In the 1923 case of Railroad Commission of the State of California v. Southern Pacific Company et al., the U.S Supreme Court ruled in favor of Southern Pacific Company, a private railroad company. The dispute arose when the state's Railroad Commission ordered Southern Pacific to stop charging different rates for intrastate and interstate commerce, arguing that it was discriminatory under state law. However, Southern Pacific contended that this order violated their rights under federal law which allowed them to set such rates based on market conditions and competition. The court held that while states have power to regulate railroads within their borders, they cannot interfere with interstate commerce or contradict federal laws governing it. Therefore, California’s attempt to enforce uniform pricing infringed upon powers reserved for Congress by Constitution's Commerce Clause.

In the dissenting opinion for Railroad Commission of the State of California v. Southern Pacific Company et al., Justice McReynolds disagreed with the majority's decision to uphold state regulation over railroads, arguing that it interfered with interstate commerce and thus violated federal law. He believed that such regulations should be left to Congress rather than individual states as they could potentially disrupt or impede trade between states. Furthermore, he argued that allowing each state to set its own rules would lead to a chaotic system where different standards applied in different jurisdictions, creating confusion and inefficiency for businesses operating across multiple states. In his view, uniformity was essential for smooth operation of interstate commerce and this could only be achieved through federal oversight.