The U.S. Supreme Court case Puerto Rico v. Russell & Co., et al., in 1932, revolved around the issue of whether or not a civil law action brought by the People of Puerto Rico against Russell & Company was constitutional under the Jones Act, which granted US citizenship to residents of Puerto Rico and provided for a bill of rights. The court ruled that it was indeed constitutional because although Puerto Rico is an unincorporated territory, it has been given broad powers to govern itself including its own judicial system separate from federal courts. Therefore, actions taken by this local government are considered as those taken by a state rather than the federal government even though they fall under U.S jurisdiction overall.

In the dissenting opinion for Puerto Rico v. Russell & Co., Justice Stone argued that the majority's decision was inconsistent with previous rulings and principles of constitutional law. He contended that Puerto Rico, as a territory, should not be considered foreign to the United States in matters of commerce or jurisdiction. The Constitution does not differentiate between states and territories in its provisions regarding federal judicial power; therefore, he believed it was wrong to deny Puerto Rico access to federal courts based on its territorial status. Furthermore, he disagreed with the majority's interpretation of "diversity jurisdiction," arguing it should include disputes between U.S citizens residing in different jurisdictions within U.S sovereignty (including territories like Puerto Rico). Lastly, Justice Stone criticized the court’s reliance on an outdated precedent from 1901 which viewed territories as “foreign” entities despite subsequent legal developments recognizing them as integral parts of U.S sovereign domain.