TVA Can Be Sued When It Acts Like a Business, Supreme Court Rules

April 29, 2019 Updated: April 29, 2019

The Supreme Court ruled unanimously in favor of a man injured in a boating accident, finding that the Knoxville-based Tennessee Valley Authority isn’t immune from lawsuits, as the federal government had claimed.

The April 29 judicial opinion came in a case called Thacker v. Tennessee Valley Authority. Gary Thacker and his wife filed suit against the authority for negligence after he and another man, Anthony Szozda, were navigating a boat on the Tennessee River and were struck while crews tried to raise a partially submerged power line. Szozda was killed.

The Eleventh Circuit Court of Appeals threw out Thacker’s lawsuit, finding the TVA, which was created by the government, couldn’t be sued. Thacker’s attorney told the Supreme Court the circuit court erred and that TVA was participating in commercial activity that should not prevent it from being held accountable in civil court. The Supreme Court reversed the circuit court decision.

The TVA, a public corporation, was created by Congress in 1933 as one of the “alphabet soup” projects championed by President Franklin Roosevelt as part of an effort to boost the nation’s crippled economy during the Great Depression. Its original stated purpose, as described in enabling legislation, was “[t]o improve the navigability and to provide for the flood control of the Tennessee River … to provide for the agricultural and industrial development of said valley … and for other purposes.”

The decision, written by Justice Elena Kagan, rejected the authority’s sweeping claim of governmental immunity, remanding the case to a lower court that will review whether a more limited type of immunity applies.

The TVA “sometimes resembles a government actor, sometimes a commercial one,” she wrote. It exercises eminent domain and arrests people, performing a governmental function, “[b]ut in other operations—and over the years, a growing number—the TVA acts like any other company producing and supplying electric power.”

During oral arguments on Jan. 14, Ann O’Connell Adams of the U.S. Solicitor General’s office, told the justices that “discretionary-function immunity, which is grounded in constitutional separation of powers principles and preexisted the enactment of the Federal Tort Claims Act, is precisely the type of immunity that Congress had in mind” for the TVA.

Thacker’s attorney, Franklin Taylor Rouse, disagreed, telling the justices that: “Congress created the Tennessee Valley Authority as a corporation that could sue and be sued. The TVA Act states: Except as otherwise specifically provided in this Act, the corporation may sue and be sued in its corporate name. Nothing in the TVA Act specifically provides the exception that the TVA now urges, immunity for what it calls discretionary work.”

Justices Samuel Alito and Sonia Sotomayor both challenged the TVA’s claim of discretion-functionary immunity, that is, of being shielded from lawsuits when it does something commercial in nature, like, for example, raising a power line.

“The TVA does some things that are purely governmental and it does some things that are pretty much purely commercial,” Alito said. “It’s a hybrid entity. As to … its commercial activities, it’s hard to see why … a business should be exempt from tort liability for every discretionary business decision that the business makes.”

TVA “does governmental functions and it does commercial functions,” Sotomayor told Adams. “You’ll have to explain to me why raising a power line is a government function.”

“Any commercial enterprise that creates a danger has to fix it. That’s what businesses do, whether it’s the government running the business or not.”

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