Case of the Day – Thursday, May 2, 2019

NEITHER FISH NOR FOWL

Normally, one would think that when an electric utility was busy building new transmission lines, it was just as subject to liability for empty-headed negligence as the next guy. That would be true for your garden-variety profiteering, money-grubbing commercial enterprise. But not necessarily when your Uncle has his fingers in the pie… at least until this past Monday.

Back in the dusty days of the Great Depression, some Americans began to think it was a good idea for the “public” – that is to say, the government – to own electric utilities. A lot of people thought private electric companies charged too much for power, did not employ fair operating practices, and were subject to abuse by the utility holding companies that owned them. What crazy ideas!

After all, the government is benevolent. And efficient. And responsive to citizens. Look no further than your local DMV. Isn’t it sad everything can’t be so well run? During his presidential campaign, Franklin Roosevelt claimed the federal government would never part with control of its power resources. At least where the Tennessee Valley Authority is concerned, he has been as good as his word.

The TVA is a utility that is neither fish nor fowl, acting in all respects like a privately-held company engaged in electricity generation and distribution. At the same time, it acts like a government agency, wielding powers reserved to the government.

Is that a good thing? Don’t ask Gary Thacker. He and fishing buddy Tony “Ski Daddy” Szozda were trollin’ and a’rollin’ in an Alabama fishing tournament on the Tennessee River one weekend, just while TVA crews were raising a submerged power line that they had accidently let drop into the river. If you ever saw the scene in “The Great Escape” where Steve McQueen commandeers a motorcycle with a rope across the road, you know where things were headed for Gary and Tony. At the they passed through the unmarked work area at full throttle, the TVA crews lifted the conductor out of the water. The boat hit the cable. Tony died.

Logically, Gary sued the TVA for negligence. After all, its crews had dropped the cable, and they had no boats patrolling the channel to warn boaters of their recovery activities, despite knowing that boats traversed the area at high speed, and that the usual Tuesday fishing tourney – with a lot of fast-moving boats – was underway.

After filing the lawsuit, Gary got smacked again. It turns out that sometimes the TVA is a private utility company. Sometimes it’s the government. Being the government has a substantial impact on liability, because no one may sue the federal government for tortious conduct (like negligence) unless the plaintiff has permission.

Permission is granted by the Federal Tort Claims Act, which grants permission to sue for many types of negligence. The FTCA, however, does not permit suit where the negligent act complained of is a “discretionary function” of government. The trial court concluded that “clotheslining” fishermen with an understaffed and poorly-thought-out power line recovery operation was a government function, and the court thus lacked jurisdiction to hear the lawsuit. The 11th Circuit Court of Appeals agreed.

But this week, the Supreme Court of the United States reversed. TVA could be a fish. Or a fowl. But it could not change according to what was convenient. If it was out in the marketplace acting like a private entity, it will be treated like one.

The Court of Appeals had applied an unusually attenuated syllogism here: the TVA has the power of eminent domain to condemn real estate for the installation of power lines. Because that is a government function, if when and where and how to build power lines is a discretionary function, any institutional stupidity that attends the building of power lines is likewise a discretionary function.

The Supreme Court would have nothing to do it. When TVA (or other government actors that compete in the marketplace with private companies)  it is subject to suit when its employees do something bone-headed, and victims are hurt or killed.

There is little question that SCOTUS (the acronym for The Supreme Court Of The United States used by people in the know) brought some sanity to the FTCA. When we reported on the Court of Appeals decision, we complained, “Where does this string finally snap? Would driving a truck to be used in the building of a power line a discretionary function, so that a drunken TVA employee running down a busload of Brownies be shielded from liability? After all, relieving the tipsy trucker would require using another employee, an allocation-of-resources decision? More to our topic, would the clearing of trees well beyond a right-of-way – because maintaining power lines that TVA built on land it had condemned be part of the “discretionary function” chain – likewise block a suit when the tree fell on the same busload of Brownies? There seems to be no logical way to cabin the 11th Circuit’s reasoning in this decision.”

