The United States Supreme Court case, United States Shipping Board Emergency Fleet Corporation v. Sullivan in 1922 revolved around the issue of whether or not a government-owned corporation could be sued without Congress's explicit permission. The plaintiff, Sullivan, was injured while working for the U.S. Shipping Board Emergency Fleet Corporation and sought compensation under state law. The defendant argued that as a federal entity it was immune from such suits unless Congress had expressly waived its immunity. The court ruled in favor of Sullivan stating that although the corporation was owned by the government, it performed commercial functions rather than governmental ones and therefore did not enjoy sovereign immunity protection against lawsuits like this one seeking workers' compensation benefits under state law. This ruling established an important precedent regarding when and how federally created corporations can be held liable for injuries to their employees.

In the dissenting opinion for United States Shipping Board Emergency Fleet Corporation v. Sullivan, Justice McReynolds argued that the majority's decision was inconsistent with previous rulings of the court and violated principles of federalism. He contended that under established precedent, a corporation created by Congress is not immune from state law unless specifically exempted by statute or if compliance would interfere with its operations or frustrate its purpose. In this case, he saw no evidence to suggest either circumstance applied to the Emergency Fleet Corporation. Furthermore, he believed that allowing such corporations to operate outside state laws could lead to an unchecked expansion of federal power at the expense of states' rights and individual liberties. Thus, in his view, Massachusetts had every right to apply its workers' compensation law in this instance.