In the case of Louisville Gas & Electric Company v. Coleman, Auditor, 1927, the Supreme Court ruled in favor of Louisville Gas & Electric Company (LG&E). The company had challenged a Kentucky law that imposed taxes on its out-of-state property and operations. LG&E argued that this was unconstitutional as it violated their rights to due process under the Fourteenth Amendment. The court agreed with LG&E's argument stating that a state cannot tax property or business activities outside its jurisdiction because it has no power or control over them. Therefore, Kentucky’s attempt to impose such taxes was deemed unlawful by the Supreme Court.

In the dissenting opinion for the case of Louisville Gas & Electric Company v. Coleman, Justice Holmes argued that Kentucky's tax on out-of-state corporations was not discriminatory and did not violate the Commerce Clause of the U.S Constitution. He contended that it was within a state's rights to impose taxes on foreign corporations doing business within its borders as long as they were applied equally to all such entities. The fact that domestic companies might be taxed differently or even exempted from certain taxes did not constitute discrimination in his view because states have different relationships with foreign and domestic businesses. Therefore, he disagreed with majority’s ruling which held this tax unconstitutional due to alleged violation of interstate commerce clause.