In the case of Mitchell, Secretary of Labor v. Budd et al., 1955, the U.S. Supreme Court ruled in favor of James P. Mitchell, then Secretary of Labor who sought to enforce compliance with wage and hour provisions under the Fair Labor Standards Act (FLSA) against railroad repair shop contractors Budd Company and Erie Railroad Company. The defendants argued that they were exempt from these provisions as their activities fell within FLSA's exemption clause for "any employee engaged in commerce or in the production of goods for commerce". However, Justice Tom C. Clark delivered a unanimous opinion stating that while railroads are instrumentalities of interstate commerce; repairing them is an indirect rather than direct partaking in such commerce hence not covered by said exemption clause.

In the dissenting opinion for Mitchell, Secretary of Labor v. Budd et al., Justice Frankfurter disagreed with the majority's interpretation of the Fair Labor Standards Act (FLSA). He argued that Congress did not intend to include employees involved in maintenance and repair work within transportation companies under FLSA’s coverage. The justice believed that these workers were more closely related to local activities rather than interstate commerce, thus falling outside the scope of federal regulation. Furthermore, he contended that this broad interpretation could lead to an excessive expansion of federal power into areas traditionally regulated by states. Therefore, he dissented from the majority's decision which held such workers as covered by FLSA.