In the 1938 case of Neblett et al. v. Carpenter, Insurance Commissioner, et al., the U.S Supreme Court ruled in favor of insurance companies that had been sued by policyholders for allegedly violating anti-trust laws. The plaintiffs claimed that these companies conspired to fix premium rates and boycott any company not adhering to their rate-setting practices, thus creating a monopoly which violated the Sherman Anti-Trust Act. However, the court held that insurance was not considered interstate commerce under federal law at this time and therefore did not fall within purview of said act. This decision effectively shielded insurance businesses from federal regulation until Congress passed legislation specifically including them in 1944 with McCarran-Ferguson Act.

In the dissenting opinion for Neblett et al. v. Carpenter, Insurance Commissioner, et al., Justice Black argued that the majority's decision to uphold a state law allowing insurance companies to discriminate based on race was unconstitutional and violated equal protection under the Fourteenth Amendment. He contended that there should be no distinction between citizens in terms of their rights and privileges; thus, it is unjustifiable for an insurance company to charge higher premiums or deny coverage altogether based solely on one's race. Furthermore, he criticized the majority’s reliance on outdated precedents which upheld racial discrimination as legal within certain contexts such as education and housing but not applicable in this case involving economic transactions like purchasing life insurance policies.