In the 1938 case Pacific Employers Insurance Co. v. Industrial Accident Commission, the U.S Supreme Court ruled in favor of the California Industrial Accident Commission, stating that a Massachusetts-based insurance company must comply with California's workers' compensation laws for an injury sustained by one of its employees while temporarily working in California. The court held that there was no violation of full faith and credit clause as it did not require a state to substitute another state’s law when dealing with matters within its own jurisdiction. This decision established precedent regarding conflicts between states’ laws on worker protection rights and set boundaries on how far-reaching these protections could be applied across different jurisdictions.

In the dissenting opinion for Pacific Employers Insurance Co. v. Industrial Accident Commission, Justice Benjamin Cardozo disagreed with the majority's decision to apply California law instead of Massachusetts law in a workers' compensation dispute involving an injury that occurred in California but was covered by a policy issued in Massachusetts. He argued that there should be one controlling jurisdiction and it should be where the contract was made unless both parties agreed otherwise or if applying such principle would violate public policy. In this case, he believed neither exception applied and thus Massachusetts law should govern as per terms of the insurance contract itself which stated it complied with laws of that state only. He expressed concern over potential chaos from allowing multiple jurisdictions to interpret contracts differently and warned against undermining full faith and credit clause of Constitution which requires states respect each other’s judicial proceedings.