In the United States v. Gaubert case of 1990, the Supreme Court ruled on whether or not discretionary actions taken by federal agencies were exempt from liability under the Federal Tort Claims Act (FTCA). The plaintiff, Robert Gaubert, was a major shareholder in Independent American Savings Association (IASA) and claimed that regulators from the Federal Home Loan Bank Board had effectively taken control of IASA's daily operations to such an extent that they became responsible for its eventual failure. He sought damages under FTCA which waives sovereign immunity for certain torts committed by federal employees. However, this act does not apply if a claim is based upon an employee’s performance of a "discretionary function." The court held that even when a discretionary action involves day-to-day management activities rather than policy decisions at a planning level, it still falls within exception provided it is susceptible to policy analysis. Therefore, no liability could be imposed on government officials as their conduct fell within this “discretionary function” exception.

In the dissenting opinion for United States v. Gaubert, Justice Thurgood Marshall argued that the majority's decision expanded the discretionary function exception to the Federal Tort Claims Act (FTCA) beyond its intended scope. He contended that this expansion would shield negligent federal employees from liability and leave victims without recourse. According to Marshall, regulatory oversight activities should not be considered discretionary functions unless they involve policy judgments of a social, economic or political nature. In his view, routine tasks such as daily supervision and monitoring do not fall under this category even if they require some degree of judgment or choice. The justice also expressed concern over potential misuse of discretion by government officials who might use it as an excuse for negligence in performing their duties.