In the 1925 case of Missouri, Kansas & Texas Railway Company et al. v. Oklahoma et al., the U.S Supreme Court ruled in favor of Oklahoma and upheld a state law that required railroads to maintain separate waiting rooms for black and white passengers. The railway company had argued that this law was unconstitutional because it violated both the Equal Protection Clause of the Fourteenth Amendment and interstate commerce laws by imposing an undue burden on out-of-state businesses. However, citing its previous ruling in Plessy v. Ferguson (1896), which established the "separate but equal" doctrine, the court held that racial segregation did not inherently constitute discrimination under federal law as long as facilities were substantially equal in quality.

In the dissenting opinion for Missouri, Kansas & Texas Railway Company v. Oklahoma et al., Justice Oliver Wendell Holmes Jr. disagreed with the majority's decision to strike down an Oklahoma law that required railroads to maintain and operate passenger trains on all their lines within the state. He argued that states should have broad powers to regulate businesses operating within their borders, especially when it comes to ensuring public safety and welfare. According to him, if a railroad company chooses not only freight but also passenger service as its business model in a particular state, then it must accept any reasonable regulations imposed by that state regarding such services even if they might be inconvenient or costly for them. Furthermore, he contended that courts should defer more often than not to legislative judgments about what constitutes "public convenience and necessity" unless there is clear evidence of arbitrary or discriminatory action.