In the Nippert v. City of Richmond case in 1945, the U.S Supreme Court ruled that a city cannot impose higher license fees on out-of-state businesses than it does on local businesses. The court held that such differential treatment violated the Commerce Clause of the U.S Constitution which prohibits states from passing legislation that improperly burdens or discriminates against interstate commerce. In this case, Mr. Nippert was an out-of-state salesman who sold merchandise in Richmond and was required to pay a $500 annual fee for his business license while local vendors were charged only $25 per year for similar licenses. The court found this discriminatory practice unconstitutional as it placed undue burden on interstate commerce.

In the dissenting opinion for Nippert v. City of Richmond, Justice Frankfurter argued that the majority's decision undermined state sovereignty and disregarded precedent regarding interstate commerce regulation. He contended that states should have the power to regulate business activities within their borders, including those involving out-of-state entities. The justice believed this was not a case of discriminatory taxation but rather an exercise of local authority over businesses operating in its jurisdiction. Furthermore, he pointed out that previous court decisions had upheld similar taxes imposed by states on foreign corporations doing business within their boundaries as long as they were fairly apportioned and did not discriminate against interstate commerce. Therefore, according to Justice Frankfurter’s view, Richmond's tax ordinance should have been upheld because it met these criteria.