The trial commenced on January 5, 1987, which included medical evidence demonstrating Elizabeth Stern’s infertility and testimonies from the Sterns and Whitehead. After hearing recorded conversations detailing statements that raised concerns about the child’s welfare, the court decided that the Sterns would receive full custody of Baby M. However, Whitehead didn’t agree with the court and appealed to the New Jersey Supreme Court.​​​​​​​

"By requiring the surrogate mother to repress whatever parental love she feels for the child, convert women’s labor into a form of alienated labor...because she must divert it from the end which the social practices of pregnancy rightly promote—an emotional bond with her child."

- Elizabeth Anderson, ​​​​​​​Philosopher, 12 May 1989, What Money Can’t Buy: The Moral Limits of Markets

On February 3, 1988, the New Jersey Supreme Court concluded that Baby M should remain with the Sterns due to a stable home environment, but voided the surrogacy contract, granting Whitehead visitation as the biological mother. The court held that paid surrogacy violated public policy and was ‘degrading to women.’ This holding reinforced the New Jersey legal system’s refusal to recognize commercial surrogacy as an enforceable form of reproductive agreement at the time, causing widespread debate over surrogacy shortly after.

"We invalidate the surrogacy contract because it conflicts with the law and public policy of this State. While we recognize the depth of the yearning of infertile couples to have their own children, we find the payment of money to a "surrogate" mother illegal, perhaps criminal, and potentially degrading to women. Although in this case we grant custody to the natural father, the evidence having clearly proved such custody to be in the best interests of the infant, we void both the termination of the surrogate mother's parental rights and the adoption of the child by the wife/step-parent. We thus restore the "surrogate" as the mother of the child."​​​​​

- New Jersey Supreme Court, 3 February 1988, In The Matter of Baby M, a Pseudonym for an Actual Person