In the case of Public Service Commission of Wisconsin et al. v. Wisconsin Telephone Co., 1932, the Supreme Court ruled in favor of the telephone company. The court held that a state regulatory commission could not force a public utility to continue providing an unprofitable service without violating due process rights under the Fourteenth Amendment. The Public Service Commission had ordered Wisconsin Telephone Company to maintain its "message rate" service (a per-call charge) despite it being financially burdensome for them and less popular among customers compared to their flat-rate services (unlimited calls for a fixed monthly fee). However, Justice George Sutherland writing for majority stated that while states have power over utilities, they cannot compel them into bankruptcy by forcing them to provide money-losing services; such action would constitute as confiscation which is prohibited by law.

In the dissenting opinion for Public Service Commission of Wisconsin et al. v. Wisconsin Telephone Co., Justice Stone argued that the majority's decision to strike down a state law regulating telephone rates was an overreach of judicial power and undermined states' rights. He contended that it is not within the purview of courts to decide on economic policy or determine what constitutes reasonable utility rates, as these are matters best left to legislative bodies and regulatory commissions who have expertise in such areas. Furthermore, he criticized the majority's reliance on evidence presented by one party (the telephone company) without giving due consideration to counter-evidence from other parties (the public service commission). In his view, this approach violated principles of fairness and impartiality inherent in judicial proceedings.