In the case of Napa Valley Electric Company v. Railroad Commission of the State of California et al., 1919, the Supreme Court was asked to determine whether a state commission had overstepped its bounds by setting rates for an electric company. The Napa Valley Electric Company argued that their constitutional rights were violated when the California Railroad Commission set what they believed to be unreasonably low rates for their services, which they claimed did not allow them a fair return on their investment and amounted to property confiscation without due process. However, after reviewing all evidence presented in lower courts regarding costs and potential profits under these new rates, as well as considering previous legal precedents about rate regulation powers held by states, the Supreme Court ruled against Napa Valley Electric Company. They found no violation of constitutional rights because there was no clear error or abuse in judgment demonstrated by the state commission's decision-making process.

The dissenting opinion in the case of Napa Valley Electric Company v. Railroad Commission of California argued that the majority's decision to uphold state regulation over private utility rates was an infringement on property rights and a violation of due process under the Fourteenth Amendment. The dissenters believed that while states have power to regulate utilities, this should not extend to setting prices without considering whether these are fair or reasonable for both consumers and companies. They contended that such price-setting could lead to confiscation, as it did not guarantee just compensation for use of property - a fundamental right protected by the Constitution. Furthermore, they disagreed with the majority's view that courts should defer entirely to legislative judgment in rate cases; instead, they maintained courts must independently review whether rates set by regulatory bodies were indeed just and reasonable.