State of Ala. ex rel. Graddick v. Tennessee Valley Authority

• Decision Date: 13 February 1981
• Docket Number: No. 79-1283,79-1283
• Citation: 636 F.2d 1061
• Parties: STATE OF ALABAMA ex rel. Charles A. GRADDICK, as Attorney General of the State of Alabama, Plaintiff-Appellee, v. TENNESSEE VALLEY AUTHORITY et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1061

636 F.2d 1061

STATE OF ALABAMA ex rel. Charles A. GRADDICK, as Attorney General of the State of Alabama, Plaintiff-Appellee, v. TENNESSEE VALLEY AUTHORITY et al., Defendants-Appellants.

No. 79-1283.

United States Court of Appeals, Fifth Circuit.

Feb. 13, 1981.

Rehearing Denied April 2, 1981.

Herbert S. Sanger, Gen. Counsel, Justin M. Schwamm, Sr., Asst. Gen. Counsel, Michael R. McElroy, Atty., Tenn. Valley Auth., Knoxville, Tenn., for defendants-appellants.

William B. Hubbard, Deputy Atty. Gen., William M. Leech, Jr., Atty. Gen., Nashville, Tenn., for State of Tenn., amicus curiae.

Edward E. Carnes, Asst. Atty. Gen., Montgomery, Ala., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Alabama.

Before GEE, FAY and RANDALL, Circuit Judges.

GEE, Circuit Judge:

The Tennessee Valley Authority ("TVA" or "Authority") appeals from an order of the United States District Court for the Northern District of Alabama requiring that its "headquarters" in Knoxville, Tennessee, be packed up and moved to Muscle Shoals, Alabama. The district judge found this relocation necessary to bring TVA into compliance with section 8(a) of the Tennessee Valley Authority Act of 1933, 16 U.S.C. § 831g(a), which reads in pertinent part: "The corporation shall maintain its principal office in the immediate vicinity of Muscle Shoals, Alabama." ¹

Since its creation by act of Congress in 1933, the TVA has maintained offices in a number of locations, including Knoxville, Chattanooga, Muscle Shoals, and Washington, D.C., in order to facilitate performance of its statutory purposes. It is undisputed that the central administration of the corporation has been located from its earliest days in Knoxville. Members of the board of directors maintain their offices in Knoxville; most of their meetings are conducted there; the central offices and directors of a number of the corporation's major divisions are located there. A smaller office is maintained in Muscle Shoals; the administrative staffs of several divisions are located there. The TVA makes no pretense that these Alabama activities comprise those that would be carried on at the administrative headquarters of a corporation.

Dissatisfied with this arrangement, the State of Alabama filed suit in 1977 ² to force the TVA to relocate its central administration in Muscle Shoals. In lieu of an answer to this complaint, the TVA filed a motion for summary judgment. ³ Alabama filed a cross motion for summary judgment, which was granted by the court. In a January 25, 1979, order the judge enjoined the TVA "from locating or maintaining the headquarters of the Tennessee Valley Authority in any place other than in the immediate vicinity of Muscle Shoals, Alabama." It is from this order of the district court that TVA now appeals.

Two of the grounds for reversal urged by TVA need delay us only slightly, for we find that the court below correctly disposed of TVA's arguments on these points. That finding is slim comfort to appellee, for the judgment falls anyway on the third ground, discussed in detail below.

The Authority's assertions that Alabama lacked standing and that the state's claim was barred by the earlier decision in Frahn v. TVA, 41 F.Supp. 83 (N.D.Ala.1941), were sufficiently dealt with below. The amicus brief filed with this court by the State of Tennessee urging reversal is itself an eloquent evocation of Alabama's alleged injury in fact; the injury is certainly sufficient to insure that there exists the concrete adverseness of positions necessary to proper clarification of the issues. Alabama has standing to challenge the TVA's actions here. In Frahn a group of Alabama residents filed suit to remedy what they considered the TVA's intransigent refusal to obey the law. The district judge granted the Authority's Rule 12(b)(6) motion on the ground that these private individuals lacked standing to complain of TVA's behavior. The court additionally remarked that the determination of placement of its corporate headquarters was properly left to the TVA. The Authority's attempt to skewer Alabama on language in Frahn, even if this court were to find the substantive issue involved in this case there to have been resolved, must fail. Alabama was neither a party to the earlier lawsuit, nor is there an identity of interest with those individuals who were plaintiffs. In addition to its parens patriae interest, which arguably can be no different substantively from that of its citizens, the state asserts a proprietary interest distinct from that of any individual or group of its citizens.

