425 U.S. 807 (1976), 75-328, United States v. Orleans

Docket Nº:No. 75-328
Citation:425 U.S. 807, 96 S.Ct. 1971, 48 L.Ed.2d 390
Party Name:United States v. Orleans
Case Date:June 01, 1976
Court:United States Supreme Court

Page 807

425 U.S. 807 (1976)

96 S.Ct. 1971, 48 L.Ed.2d 390

United States

v.

Orleans

No. 75-328

United States Supreme Court

June 1, 1976

Argued March 22, 1976

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Syllabus

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 [96 S.Ct. 1973] and their employees are not federal employees within the meaning of the FTCA. Pp. 813-819.

(a) The FTCA, which is a limited waiver of sovereign immunity

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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, 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. 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. 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. 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. 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. 817-819.

509 F.2d 197, reversed. BURGER, C.J., delivered the opinion for a unanimous Court.

Page 809

BURGER, J., lead opinion

MR CHIEF JUSTICE BURGER delivered the opinion of the 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.

I

Title II of the Economic Opportunity Act of 1964, 78 Stat. 516, as amended, 81 Stat. 690, 42 U.S.C. § 2781 et seq., was passed to

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.

42 U.S.C. § 2781(a). To this end, the Act

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.

Ibid.

Under the statute, a community action agency is 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 . . .

and which is "capable of planning, conducting, administering and evaluating a community action program. . . ." 42 U.S.C. § 2790(a). A community action program

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. . . .

Ibid.

The Warren-Trumbull Council for Economic Opportunity, Inc., is a community [96 S.Ct. 1974] action agency; it is a nonprofit corporation incorporated under § 1702.01 et seq. of the Ohio Revised Code. At the time of this suit, the

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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.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.

The injured boy and his father, having exhausted their administrative remedies, sued the United States in the United States District Court for the Northern District of Ohio under the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b) and 2671 et seq., alleging that agents of the United States in charge of the outing were negligent in its organization and supervision. The United States moved for summary judgment pursuant to Fed.Rule Civ.Proc. 56 on the ground that the Warren-Trumbull Council and Westlawn were not "instrumentalities or

Page 811

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."

Page 812

The Court of Appeals for the Sixth Circuit reversed the District Court, 509 F.2d 197 (1975), holding that it was necessary to [96 S.Ct. 1975] examine the "type and extent of control retained by the principal." Id. at 201. It noted, however, that it was

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.

Id. at 202.

The relationship between OEO and WTCEO [the Warren-Trumbull...

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