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United States v. Orleans et al.

Supreme Court of United States
425 U.S. 807 (1976)
ELI5:

Rule of Law:

An entity that receives federal funding and is subject to federal regulations is not a 'federal agency' for purposes of liability under the Federal Tort Claims Act (FTCA) unless the federal government exercises control over the detailed physical performance and day-to-day operations of that entity and its employees.


Facts:

  • The Warren-Trumbull Council for Economic Opportunity, Inc. (Warren-Trumbull Council) was a private, nonprofit Ohio corporation operating as a community action agency.
  • The Council received all of its funding from the federal Office of Economic Opportunity (OEO) to carry out programs under the Economic Opportunity Act of 1964.
  • One of the Council's programs, the Westlawn Neighborhood Opportunity Center (Westlawn), sponsored a recreational outing for a group of children.
  • Because the Council's van was not large enough to transport all the children, Council employees arranged for two young men to drive some children in their privately owned automobiles.
  • Joseph V. Orleans was a child on the outing who was injured when the private car in which he was a passenger collided with a parked truck.

Procedural Posture:

  • Joseph V. Orleans and his father sued the United States in the U.S. District Court for the Northern District of Ohio under the Federal Tort Claims Act.
  • The United States filed a motion for summary judgment, arguing the Warren-Trumbull Council was an independent contractor, not a federal agency.
  • The District Court granted summary judgment for the United States, finding the Council was a contractor.
  • The Orleanses (respondents) appealed to the U.S. Court of Appeals for the Sixth Circuit.
  • The Court of Appeals reversed the District Court, holding that the Council was a federal instrumentality for FTCA purposes.
  • The United States (petitioner) petitioned the U.S. Supreme Court for a writ of certiorari, which was granted to resolve a conflict among the circuit courts.

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Issue:

Is a local community action agency, funded entirely by the federal government under the Economic Opportunity Act and subject to its extensive regulations, a 'federal agency' or 'instrumentality' for the purposes of the Federal Tort Claims Act?


Opinions:

Majority - Chief Justice Burger

No, a local community action agency is not a 'federal agency' for FTCA purposes merely because it is federally funded and regulated. Under the FTCA, the United States waives sovereign immunity for torts committed by its employees, but expressly excludes employees of independent contractors. The determinative question is not whether the entity receives federal funds or must comply with federal standards, but whether the federal government has the power 'to control the detailed physical performance of the contractor.' The court found that despite extensive regulations and funding conditions, the OEO did not supervise the day-to-day operations of the Warren-Trumbull Council. The Economic Opportunity Act's structure and legislative history show Congress intended these agencies to be locally controlled and operated, not to be new federal agencies. Therefore, the Council was an independent contractor, and its employees were not federal employees for whom the United States could be held liable under the FTCA.



Analysis:

This decision significantly clarifies the 'independent contractor' exception under the Federal Tort Claims Act, reinforcing the 'control test' established in cases like Logue v. United States. By focusing on day-to-day operational control rather than funding and regulatory oversight, the Court prevented a massive expansion of federal tort liability that could have encompassed countless state, local, and private entities receiving federal grants. The ruling establishes a strong precedent that federal funding and the imposition of standards to ensure that funds are properly used do not, by themselves, transform a grantee or contractor into an arm of the federal government for liability purposes. This maintains a clear line between federal oversight and direct federal agency action.

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