In the case of Texas and Pacific Railway Company v. Eastin & Knox, 1908, the U.S Supreme Court ruled in favor of Texas and Pacific Railway Company. The dispute arose when Eastin & Knox claimed that they had been overcharged for transporting their cattle via the railway company's services. They argued that under a state law enacted by Louisiana, they were entitled to recover four times the amount they were overcharged. However, this was contested by Texas and Pacific Railway who asserted that federal laws superseded state laws in matters related to interstate commerce rates. The court agreed with Texas and Pacific Railway’s argument stating that while states have power to regulate within their boundaries, it does not extend into areas governed by Congress such as interstate commerce regulation which includes railroad freight rates across state lines. Therefore, Louisiana's statute could not be applied in this instance because it conflicted with federal law - Interstate Commerce Act – which only allowed recovery of actual damages from rate disputes rather than punitive ones like those stipulated under Louisiana law.

In the dissenting opinion for the Texas and Pacific Railway Company v. Eastin & Knox case, Justice Harlan disagreed with the majority's decision to deny recovery of attorney fees from a railway company that had been sued for damages. He argued that under Texas law, which should apply in this case as it was where the contract was made and expected to be performed, allowed such recovery if it were stipulated in writing within a contract. The plaintiff had indeed included such provision in their bill of lading with the defendant railway company. Therefore, he believed they were entitled to recover reasonable attorney fees incurred due to litigation resulting from any breach by said company. Furthermore, Justice Harlan pointed out that federal courts sitting as diversity jurisdiction courts must follow state laws regarding contractual obligations unless there is an explicit federal statute stating otherwise or if applying state law would violate constitutional rights - neither of which applied here.