In the 1942 case of Matton Steamboat Co., Inc. et al. v. Murphy, Acting Industrial Commissioner, et al., the U.S Supreme Court ruled in favor of New York State's right to award unemployment compensation benefits to a former employee of Matton Steamboat Company who was laid off when his ship was docked for repairs in New York waters. The company argued that it should not have to pay because its operations were primarily interstate and thus outside state jurisdiction under the Commerce Clause of the Constitution. However, Justice Frankfurter writing for majority held that while navigation is subject to federal control under commerce clause, this does not prevent states from providing social welfare measures like unemployment compensation within their borders even if they incidentally affect navigation.

In the dissenting opinion for Matton Steamboat Co., Inc. et al. v. Murphy, Acting Industrial Commissioner, et al., Justice Frankfurter argued that the majority's decision to uphold New York State's unemployment compensation law as applied to maritime workers was incorrect because it interfered with federal jurisdiction over maritime matters under the U.S Constitution’s Commerce Clause and Admiralty Jurisdiction Clause. He contended that Congress had exclusive power in this area and any state laws should be considered invalid if they conflicted with federal legislation or policy regarding interstate commerce or admiralty affairs. According to him, allowing states to regulate these areas would lead to a chaotic system of conflicting rules and regulations which could potentially disrupt national uniformity in dealing with issues related to navigation, shipping, and commerce on navigable waters.