In the case of Union Pacific Railroad Company v. Public Service Commission of Missouri, 1918, the U.S Supreme Court ruled in favor of Union Pacific Railroad Company. The dispute arose when the state commission ordered a reduction in intrastate freight rates by approximately ten percent. The railroad company argued that this order was unconstitutional as it violated their rights under the Fourteenth Amendment's due process clause and resulted in confiscatory rates that did not allow them to earn a reasonable return on their investment. They also contended that it interfered with interstate commerce regulation which is under federal jurisdiction according to Commerce Clause of Constitution. The court held that while states have authority over local matters such as intrastate commerce, they cannot exercise this power in ways conflicting with national policies or laws set forth by Congress regarding interstate commerce. Furthermore, they agreed with Union Pacific's argument about violation of its constitutional right against deprivation without due process since imposed rate reductions were unreasonable and deprived them from earning fair returns on property used for public service.

In the dissenting opinion for Union Pacific Railroad Company v. Public Service Commission of Missouri, Justice Louis D. Brandeis argued that the Supreme Court should not have intervened in this case as it was a matter of state regulation and policy. He believed that the State of Missouri had acted within its rights to regulate railroad rates to protect consumers from excessive charges, even if these regulations might impact interstate commerce indirectly. The majority's decision to strike down Missouri's law on grounds that it interfered with interstate commerce represented an overreach into states' rights, according to Justice Brandeis. He contended that unless there is clear evidence showing such laws are unreasonable or discriminatory against out-of-state businesses, they should be upheld by courts under principles of federalism and respect for state sovereignty.