In the case of Red Cross Line v. Atlantic Fruit Company, 1923, the Supreme Court examined whether a contract between two parties could be voided due to an alleged violation of the Sherman Antitrust Act. The Red Cross Line had entered into a contract with Atlantic Fruit Company for transportation services but later sought to nullify this agreement on grounds that it was in restraint of trade and therefore violated antitrust laws. The court ruled against Red Cross Line, stating that while certain aspects of their agreement might potentially limit competition, they did not necessarily constitute an unreasonable restraint on trade as defined by the Sherman Act. Furthermore, even if there were elements within their arrangement which contravened antitrust legislation, these could be severed from rest of the contract without invalidating it entirely.

In the dissenting opinion for Red Cross Line v. Atlantic Fruit Company, it was argued that the majority's decision to allow a foreign corporation to sue in federal court based on diversity jurisdiction contradicted established legal principles and precedent. The dissent contended that corporations should only be considered citizens of their state of incorporation for purposes of diversity jurisdiction, not where they have their principal place of business or are doing business. This interpretation would prevent foreign corporations from accessing U.S courts simply because they do some business within the country. Furthermore, this view held that allowing such suits could potentially flood federal courts with cases better suited to state courts and undermine the balance between federal and state judicial systems.