In the case of Philadelphia & Reading Railway Company v. Hancock, 1919, the U.S. Supreme Court was asked to determine whether a state court could exercise jurisdiction over an out-of-state corporation in relation to a contract dispute. The plaintiff, Hancock, had been injured while working for the railway company in Pennsylvania and sought compensation under New Jersey's Workmen's Compensation Act since he resided there. The railway company argued that it did not have sufficient contacts with New Jersey for the state courts to exercise jurisdiction over them. The Supreme Court ruled against the railroad company stating that corporations conducting interstate commerce were subject to local laws and regulations where they operate or do business as long as those laws don't interfere with interstate commerce regulation by Congress. Therefore, even though its primary operations were outside of New Jersey, because it conducted some business within the state (including employing residents like Hancock), it was subject to their jurisdiction regarding workers' compensation claims.

In the dissenting opinion for Philadelphia & Reading Railway Company v. Hancock, the justice argued that the plaintiff's injury was not due to negligence on part of the railway company and thus they should not be held liable. The justice believed that there was no evidence proving that a safer method could have been used by the defendant in handling freight cars at its coal chute, nor any proof showing neglect or violation of duty by them. He also pointed out inconsistencies in testimonies regarding whether it was customary to use sprags (devices inserted into wheel spokes) while moving cars down an incline - which is how Hancock got injured. The justice concluded his dissent stating if such practices were indeed common then it would be unreasonable to hold companies responsible for injuries resulting from their usage as employees are aware of associated risks when accepting employment under those conditions.