In the case of St. Louis, Iron Mountain & Southern Railway Company v. Williams et al., 1919, the U.S Supreme Court was tasked with determining whether an Arkansas statute that imposed a penalty on railroads for failure to provide equal and just rates was in violation of due process under the Fourteenth Amendment. The railway company argued that it had been denied due process because it had not been given notice or opportunity to be heard before being penalized by the state's railroad commission. However, the court ruled against them stating that there is no constitutional right to a hearing prior to imposition of such penalties as long as they are within reasonable bounds and do not result in arbitrary punishment. This decision upheld states' rights to regulate businesses within their borders for public welfare purposes without violating federal constitution protections.

In the dissenting opinion for St. Louis, Iron Mountain & Southern Railway Company v. Williams et al., Justice Oliver Wendell Holmes Jr. argued that the majority's decision to strike down an Arkansas law as unconstitutional was incorrect because it interfered with a state's right to regulate business within its borders. He believed that states should have the power to determine what constitutes reasonable penalties for businesses operating within their jurisdiction and disagreed with the notion that this particular statute violated due process rights of corporations under Fourteenth Amendment protections. According to him, there was no constitutional basis for invalidating a penalty simply because it might be viewed as excessive or unreasonable; such determinations were better left up to individual states rather than federal courts.