In the case of P. J. Carlin Construction Co. et al v Heaney et al., 1936, the U.S Supreme Court ruled in favor of P.J Carlin Construction Company and other contractors who were involved in building a tunnel under New York's East River for the city's transportation system. The plaintiffs had been sued by workers or their representatives who claimed that they suffered from "caisson disease" (also known as decompression sickness) due to working conditions during construction, which allegedly violated state labor laws regarding safety measures against industrial diseases. However, the court held that these claims fell within admiralty jurisdiction because work was done on navigable waters and thus federal law applied rather than state law - specifically, it invoked provisions of Longshoremen’s and Harbor Workers’ Compensation Act which limited liability for employers in such cases.

In the dissenting opinion for P. J. Carlin Construction Co. et al. v. Heaney et al., Justice Cardozo argued that the majority's decision to uphold a New York law requiring construction contracts to include provisions ensuring workers are paid prevailing wages was an overreach of state power and violated principles of free contract under the Fourteenth Amendment's Due Process Clause. He contended that while states have broad powers in regulating labor conditions, they should not be allowed to dictate specific terms in private employment contracts, as this interferes with individual liberty and freedom of contract between employers and employees.