In the 1948 case Woods v. Interstate Realty Co., the U.S Supreme Court ruled that federal courts do not have jurisdiction over cases involving state laws, unless there is a clear and substantial federal interest involved. The case arose when Interstate Realty Company sued Woods in a Mississippi court for breach of contract related to real estate commissions. When it was moved to a federal district court, the judge dismissed it on grounds that diversity jurisdiction did not apply as both parties were from Mississippi. On appeal, the Fifth Circuit reversed this decision stating that since part of the disputed land lay in Louisiana (a different state), diversity jurisdiction applied here. However, upon reaching Supreme Court, Justice Hugo Black writing for majority held that mere presence of property located out-of-state does not automatically create sufficient "federal interest" to warrant removal from state courts under diversity clause; rather such decisions should be based on whether or not applying state law would significantly affect any major national interests or lead to significant legal uncertainty across states - neither condition being met here.

In the dissenting opinion for Woods v. Interstate Realty Co., Justice Robert H. Jackson disagreed with the majority's decision to uphold a federal court's jurisdiction over a case involving state property rights and contracts, arguing that it was an unwarranted expansion of federal power into areas traditionally governed by state law. He contended that there was no clear evidence Congress intended for such broad interpretation of its legislation when enacting the Emergency Price Control Act (EPCA). Furthermore, he expressed concern about potential implications on states' rights and autonomy in managing their internal affairs if this precedent were allowed to stand unchallenged. In his view, this ruling could lead to undue interference from federal courts in matters best left under local control and potentially undermine principles of Federalism inherent within U.S Constitution.