The U.S. Supreme Court case State Industrial Commission of the State of New York v. Nordenholt Corporation et al., 1921, revolved around a dispute over workers' compensation laws in the state of New York. The Nordenholt Corporation was challenging an award granted to one of its employees who had been injured while working on a dredging project located outside territorial waters but within jurisdictional boundaries set by federal law for admiralty cases. The company argued that since the injury occurred outside state territory, it should not be subject to state workers' compensation laws and instead fall under federal maritime law which did not provide for such benefits at that time. However, the Supreme Court ruled against Nordenholt Corporation stating that although the location where injury occurred was technically beyond territorial limits, it still fell within areas considered part of New York's commercial domain due to its economic activities there like dredging operations etc., thus making it subject to local labor regulations including those related with worker compensations.

In the dissenting opinion for the case of State Industrial Commission of New York v. Nordenholt Corporation, Justice McReynolds disagreed with the majority's interpretation of "employment" under New York’s Workmen Compensation Law. He argued that a broader reading would include all services performed by an employee within their contract, regardless if they were outside state boundaries when injured. In his view, this was not what lawmakers intended and it could lead to absurd results where employers are liable for injuries sustained anywhere in the world as long as there is some connection to their employment contract. Furthermore, he believed that such broad interpretations infringe on states' rights because they allow one state (New York) to regulate conduct occurring entirely within another jurisdiction (Louisiana). This goes against principles of federalism which require each state respect others’ sovereignty and avoid interfering with their internal affairs.