In the case of City of Pomona v. Sunset Telephone and Telegraph Company in 1911, the U.S Supreme Court ruled in favor of Sunset Telephone and Telegraph Company. The dispute arose when the city council of Pomona, California passed an ordinance requiring all telephone companies to obtain a franchise from them before laying down any lines within city limits. However, Sunset argued that they had already obtained a statewide franchise from the state legislature which allowed them to lay lines anywhere within California without needing additional permission from local authorities. The court agreed with this argument stating that municipalities cannot override franchises granted by state legislatures unless explicitly given such power by statute or constitutionally provided for it. Therefore, Pomona's ordinance was deemed invalid as it conflicted with rights previously granted to Sunset by their statewide franchise.

In the dissenting opinion for City of Pomona v. Sunset Telephone and Telegraph Company, Justice Holmes disagreed with the majority's decision to uphold a city ordinance that required telephone companies to bury their wires underground. He argued that this requirement was an unreasonable exercise of police power because it did not serve any clear public safety purpose. Instead, he believed it imposed unnecessary costs on businesses without providing any significant benefits to the community at large. Furthermore, he contended that such regulations should be considered as taking private property for public use without just compensation, which is prohibited by the Constitution. Therefore, in his view, the ordinance violated both state law and constitutional principles protecting property rights.