In the 1909 case of Ludwig, Secretary of State of Arkansas v. Western Union Telegraph Company, the Supreme Court ruled in favor of Western Union. The state of Arkansas had imposed a tax on telegraph companies based on their gross receipts from both interstate and intrastate business operations. However, Western Union argued that this taxation was unconstitutional as it violated the Interstate Commerce Clause by taxing interstate commerce activities which were under federal jurisdiction. The court agreed with this argument and held that while states could tax businesses operating within their borders, they could not impose taxes on revenues derived from interstate commerce activities because such power belonged exclusively to Congress under the U.S Constitution's Commerce Clause.

In the dissenting opinion for Ludwig v. Western Union Telegraph Company, Justice Harlan argued that the majority's decision was inconsistent with previous rulings and violated principles of federalism. He contended that Arkansas had a right to regulate businesses within its borders and impose taxes on them as it saw fit. The state law in question did not interfere with interstate commerce or violate any constitutional provisions, according to him. Furthermore, he disagreed with the majority's interpretation of what constituted "doing business" in a state, arguing that sending telegrams into or out of Arkansas should be considered doing business there even if those messages originated or were received elsewhere. Therefore, he believed Western Union should be subject to taxation under Arkansas law.