In the case of Waterman Steamship Corp. v. Dugan & McNamara, Inc., 1960, the U.S Supreme Court ruled in favor of Waterman Steamship Corporation. The dispute arose when a ship owned by Waterman was damaged while being repaired by Dugan & McNamara, Inc., and an insurance company paid for the damages on behalf of Dugan & McNamara under a policy that included a subrogation clause. This clause allowed the insurer to step into the shoes of Dugan & McNamara and sue any third party responsible for causing damage to recover its payout - in this case, they attempted to sue Waterman itself. However, it was determined that since both parties had agreed upon exoneration from liability through their contract prior to repairs commencing (known as "exculpatory clauses"), these terms were binding and could not be circumvented by subrogation rights held by insurers who were not partied to said agreement.

The dissenting opinion in the Waterman Steamship Corp. v. Dugan & McNamara, Inc., case argued that the majority's decision to allow a ship owner to recover damages from a stevedoring company for injuries sustained by one of its employees was incorrect and inconsistent with previous rulings. The dissent pointed out that under existing law, an employer is generally not liable for injuries suffered by an employee during the course of their employment due to negligence on part of fellow workers or supervisors unless it can be proven that there was some fault on part of the employer itself. In this case, no such proof existed; therefore, according to them, allowing recovery would effectively make employers insurers against all risks faced by their employees at work which they believed wasn't right or fair.