On April 29, 2019, the Supreme Court of the United States decided Thacker v. Tennessee Valley Authority, No. 17-1201, holding that the “sue-and-be-sued” clause that waives the Tennessee Valley Authority’s (TVA) sovereign immunity is not subject to a “discretionary-function” exception, but it may be subject to an exception if a lawsuit would be a grave interference with the TVA’s performance of one of its governmental functions.
The Tennessee Valley Authority Act of 1933 (the Act) established the TVA as a “wholly owned public corporation of the United States.” The TVA performs both governmental functions (for example, exercising eminent-domain powers) and commercial ones (for example, producing and selling electricity). As a government-owned corporation, the TVA normally would enjoy sovereign immunity from suit. But the Act provides that the TVA may “sue and be sued in its corporate name,” and under Supreme Court precedent, a sue-and-be-sued clause waives a government-owned corporation’s sovereign immunity.
Gary Thacker sued the TVA for negligence after suffering serious injuries in 2013 when the boat he was driving struck a power line being raised from the Tennessee River by several TVA workers. The TVA moved to dismiss the suit on sovereign-immunity grounds, arguing that notwithstanding the sue-and-be-sued clause, the TVA is entitled to immunity from any suit based on an employee’s exercise of “discretionary functions.” The district court agreed and dismissed the lawsuit. On appeal, the Eleventh Circuit affirmed.
The Supreme Court disagreed and reversed. The Court observed that the waiver of sovereign immunity in the Act is subject to exceptions that are specifically provided in the statute, but there is no exception for “discretionary functions.” And while the Federal Tort Claims Act (FTCA), which waives the government’s sovereign immunity in certain circumstances, does contain an exception for discretionary functions, it explicitly states that it does not apply to the TVA. Thus, the TVA does not have sovereign immunity for all “discretionary functions.”
But the Court went on to recognize that a sue-and-be-sued clause does have an implied exception (and sovereign immunity will not be waived) when a lawsuit is either “not consistent with the statutory or constitutional scheme” or the lawsuit would be a “grave interference with the performance of a governmental function.” The Court therefore concluded that the TVA retains sovereign immunity in cases where a lawsuit would be a “grave interference” with the TVA’s performance of one of its governmental functions. The Court remanded the case for the lower courts to decide whether the TVA’s allegedly negligent conduct was commercial, in which case the TVA would not be immune from Thacker’s suit.
Justice Kagan delivered the opinion for a unanimous court.