In the case of United States v. Baltimore & Ohio Railroad Company, 1912, the U.S Supreme Court was tasked with determining whether a railroad company could be held liable for damages to goods during transportation under the Carmack Amendment to the Interstate Commerce Act. The Baltimore & Ohio Railroad Company had been contracted by a shipping company to transport sugar from New York City to Cincinnati; however, part of this shipment was damaged in transit due to an accident caused by negligence on behalf of another railroad company that B&O had subcontracted. The court ruled in favor of the United States and against B&O, stating that under federal law (the Carmack Amendment), initial carriers are responsible for any damage or loss incurred throughout transportation regardless if they subcontracted part or all their services. This ruling established important precedent regarding liability in freight transport cases.

In the dissenting opinion for United States v. Baltimore & Ohio Railroad Company, it was argued that the Interstate Commerce Commission (ICC) did not have the authority to determine what constituted a reasonable rate without judicial review. The dissenters believed that this power should be held by courts and not an administrative body like ICC. They contended that allowing such decisions to rest with an administrative agency would undermine due process rights of railroad companies as they could face penalties without having their case heard in court first. Additionally, they expressed concerns about potential arbitrariness in decision-making by ICC and emphasized on maintaining checks and balances between different branches of government.