In the Southern Pacific Company v. United States case of 1926, the Supreme Court ruled on a dispute involving railroad freight rates. The Interstate Commerce Commission (ICC) had ordered an increase in rates for certain commodities transported by railroads, including lumber and petroleum products. However, Southern Pacific Company challenged this order arguing that it was discriminatory because it only applied to specific goods and not others. They also argued that the ICC did not have enough evidence to justify such rate increases. The Supreme Court disagreed with Southern Pacific's arguments and upheld the ICC's decision. The court found no discrimination as all items within each class were treated equally under the new rates; furthermore, they determined there was substantial evidence supporting these changes made by ICC based on economic conditions at that time. This ruling affirmed federal regulatory power over interstate commerce while emphasizing fair treatment among different classes of goods in setting transportation costs.

In the dissenting opinion for Southern Pacific Company v. United States, Justice Stone argued that the Interstate Commerce Commission (ICC) had acted within its authority when it ordered a reduction in rates charged by railroads for interstate transportation of commodities. He believed that the ICC's decision was based on substantial evidence and should not be overturned by courts unless there is clear error or abuse of discretion. The majority opinion, he contended, failed to give due weight to these principles and improperly substituted its own judgment for that of the ICC regarding what constitutes reasonable rates. Furthermore, Justice Stone disagreed with the majority's interpretation of "value" as used in determining rate reasonableness under federal law; instead arguing it should include consideration of factors such as earning power and market value rather than being limited solely to reproduction cost.