In the 1988 case of Neitzke et al. v. Williams, the U.S Supreme Court examined whether a complaint can be dismissed as frivolous under 28 U.S.C §1915(d) if it fails to state a claim upon which relief can be granted. The plaintiff, an inmate in Wisconsin's prison system, filed a civil rights suit against prison officials alleging that they had conspired to misdiagnose his condition and give him improper medical treatment for cancer he did not have. The District Court dismissed the lawsuit as frivolous under §1915(d). However, on appeal by Williams, the Supreme Court held that a complaint cannot be dismissed simply because it appears unlikely that its factual allegations could lead to liability; rather dismissal is only appropriate when claims lack arguable basis either in law or fact such as legal conclusions unsupported by any alleged facts or fanciful factual allegations. Therefore, failure to state valid legal claim does not equate with "frivolousness". Consequently, William’s case was remanded back down for further proceedings.

In the dissenting opinion for Neitzke et al. v. Williams, Justice Stevens argued that a complaint should not be dismissed as frivolous unless it is based on an "indisputably meritless legal theory." He disagreed with the majority's view that a claim can be considered frivolous even if it is based on an arguable question of law or fact. According to him, this approach could potentially discourage inmates from filing legitimate complaints due to fear of sanctions for filing 'frivolous' lawsuits. Furthermore, he expressed concern about leaving too much discretion in the hands of district court judges when determining what constitutes a frivolous claim and suggested that such power might lead to inconsistent rulings across different courts.