply. The court ruled in favor of the employee stating that since he had been hired to work aboard a vessel operating within navigable waters of California and his injury occurred there too, it fell under jurisdictional purview of Californian laws despite being employed by an overseas entity or having signed employment contracts elsewhere.

In the dissenting opinion for London Guarantee & Accident Company, Ltd. v. Industrial Accident Commission of California, Justice Holmes argued that the majority's decision was inconsistent with previous rulings and violated principles of federalism by allowing a state to impose its laws on an out-of-state contract. He contended that while states have broad powers to regulate their own affairs, they should not be able to extend their jurisdiction beyond their borders in this manner. The justice believed that the case involved a contract made outside of California between parties who were not residents there at the time it was executed; therefore, he thought it inappropriate for California law to apply simply because one party later moved there and became injured within its boundaries. In his view, such application would unfairly burden interstate commerce and infringe upon other states' rights to govern contracts made within their jurisdictions according to their own laws.