Our findings that the district judge sufficiently resolved difficult questions of standing and res judicata can give Alabama only brief solace; fully entitled to bring this lawsuit, the state is not, however, entitled to prevail. The sole question for decision here, correctly recognized by the district court, is the meaning of the "principal office" provision of 16 U.S.C. § 831g(a). Summary judgment was thus the appropriate resolution of this matter; the victory simply went to the wrong contestant. This court must now consider the legal effect of the statutory requirement that the TVA maintain its "principal office in the immediate vicinity of Muscle Shoals, Alabama."

Contrary to Alabama's assertions, this court finds the "plain meaning" of the statutory language not to be all that plain. That application of a dictionary to the phrase necessarily results in the conclusion that certain (but not all) administrative functions of the Authority should properly exist only in Muscle Shoals is not ineluctably clear. As a legal term of art (if such it be), "principal office" lacks a certain definiteness in its connotation; courts and commentators confuse and differently distinguish phrases such as "principal office," "registered office," and "principal place of business." ⁴

Confronted with a provision the reading of which we find ambiguous, this court must turn to familiar but nevertheless slippery tools of statutory construction. Before doing so, however, it is important to clarify what this exercise must entail. The TVA asserts that whatever the phrase actually means, the Authority's consistent forty-year reading of it is a reasonable one and that proper judicial deference to agency expertise would prompt this court to leave the reasonable interpretation undisturbed. That deferential solution would spare this court much of the following exercise and for that reason, among others, is a facially attractive one. That conclusion is, however, fundamentally flawed. The proposition the TVA here urges is appropriate in situations where the agency's challenged action in some way implicates its special expertise. Cf. Young v. TVA, 606 F.2d 143, 145 (6th Cir. 1979) (question of TVA authority to construct power plant outside watershed of Tennessee River; agency construction of statutory provision upheld in part because "(t)he construction and operation of power plants and the distribution of electric energy generated therefrom requires expertise which should be accorded deference by the courts"). This court is hard pressed to arrive at reasons why the TVA's interpretation of a purely legal point here should be accorded any weight at all, much less rendered the deference suggested. Cf. Coca-Cola Co. v. Atchison, Topeka & Santa Fe Railway Co., 608 F.2d 213, 222 (5th Cir. 1979) ("(n)evertheless, even where the issue is one of pure law, such as interpretation of contracts, tariffs, regulations and statutes, room still is present for deference to the views of administrative agencies, particularly where the understanding of the problem is enhanced by the agency's expert understanding of the industry " (emphasis added)). Congress did not commit to the TVA's judgment the location of its principal office; that decision is chiseled in stone at 16 U.S.C. § 831g(a). If this court were to arrive at the legal determination that "principal office" meant administrative headquarters, then, absent congressional amendment of that provision, ⁵ the reasonableness of TVA's error could not save it from Muscle Shoals. The question is properly one for the court to decide, and so we turn to it. We conclude that TVA's interpretation of the "principal office" provision is not only reasonable, it is correct.

As suggested above, courts and commentators can be found falling on both sides of this definitional dispute; no attempt will here be made to cast these into respective measures and to determine the "weight" of authority. The sources that, however, helped lead us to our reading of the term in its context will be briefly noted and qualified.

The major corporate law treatises do not offer a united front. Compare 1 H. Oleck, Modern Corporate Law § 3, at 13 (1958) (" 'Principal office' means the place stated in the articles or certificate of incorporation as the address of the corporation."), with 8 W. Fletcher, Cyclopedia of the Law of Private Corporations § 4035, at 458 (1966) ("The words 'principal office' have a definite meaning, especially when applied to a corporation, in which case they mean the head office, the place where the principal officers generally transact business and the place to which reports are made and from which orders emanate."). The above formulations need not be mutually exclusive. A corporation's central headquarters, "from which orders emanate," could well be the office listed in the charter as the formal address of the entity. But it need not be; and as pointed out by the TVA, in common practice it frequently is not the same location. The Delaware corporation law statute for many years required businesses incorporating under its provisions to maintain a "principal office or place of business" within the state. ⁶ This popular incorporating state was never inundated with actual corporate headquarters because of this statutory requirement. No independent tabulation of...