In the case of South Covington & Cincinnati Street Railway Company v. Commonwealth of Kentucky, 1919, the Supreme Court ruled in favor of the state's right to regulate fares on a privately owned streetcar line. The railway company had argued that it was unconstitutional for Kentucky to set maximum rates because this interfered with its ability to make contracts and deprived it of property without due process. However, Justice Mahlon Pitney delivered an opinion stating that public utilities are subject to regulation when necessary for public good and such regulations do not infringe upon constitutional rights if they are reasonable and fair. He further stated that courts should defer to legislative judgment unless there is clear error or abuse.

In the dissenting opinion for South Covington & Cincinnati Street Railway Company v. Commonwealth of Kentucky, Justice Holmes argued that the majority's decision to uphold a state law requiring street railway companies to sell seven tickets for a quarter was an overreach of judicial power. He contended that it is not within the purview of courts to determine whether such laws are wise or unwise; rather, their role should be limited to determining constitutionality. In his view, if there were any issues with this law, they should have been addressed by voters and legislators in Kentucky instead of being decided upon by judges on a federal level who may lack understanding about local conditions and needs. Furthermore, he disagreed with the majority's assertion that this law violated due process rights under Fourteenth Amendment as he believed it did not deprive railway companies from earning fair returns on their investments.