In the 1916 case of Louisville & Nashville Railroad Company et al. v. Layton, the U.S Supreme Court ruled in favor of the railroad company. The dispute arose when Mr. Layton was injured while working for the railroad company and sought compensation under Kentucky's Employer's Liability Act (FELA). However, his employment contract stipulated that any injury claims would be governed by Alabama law, which did not provide as generous benefits as FELA. The court held that such a contractual provision was valid and enforceable because it did not violate public policy or deprive an employee of any rights he might have under federal law if he were injured in another state where those laws applied directly to his situation.

In the dissenting opinion for Louisville & Nashville Railroad Company v. Layton, Justice Holmes disagreed with the majority's decision to uphold a Kentucky law that required railroads to provide separate but equal accommodations for black and white passengers. He argued that this law was unconstitutional because it violated the Equal Protection Clause of the Fourteenth Amendment by treating individuals differently based on their race. Furthermore, he contended that such laws perpetuated racial discrimination and segregation in society rather than promoting equality as they claimed to do. In his view, these laws were not about providing equal facilities but about enforcing racial separation and inferiority under state sanction.