Maybe the Justices read this blog. It’s doubtful, but the wisdom of the Court’s decision on Monday is not.

Thacker v. Tennessee Valley Authority, Case No. 17-1201, 2019 U.S. Lexis 3149 (April 29, 2019). Gary Thacker sued TVA for negligence involving a tragic 2013 accident on the Tennessee River. While Gary and his friend Anthony Szozda were participating in a local fishing tournament, TVA was raising a downed power line that was partially submerged when a pulling cable had failed earlier that day. At the moment that TVA employees began lifting the conductor out of the water, the fishing partners’ boat passed through. The conductor struck Szozda, killing him, and Thacker. Injuring him seriously.

The district court concluded that TVA’s activities raising the cable were part of its discretionary function as a government agency, and dismissed the complaint for lack of subject-matter jurisdiction. Gary appealed, and the 11th Circuit agreed. Last week, the Supreme Court reversed the two lower courts.

Held: TVA is not immune from suit for negligence arising from the accident.

Under the doctrine of sovereign immunity, no one can sue the United States without the government’s permission. In the Federal Tort Claims Act, the government granted a limited waiver of its immunity, allowing people to sue the government for torts committed by its employees and agents. The FTCA contains an exception from liability when a government employee performs “a discretionary function or duty.”

By contrast, the TVA is governed by its own statutory waiver of sovereign immunity, 16 U.S.C. § 831c, which grants the TVA is power to “sue and be sued in its own corporate name,” with any judgment paid from TVA assets rather than the federal treasury.  The Supreme Court has previously held that when Congress “launched a governmental agency into the commercial world and endowed it with authority to “sue or be sued,’” the clause should be “liberally construed.”

The government successfully convinced the 11thCircuit Court of Appeals that something like the FTCA’s discretionary-function exception should be judicially inferred to prevent “judicial second-guessing” of TVA policy decisions. Citing a prior Supreme Court decision, Federal Housing Administration v. Burr, the government contended that courts should recognize implied limits on “sue-and-be-sued” clause authority when “necessary to avoid grave interference” with governmental functions. Thus, the government argued to the Supreme Court, that the TVA’s discretionary decisions should be protected from court review.

But the Supreme Court “balk[ed] at using Burr to provide a gov­ernmental entity excluded from the FTCA with a replica of that statute’s discretionary function exception.” The Court explained that because “[t]he law … places the TVA in the same position as a private corporation supplying electricity,” “a suit challenging a commercial act will not ‘grave[ly]’—or, indeed, at all—interfere with the ‘governmental functions Burr cared about protecting.’”

However, as the court noted, “the TVA is something of a hybrid, combining traditionally govern­mental functions with typically commercial ones.” The TVA engages in governmental activities such as exercising eminent domain to take private property for TVA use and running its own band of law enforcement agents. The Court said that if TVA’s activities are “commercial—the kind of thing any power company might do – the TVA cannot invoke sovereign immunity.” But even if the conduct is governmental, it must be clearly show” that granting TVA immunity from private lawsuit is needed to prevent a “grave interference” with a governmental function.

Because the district court bypassed the “grave interference test,” the court sent the case back for reconsideration in light of this analytical framework.

The Court rejected the government’s claim that constitutional separation-of-powers principles prevents courts from reviewing a government entity’s discretionary choices. The Justices rejected the separation-of-powers argument as applied to the commercial activity engaged like the construction undertaken by the TVA in this case. Beyond that, the Court ruled that Congress by statute waiver may strip a government entity of immunity. “The right gov­ernmental actor (Congress) is making a decision within its bailiwick (to waive immunity) that authorizes an appro­priate body (a court) to render a legal judgment.”

The ruling should blunt government defenses of policy immunity for entities that “operate[] in the marketplace as private companies do” and thus should be “as liable as they are for choices and judgments.”

– Tom Root

TNLBGray140407

One thought on “Case of the Day – Thursday, May 2, 2019

  1. Tony was a good friend of ours and a man that loved his country. He was an Army veteran and did not deserve to die that way. Shame on our government.

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