In the case of Southland Gasoline Co. v. Bayley et al., 1942, the U.S Supreme Court ruled in favor of Southland Gasoline Company (SGC). The dispute arose when SGC entered into a contract with Bayley and others to supply gasoline for their service stations at a fixed price over several years. However, due to changes in market conditions that made it unprofitable for SGC to continue supplying gas at the agreed-upon price, they sought relief from this obligation by filing suit against Bayley and his associates. They argued that enforcement of such contracts was contrary to public policy as it could potentially lead to monopolistic practices which were prohibited under antitrust laws. The lower courts initially sided with Bayley but upon appeal, the Supreme Court reversed these decisions stating that there was no evidence showing any intent or effect on part of SGC's agreement leading towards monopoly or restraint trade; hence not violating Sherman Act provisions regarding anti-competitive behavior. Thus, while acknowledging potential risks associated with long-term fixed-price contracts like those between SGC and Bailey et al., the court held that such agreements are not inherently illegal unless they specifically aim or result in creating monopolies or restraining trade.

In the dissenting opinion for Southland Gasoline Co. v. Bayley et al., Justice Frankfurter argued that the majority's decision to allow a federal court to hear a case involving state law was an overreach of federal jurisdiction, and undermined states' rights. He contended that this case should have been heard in state court because it involved issues related to local policy and regulation, which are traditionally within the purview of state courts. Furthermore, he asserted that allowing such cases to be tried in federal courts could lead to inconsistent interpretations of state laws by different federal judges, creating confusion and uncertainty about their application. Finally, he warned against expanding the role of federal courts at the expense of diminishing states' authority over matters primarily concerning them.