The U.S. Supreme Court case New Orleans Public Service, Inc. v. City of New Orleans in 1929 revolved around the issue of whether a city ordinance could force a public utility to continue providing services even after its franchise agreement had expired without violating the Constitution's contract clause or due process clause. The plaintiff, New Orleans Public Service Incorporated (NOPSI), argued that it was unconstitutional for them to be forced by an ordinance from the City of New Orleans to continue operating street railway lines despite their franchise having ended and no new agreement being reached on rates and terms with the city council. However, the court ruled against NOPSI stating that such ordinances were not unconstitutional as they did not violate either clauses mentioned above because they were enacted under police power for public welfare purposes; thus allowing cities to ensure continuity in essential services like transportation.

In the dissenting opinion for New Orleans Public Service, Inc. v. City of New Orleans, Justice Oliver Wendell Holmes Jr., joined by Justices Louis Brandeis and Harlan Fiske Stone, disagreed with the majority's view that a city ordinance requiring street railway companies to sell seven tickets for a quarter was unconstitutional due to it being confiscatory in nature. The dissent argued that there was insufficient evidence presented at trial to support this conclusion and emphasized that courts should not interfere with legislative decisions on economic matters unless they are clearly unreasonable or arbitrary. They believed the judiciary should defer more often to legislative judgment in such cases because legislators have access to local knowledge and expertise which judges do not possess. Furthermore, they pointed out that if businesses could challenge every regulation affecting their profits as confiscatory then virtually all government regulation would be paralyzed.