In the 1930 case of Memphis & Charleston Railway Company v. Pace et al., the U.S Supreme Court ruled in favor of the railway company, reversing a judgment from a lower court that had awarded damages to Pace for injuries sustained while working on one of its trains. The central issue was whether or not federal law applied to this dispute, as opposed to state law which would have been more favorable to Pace's claim. The court held that because interstate commerce was involved, federal law did indeed apply and under those laws, it found no negligence on part of the railway company. This decision clarified jurisdictional issues between state and federal courts when dealing with cases involving interstate commerce.

In the dissenting opinion for Memphis & Charleston Railway Company v. Pace et al., Justice Stone argued that the majority's decision to uphold a Tennessee law requiring railroads to provide equal but separate accommodations for white and black passengers was inconsistent with previous Supreme Court rulings. He contended that this law, which allowed railway companies to segregate passengers based on race, violated the Equal Protection Clause of the Fourteenth Amendment. Furthermore, he disagreed with the majority's assertion that segregation did not imply inferiority or inequality between races. In his view, enforced separation inherently implied legal inferiority of one group compared to another and thus constituted discrimination prohibited by federal law.