Source: https://supreme.justia.com/cases/federal/us/425/807/
Timestamp: 2019-04-23 02:15:28+00:00

Document:
Under the Economic Opportunity Act of 1964 (EOA) the Federal Government, acting through an agency (at the relevant time herein the Office of Economic Opportunity (OEO)), furnishes financial assistance for community action programs undertaken by community action agencies. Such an agency is defined as a "State or political subdivision of a State . . . or a public or private nonprofit agency or organization which has been designated by a State or such a political subdivision" to plan and administer a community action program, consisting of "services and activities having a measurable and potentially major impact on causes of poverty in the community. . . ." The Warren-Trumbull Council is a community action agency operating as a nonprofit corporation under Ohio law, and was funded entirely by the OEO, but also received 20% of its support locally from "in-kind" services in compliance with EOA funding requirements. One of the Council's activities was a Neighborhood Opportunity Center, which sponsored recreational outings for children. While returning from one of the Center's outings in a private car for which the Council had made arrangements, a minor child was injured in a collision. The child and his father (respondents) brought suit in the District Court against the United States under the Federal Tort Claims Act (FTCA) alleging negligence on the part of agents of the United States in organizing and supervising the outing. The Government moved for summary judgment on the ground that the Council and Center were not "instrumentalities or agencies of the United States" within the purview of the FTCA. The District Court granted the motion, holding that the Council was a contractor with the OEO, not a corporation acting as a federal instrumentality, and that the Council's employees were not federal employees. The Court of Appeals reversed.
Held: The Council and the Center are not federal agencies or instrumentalities and their employees are not federal employees within the meaning of the FTCA. Pp. 425 U. S. 813-819.
applying to injuries caused by the negligent act of any Government employee while acting within the scope of his employment, but excluding from its coverage "any contractor with the United States," was never intended to reach employees or agents of all federally funded programs. The critical element in distinguishing an agency from a contractor is the Government's power "to control the detailed physical performance of the contractor," Logue v. United States, 412 U. S. 521, 412 U. S. 528. The question here is not whether the community action agency receives federal money and must comply with federal standards and regulations, but whether its daily operations are supervised by the Federal Government. Cf. Logue, supra; Maryland v. United States, 381 U. S. 41. Pp. 425 U. S. 813-815.
(b) Compliance with Government conditions and regulations to meet contract or grant goals does not convert a contractor to an agent of the Government. Pp. 425 U. S. 815-816.
(e) The EOA emphasizes that a community action agency (which like myriads of other activities is federally funded) is a local enterprise, not a federal enterprise whose "detailed physical performance" is subject to Government control. P. 425 U. S. 816.
(d) The legislative history relating to the community action programs manifests the congressional intent not to create new federal agencies, but to strengthen community capabilities of eliminating poverty at the local level. P. 425 U. S. 817.
(e) Local officials administer the programs. Though OEO regulations and guidelines must be observed, the OEO, none of whose employees may serve on a community action board, has no power to supervise the community action agency or its neighborhood program. Pp. 425 U. S. 817-819.
509 F.2d 197, reversed. BURGER, C.J., delivered the opinion for a unanimous Court.
This case presents the question whether a community action agency funded under the Economic Opportunity Act of 1964 is a federal instrumentality or agency for purposes of Federal Tort Claims Act liability.
"stimulate a better focusing of all available local, State, private, and Federal resources upon the goal of enabling low income families, and low income individuals . . . to become fully self-sufficient."
"provides for community action agencies and programs, prescribes the structure and describes the functions of community action agencies and authorizes financial assistance to community action programs and related projects and activities."
"State or political subdivision of a State . . . or a public or private nonprofit agency or organization which has been designated by a State or such a political subdivision . . ."
"includes or is designed to include . . . a range of services and activities having a measurable and potentially major impact on causes of poverty in the community. . . ."
Warren-Trumbull Council received all of its monetary resources from the Office of Economic Opportunity (OEO), the federal agency established to administer the Economic Opportunity Act. [Footnote 1] The Council also received local "in-kind" contributions and was empowered to receive funding from other sources. The "in-kind" contributions supply the 20% local support which each community action agency must receive to qualify for federal grants. 42 U.S.C. § 2812(c).
