In the United States Supreme Court case of United Steelworkers of America v. Warrior & Gulf Navigation Co., the court was tasked with determining whether a dispute over contracting out work, which had previously been performed by union members, was subject to arbitration under collective bargaining agreements. The company argued that it retained managerial rights and could therefore make decisions about subcontracting without needing to arbitrate. However, the Union contended that this action violated their agreement and demanded arbitration. The Supreme Court ruled in favor of the Union stating that unless specifically excluded from an agreement, disputes between a company and its workers should be resolved through arbitration as per their contract's "broad" clause on grievance procedures. This decision emphasized labor-management relations' importance in maintaining industrial peace and established precedent for interpreting collective bargaining agreements broadly to include all matters not explicitly excluded.

In the dissenting opinion for United Steelworkers of America v. Warrior & Gulf Navigation Co., Justice Frankfurter, joined by Justice Harlan, argued that the majority's decision to compel arbitration in labor disputes even when a contract clause is ambiguous undermines collective bargaining and infringes on parties' rights to negotiate their own terms. They contended that it should not be assumed that parties agreed to arbitrate all matters simply because they included an arbitration clause in their agreement. Instead, they believed such clauses should only apply where there was clear evidence both sides intended them to cover a particular dispute. The justices also expressed concern about courts overstepping their bounds and intruding into areas best left for negotiation between employers and unions.