In the 1892 case of Mitchell v. New York, Lake Erie and Western Railroad Company, the U.S Supreme Court ruled in favor of the railroad company. The plaintiff, Mitchell, was a passenger on one of the defendant's trains when he was injured due to an accident caused by negligence on part of some employees. He sued for damages but his claim was denied because he had not paid full fare for his ticket as required by law at that time; instead he traveled using a "1,000-mile" ticket which cost less than regular fares. The court held that since Mitchell did not pay full fare for his journey and thus violated state laws regulating railroads' tariffs (which were designed to protect passengers), he could not recover damages from the railroad company even though it might have been negligent.

In the dissenting opinion for Mitchell v. New York, Lake Erie and Western Railroad Company, it was argued that the majority's decision to hold a railroad company liable for damages caused by an employee who acted outside of his scope of employment was incorrect. The dissenting justices believed this ruling expanded employer liability beyond established legal principles. They contended that employers should only be held responsible for actions committed by their employees within the course of their duties or in furtherance of their employer’s interests. In this case, they pointed out that the conductor had no authority to eject passengers from moving trains and thus his actions were not representative or reflective of those sanctioned by his employer -the railroad company-. Therefore, according to them, holding the company accountable would set a dangerous precedent where businesses could potentially be held liable for any action taken by an employee regardless if such action is related with its job responsibilities or not.