One of the activities of the Warren-Trumbull Council was the Westlawn Neighborhood Opportunity Center (Westlawn), established under 42 U.S. C. § 2811. Westlawn sponsored a recreational outing for a group of children. The Warren-Trumbull Council furnished a van for the outing. Since the van was not large enough to transport all the children, employees of the Council arranged for two young men from the Westlawn area to drive some of the children to and from the outing in privately owned automobiles. Respondent Joseph v. Orleans was one of the children on the outing who, while returning in one of the private cars, was injured when the car collided with a parked truck.
agencies of the United States within the purview and scope of 28 U.S.C. 2671."
The District Court granted the Government's motion, holding that the Warren-Trumbull Council was a contractor with the OEO, "not a corporation acting as an instrumentality or agency of the United States." The District Court also found that employees of the Warren-Trumbull Council and Westlawn are not federal employees. Orleans v. United States, No. C72-260-Y (Sept. 13, 1973). In response to respondents' motion to reconsider, the District Court accepted "the four basic facts upon which plaintiffs base their conclusion": that the Warren-Trumbull Council "was created for the purpose of carrying out the community action programs contained in the Economic Opportunity Act of 1964," that the Council received no funds from any source other than the OEO, that the Council conducted only programs "formulated and funded by the federal government," and that the OEO closely supervised the Council and its activities. The District Court also noted that federal funding was stopped until the Warren-Trumbull Council was reorganized and a new chairman of the governing board was appointed. The District Court held, however, that the recited facts did not warrant a conclusion that the Council was an agency or instrumentality of the Federal Government. The District Court determined that Congress intended that community action agencies be locally controlled and that the Warren-Trumbull Council was empowered and encouraged to receive money and develop programs from federal and other sources. The District Court found that whether or not the Council used this power it "remains an independent, locally controlled and constituted non-profit corporation." The District Court, in reaffirming its prior ruling, thus held that the Council was a contractor conducting "prepackaged Federal programs."
"necessary to keep in mind the concept of the importance of using all the resources of the local community to fight poverty which underlies the Economic Opportunity Act of 1964."
"The relationship between OEO and WTCEO [the Warren-Trumbull Council] meets a number of the criteria for establishing that WTCEO is an independent contractor. There was no showing that OEO controlled or supervised the physical performance of the work of employees of WTCEO and Westlawn. Moreover, the requirements imposed on these local agencies by statute and regulations are not concerned with the details of the day-to-day operations of the agencies or the programs which they carry on in the Warren-Trumbull County area. They are more in the nature of general instructions to be followed in order to assure that certain policies which Congress had adopted in establishing OEO are respected and adhered to."
agencies are not traditional independent contractors. Id. at 204. The Court of Appeals reasoned that, since both the Federal Tort Claims Act and the Economic Opportunity Act were designed to remedy hardship and suffering, they, when read together, indicate that Congress did not intend that beneficiaries of the Economic Opportunity Act who sustain injury in the course of federally approved programs be barred from recovery under the Federal Tort Claims Act. Under that court's holding, such "beneficiaries" are, in effect, carved out as a special class to be covered by the Tort Claims Act independently of whether a member of the public injured by the same car could recover.
Subsequently, in April, 1975, the Court of Appeals for the Eighth Circuit reached a contrary conclusion. Vincent v. United States, 513 F.2d 1296. We granted the writ of certiorari in this case to resolve the conflict between the Circuits. 423 U.S. 911 (1975).
employees to include officers and employees of "any federal agency," but excludes "any contractor with the United States." 28 U.S.C. § 2671. [Footnote 3] Since the United States can be sued only to the extent that it has waived its immunity, due regard must be given to the exceptions, including the independent contractor exception, to such waiver. See Dalehite v. United States, 346 U. S. 15, 346 U. S. 331 (1953). A critical element in distinguishing an agency from a contractor is the power of the Federal Government "to control the detailed physical performance of the contractor." Logue v. United States, 412 U. S. 521, 412 U. S. 528 (1973).
specifications of a contract or grant, but they are largely free to select the means of its implementation. [Footnote 5] Perhaps part of the cost to the Government often includes the expense for public liability insurance, but that is a matter of either contract or choice. The respondents did not sue the community action agency itself. Similarly, by contract, the Government may fix specific and precise conditions to implement federal objectives. Although such regulations are aimed at assuring compliance with goals, the regulations do not convert the acts of entrepreneurs -- or of state governmental bodies -- into federal governmental acts. [Footnote 6] Cf. Jackson v. Metropolitan Edison Co., 419 U. S. 345 (1974); Moose Lodge No. 107 v. Irvis, 407 U. S. 163 (1972).
