In the 1916 case of Swift & Company et al. v. Hoover, the United States Supreme Court dealt with a dispute over livestock prices between meatpacking companies and cattle producers in Chicago's Union Stock Yards. The plaintiffs, several large meatpacking firms including Swift & Co., argued that they were not subject to regulation by the Interstate Commerce Commission (ICC) because their business was primarily local rather than interstate commerce. However, defendants contended that since these companies had significant influence on nationwide market prices for livestock due to their size and reach, they should be regulated as part of interstate commerce under the Sherman Antitrust Act. The Supreme Court ruled in favor of defendants and upheld ICC's authority to regulate these businesses even though most transactions occurred within one state. It reasoned that while individual transactions may be intrastate in nature, taken collectively they have a substantial impact on interstate commerce thus falling under federal jurisdiction. This decision expanded federal regulatory power over industries whose activities could affect national markets regardless of whether those activities crossed state lines or not.

In the dissenting opinion for Swift & Company et al. v. Hoover, Justice Oliver Wendell Holmes Jr., joined by Justices Charles Evans Hughes and Willis Van Devanter, argued that the federal government did not have jurisdiction over this case as it involved intrastate commerce rather than interstate commerce. They contended that the Sherman Antitrust Act was designed to regulate business activities crossing state lines and should not be applied to transactions occurring entirely within a single state's borders. The majority's interpretation of "direct effect" on interstate commerce was seen as too expansive by these justices, who believed such an approach could lead to federal intrusion into areas traditionally governed by states' rights under the Constitution’s Commerce Clause.