The case Blanchette et al., Trustees of Property of Penn Central Transportation Co. v. Connecticut General Insurance Corp. et al., 1974, revolved around the constitutionality and legality of the Rail Act passed by Congress in response to a major crisis in rail transportation industry during early 1970s. The act allowed for reorganization and financial aid to failing railroad companies, including Penn Central Transportation Company which was under bankruptcy protection at that time. A group of bondholders led by Connecticut General Insurance Corporation challenged this act claiming it violated their Fifth Amendment rights as they were not adequately compensated for their bonds seized under this legislation. However, the Supreme Court ruled against them stating that while government actions did result in taking property from bondholders, it was within its power under "public use" clause provided just compensation is given - an issue left open for determination later on.

In the dissenting opinion for Blanchette et al., Trustees of Property of Penn Central Transportation Co. v. Connecticut General Insurance Corp. et al., Justice William O. Douglas argued that the majority's decision was a departure from established constitutional principles regarding governmental taking of private property without just compensation, as outlined in the Fifth Amendment to the U.S Constitution. He contended that by allowing Congress to determine what constitutes "just compensation" and not providing an independent judicial review, it undermines this fundamental right and sets a dangerous precedent for future cases involving government takings. Furthermore, he disagreed with the majority's view on bankruptcy proceedings being applicable in this case because railroad reorganizations are different due to their public interest aspect which is absent in ordinary bankruptcies.