The Porto Rico Railway, Light & Power Company v. Mor case in 1919 revolved around a dispute over the validity of a tax imposed by Puerto Rican authorities on the power company. The Supreme Court ruled that while Puerto Rico was not technically considered part of the United States for constitutional purposes, it was still subject to certain U.S. laws and regulations as an unincorporated territory under American control since its acquisition from Spain in 1898 following the Spanish-American War. Therefore, any taxes levied against businesses operating within its borders had to comply with these laws and regulations. In this particular case, however, it was determined that there were no federal restrictions preventing local taxation of corporations like Porto Rico Railway, Light & Power Company by territorial governments such as Puerto Rico's at that time. Thusly ruling in favor of Mor (representing Puerto Rican government), thereby validating their right to impose said tax on companies operating within their jurisdiction despite those companies' objections based on perceived violations of U.S law or constitutionality.

In the dissenting opinion for Porto Rico Railway, Light & Power Company v. Mor, Justice McReynolds disagreed with the majority's interpretation of Puerto Rico's Foraker Act and its application to this case. He argued that Congress intended to grant Puerto Rican courts jurisdiction over local matters without interference from federal courts unless constitutional rights were at stake. In his view, the dispute between a public utility company and its customers about rates was a local matter that should be resolved by Puerto Rican authorities under their own laws rather than being taken up by U.S federal court system on grounds of diversity jurisdiction as it involved no substantial federal question or constitutional issue. The justice contended that allowing such cases in U.S courts would undermine Puerto Rico’s autonomy and self-governance which he believed was contrary to congressional intent when passing Foraker Act.