In the case of Southern Pacific Company v. Stewart, 1918, the United States Supreme Court ruled in favor of Southern Pacific Company. The dispute arose when a train owned by Southern Pacific collided with a wagon at a railroad crossing, resulting in injuries to those on board the wagon. The victims sued for damages and won their case in an Arizona court based on state law that placed automatic liability on railroads for accidents at crossings unless they could prove negligence by the other party. However, upon appeal to the Supreme Court it was determined that this state law conflicted with federal laws governing interstate commerce which required proof of negligence rather than assuming it automatically. As such, because trains are involved in interstate commerce and thus subject to federal regulation under Commerce Clause powers granted by Constitution's Article I Section 8 clause 3 ,the ruling was overturned as being unconstitutional.

In the dissenting opinion for Southern Pacific Company v. Stewart, Justice Holmes disagreed with the majority's decision to hold a railroad company liable for injuries sustained by an employee during his lunch break. He argued that under federal law, employers are only responsible for providing safe working conditions and should not be held accountable for accidents occurring outside of work-related activities. According to him, it was unreasonable to expect companies to ensure safety in areas beyond their control or unrelated to employment duties. Furthermore, he contended that extending employer liability into personal time would set a dangerous precedent and could lead to excessive litigation against businesses.