The Oakley v. Louisville & Nashville Railroad Co. case in 1949 revolved around a dispute over the interpretation of the Federal Employers' Liability Act (FELA). The plaintiff, Oakley, was an employee of the railroad company who suffered injuries while working due to alleged negligence on part of his employer. He filed a lawsuit seeking compensation for his injuries under FELA which allows workers to sue their employers for damages resulting from work-related injuries caused by negligence. However, there was disagreement about whether or not he could recover full damages as per Alabama law or if it should be reduced according to contributory negligence principles under federal common law - this principle reduces damage awards based on the degree that plaintiffs are found responsible for their own injury. The Supreme Court ruled in favor of Oakley stating that state laws cannot limit rights and remedies provided by FELA and therefore, contributory negligence does not apply here. This meant that even if Oakley had contributed partially towards his injury through some form of carelessness or lack thereof safety measures at work, he would still receive full compensation as mandated by FELA.

In the dissenting opinion for Oakley v. Louisville & Nashville Railroad Co., Justice Robert H. Jackson argued that the majority's decision was a departure from established principles of federalism and judicial restraint, which traditionally limit the Supreme Court's interference in state affairs. He contended that Kentucky law should govern this case as it involved an accident within its jurisdiction involving residents of Kentucky and a corporation operating under its laws. The majority’s ruling, he believed, overstepped boundaries by applying federal common law instead of respecting state sovereignty to decide on matters concerning their citizens' safety regulations at work sites. Furthermore, he criticized the court for creating new legal standards without clear constitutional or statutory authority and warned against potential consequences such as confusion among lower courts and inconsistency in future decisions.