Federal funding reaches myriad areas of activity of local and state governments and activities in the private sector as well. It is inconceivable that Congress intended to have waiver of sovereign immunity follow congressional largesse and cover countless unidentifiable classes of "beneficiaries." The Federal Government in no sense controls "the detailed physical performance" of all the programs and projects it finances by gifts, grants, contracts, or loans. Logue v. United States, supra at 412 U. S. 528. The underlying statute emphasizes that a community action agency is a local, not a federal, enterprise; thus, agents and employees of a local community action agency are not "employee[s] of the [Federal] government." 28 U.S.C. § 2671.
"the role of the Federal Government will be to give counsel and help, when requested, and to make available substantial assistance in meeting the costs of those programs."
"the strengthening of community capabilities for planning and coordinating Federal, State, and other assistance related to the elimination of poverty . . . through . . . local . . . organizations. . . ."
42 U.S.C. § 2781(a)(1). See S.Rep. No. 1218, 88th Cong., 2d Sess., 18 (1964). Congress also aimed to promote local resident participation in "the development and implementation of all programs and projects designed to serve the poor or low income areas," 42 U.S.C. § 2781(a)(4), and to broaden private support and aid, § 2781(a)(5). Tied in with the latter goal is the requirement that a community action agency receive at least 20% of its support from nonfederal sources. § 2812(c).
and programmatic limitations and application procedures. 45 CFR pts. 1060-1070 (1974). The OEO also issues numerous guidelines. These regulations and guidelines attempt to assure that the federal money is spent for the benefit of the poor. The regulations do not give the OEO power to supervise the daily operation of a community action agency or a neighborhood program.
employees distorts well established concepts of master and servant relationships and extends the meaning of the Federal Tort Claims Act beyond the intent of Congress.
The Community Service Administration succeeded the Office of Economic Opportunity. The CSA is the agency which currently furnishes financial assistance to community action agencies. 88 Stat. 2310, 42 U.S.C. § 2941 (1970 ed., Supp. IV).
"(b) Subject to the provisions of chapter 171 of this title, the district courts, together with the United States District Court for the District of the Canal Zone and the District Court of the Virginia Islands, shall have exclusive jurisdiction of civil actions on claims against the United States, for money damages, accruing on and after January 1, 1945, for injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred."
"As used in this chapter and sections 1346(b) and 2401(b) of this title, the term 'Federal agency' includes the executive departments, the military departments, independent establishments of the United States, and corporations primarily acting as instrumentalities or agencies of the United States, but does not include any contractor with the United States."
"'Employee of the government' includes officers or employees of any federal agency, members of the military or naval forces of the United States, and persons acting on behalf of a federal agency in an official capacity, temporarily or permanently in the service of the United States, whether with or without compensation."
"'Acting within the scope of his office or employment,' in the case of a member of the military or naval forces of the United States, means acting in line of duty."
Ohio law applies the same test in distinguishing between an employee and an independent contractor. See, e.g., Gillum v. Industrial Comm'n, 141 Ohio St. 373, 381, 48 N.E.2d 234, 237 (1943); New York, C. & St. L.R. Co. v. Heffner Constr. Co., 9 Ohio App.2d 174, 223 N.E.2d 649 (1967). See generally Restatement (Second) of Agency § 2 (1958).
Since the issue in this case is whether or not there was day-to-day control of a program, it is irrelevant whether the program is funded by means of a contract or a grant.
The Court of Appeals placed reliance upon the suspension of federal funding pending changes in the local board; plainly, the granting of funds can be conditional without changing the basic relationship between federal and local governments and their components.
It is thus irrelevant that the Warren-Trumbull Council did not obtain additional funds from other sources or conduct any programs without federal money.
In another context a community action agency has been held to be a private, not a federal, employer. Hines v. Cenla Community Action Comm., Inc., 474 F.2d 1052, 1058 (CA5 1973).

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