The U.S. Supreme Court case Minneapolis, St. Paul & Sault Ste. Marie Railway Company v. Washburn Lignite Coal Company in 1920 revolved around a dispute over freight rates for transporting coal between the two companies involved - a railway company and a coal company. The Washburn Lignite Coal Company had sued the railway company alleging that it was charging excessive rates for transportation of its lignite coal which violated the Interstate Commerce Act (ICA). The lower court ruled in favor of the coal company, ordering reparations to be paid by the railroad firm based on an estimated reasonable rate rather than actual costs incurred during transport operations. However, upon appeal to the Supreme Court, this decision was reversed with Justice Mahlon Pitney delivering majority opinion stating that under ICA provisions only allowed reparation orders if it could be proven that existing charges were unreasonable and unjustly discriminatory against shippers or localities; not simply because they exceeded what might have been deemed as 'reasonable'. Therefore, without concrete evidence showing discrimination or unreasonableness beyond mere excessiveness compared to hypothetical 'reasonable' rates, no reparations could be ordered according to ICA stipulations.

In the dissenting opinion for Minneapolis, St. Paul & Sault Ste. Marie Railway Company v. Washburn Lignite Coal Company, Justice Holmes disagreed with the majority's decision that a railroad company could not charge higher rates to customers who were located closer to its source of supply than those farther away. He argued that there was no legal basis for this conclusion and that it contradicted established principles of commerce and trade practices in which prices often vary based on distance from the source of supply or other factors unrelated to cost. Furthermore, he contended that such a ruling would unfairly burden railroads by forcing them to subsidize certain businesses at their own expense without any clear benefit or justification.