The U.S. Supreme Court recently scheduled oral arguments in Galette v. New Jersey Transit Corporation and NJ Transit v. Colt, a pair of consolidated cases involving whether the New Jersey Transit Corporation (NJ Transit) is entitled to interstate sovereign immunity. The Court’s decision will likely establish a national precedent for determining which state-created entities can invoke sovereign immunity and under what circumstances.
Legal Background
In Franchise Tax Board v. Hyatt, 587 U.S. 230 (2019), the Court overturned Nevada v. Hall, 440 U.S. 410 (1979), ruling that each State enjoys sovereign immunity not only in federal court under the Eleventh Amendment, but also in the courts of its co-equal States under the doctrine of interstate sovereign immunity. This doctrine, the Court held, “is a historically rooted principle embedded in the text and structure of the Constitution.”
Since Hyatt, the U.S. Supreme Court has not established a test for determining whether a state entity is an arm of the State entitled to sovereign immunity. As a result, the lower courts have borrowed from the Court’s Eleventh Amendment immunity cases to define the contours of interstate sovereign immunity. Under the Eleventh Amendment, for example, immunity does not extend to municipal corporations or other quasi-independent state entities.
Courts often apply a multi-factor test to determine whether an entity is an “arm of the state.” In 2018, the U.S. Court of Appeals for the Third Circuit ruled that NJ Transit is an arm of the state under the Eleventh Amendment and is immune from suit in federal court.
NJ Transit v. Cole
On February 9, 2017, a bus owned and operated by NJ Transit allegedly struck and injured Jeffrey Colt in Manhattan. He subsequently filed suit, claiming negligence, negligent hiring, and loss of consortium. In 2020, NJT moved to dismiss the complaint, arguing it was protected by sovereign immunity as an arm of the State of New Jersey.
The New York Court of Appeals held that NJ Transit was entitled to sovereign immunity. The court concluded that allowing the suit to proceed would not offend New Jersey’s sovereign dignity because NJT operates with significant independence and New Jersey would not be financially liable for a judgment against NJT. It wrote:
Balancing each consideration, we conclude that New Jersey’s lack of legal liability or ultimate financial responsibility for a judgment in this case outweighs the relatively weak support provided by the other factors. Put simply, allowing this suit to proceed would not be an affront to New Jersey’s dignity because a judgment would not be imposed against the State, and the entity that would bear legal liability has a significant degree of autonomy from the State. We therefore conclude that [NJ Transit] is not an arm of New Jersey and may not invoke sovereign immunity.
Galette v. NJ Transit
In his lawsuit, Cedric Galette alleged that, on August 9, 2018, he was a passenger in a vehicle when NJ Transit struck the vehicle, while the vehicle was stopped on Market Street in Philadelphia, Pennsylvania. Galette alleged that NJ Transit and the driver were negligent in several respects and that their negligence caused him to suffer physical injuries. In response, NJ Transit alleged that it is an arm of the State of New Jersey entitled to the protections of sovereign immunity.
The Pennsylvania Supreme Court held that NJ Transit is an arm of the State of New Jersey and immune from suit in Pennsylvania under the doctrine of interstate sovereign immunity. In so ruling, the court broke with both the New Jersey Supreme Court and Third Circuit. It wrote:
In our view, the Transportation Act, which defines NJ Transit and its functions, strongly evidences that New Jersey views NJ Transit as its arm for purposes of providing public transportation. The Act also demonstrates that the political branches of the State of New Jersey have significant power over NJ Transit, as the New Jersey Executive and Legislative branches appoint NJ Transit’s board and the board can take no action without seeking the Governor’s approval following a meeting. While it seems that the New York High Court is correct that the State of New Jersey would not be responsible for a judgment entered against NJ Transit, we do not place significant weight on this factor under the circumstances presently before us. Rather, as we explained above, we view the first factor as the driving force in concluding that NJ Transit is an arm of the State of New Jersey.
Issues Before the Supreme Court
The Supreme Court granted certiorari on July 3, 2025. The justices agreed to consider the following question: “Whether NJ Transit is an arm of the State of New Jersey for interstate sovereign immunity purposes.”
A ruling is expected by the end of the term in June/July 2026.
