In the 1913 case of Southern Railway Company v. Gadd, the United States Supreme Court ruled in favor of Southern Railway Company, reversing a decision by the North Carolina Supreme Court. The plaintiff, Gadd, had been injured while working for Southern Railway and sought compensation under North Carolina's Employer’s Liability Act. However, this state law conflicted with federal laws regulating interstate commerce as it imposed liability on common carriers engaged in such commerce beyond what was stipulated at a federal level. The U.S. Supreme Court held that when an employee is involved in interstate commerce activities and gets injured during work hours due to negligence from fellow employees or defects within workplace facilities provided by employers who are also partaking in interstate trade - their rights should be determined according to Federal law rather than State legislation because these matters fall under Congress' jurisdiction over Interstate Commerce.

In the dissenting opinion for Southern Railway Company v. Gadd, it was argued that the court majority erred in its interpretation of liability under common law principles and state statutes. The dissent emphasized that a railway company should not be held liable for injuries to an employee who knowingly assumes risks associated with his job, unless negligence on part of the employer is proven. It was contended that Mr. Gadd had full knowledge of the defective condition of equipment he used and willingly accepted this risk as part of his employment agreement with Southern Railway Company; hence, no liability should attach to the company without proof of negligence or intent to harm. Furthermore, they disagreed with applying a statute designed to protect employees from hidden dangers or unanticipated risks to situations where employees are fully aware and accepting such known hazards inherent in their work duties.