Galette v. New Jersey Transit Corporation

    Issues

    Is the New Jersey Transit Corporation, as an arm of the State of New Jersey, entitled to interstate sovereign immunity, thereby barring out-of-state negligence claims against it?

    Oral argument:
    January 14, 2026
    Court below:
    Supreme Court of Pennsylvania

    This case asks the Supreme Court to determine whether the New Jersey Transit Corporation (“NJ Transit”) is an arm of the State of New Jersey entitled to interstate sovereign immunity. Cedric Galette initiated a negligence lawsuit against NJ Transit under Pennsylvania law. NJ Transit filed a motion to dismiss the suit based on interstate sovereign immunity, a common law doctrine under which a sovereign cannot be sued without its consent. Galette argues that although the Legislature of the State of New Jersey (“the State”) established the entity as an “instrumentality” of the State, NJ Transit’s structure, as well as the lack of direct state liability for its adverse judgements, demonstrate it is not an arm of the State for sovereign immunity purposes. NJ Transit counters that NJ Transit was created as an arm of New Jersey entitled to sovereign immunity, emphasizing statutory language calling it an instrumentality of the State, its governmental powers, essential public function, gubernatorial control, and dependence on state funding. The outcome of this case will impact federalism and state sovereignty as well as economic consequences for state-affiliated commercial entities.

    Questions as Framed for the Court by the Parties

    Whether the New Jersey Transit Corporation is an arm of the State of New Jersey for interstate sovereign immunity purposes.

    Facts

    On August 9, 2018, Cedric Galette was a passenger in a vehicle driven by Julie McCrey.While the vehicle was stopped on a street in Philadelphia, Pennsylvania, it was struck by a New Jersey Transit vehicle, causing physical injuries to Galette. Galette filed a civil complaint against McCrey and NJ Transit in the Court of Common Pleas of Philadelphia County, alleging that both were negligent in several respects.

    NJ Transit filed a motion to dismiss. NJ Transit claimed that the New Jersey State Legislature explicitly established NJ Transit as an “instrumentality” (i.e., arm) of the State of New Jersey (“the State”) in The New Jersey Public Transportation Act of 1979. NJ Transit argued that as an arm of the State, it is entitled to the same sovereign immunity granted to State’s government, and is immune from private suits brought in other states’ courts. The legal doctrine of sovereign immunity was brought over to the United States from Great Britain, and originally established that no suit could be brought against the King of England because “no court can have jurisdiction over him.” Once America gained its independence, the Eleventh Amendment of the United States Constitution established that US states do not have the power to subject other US states to the jurisdiction of their courts without their consent. The purpose of interstate sovereign immunity has, historically, been to protect the dignity of states as equal sovereigns and to prevent conflicts between individual states.

    The trial court denied NJ Transit’s motion to dismiss, and the Superior Court of Pennsylvania affirmed on appeal, holding that NJ Transit is not an arm of the State and is not entitled to sovereign immunity, regardless of statements made by the State Legislature. The Superior Court used a “six-factor test” to determine whether NJ Transit was arm of the state. These six factors evaluated 1) the legal classification of the entity, 2) the state’s control over the entity, 3) the entity’s power to raise revenue, 4) the funding provided by the state to the entity, 5) whether the state is liable for the entity’s lawsuits, and 6) whether the entity’s core function is a governmental function. The Superior Court determined that the first, second, and sixth factors supported an argument that NJ Transit was an “arm,” but the other three did not, and these factors have historically carried equal weight. The Superior Court instead analyzed whether subjecting NJ Transit to this lawsuit would undermine the purpose of the Eleventh Amendment – protecting New Jersey’s “sovereign dignity” and treasury – and determined that neither would be at stake in a suit against NJ Transit.

    The Pennsylvania Supreme Court, however, granted the first factor heavier weight in this case, given that it implicated interstate sovereign immunity, rather than private citizens’ abilities to bring suits against their own state governments. To preserve the State’s sovereignty, the court decided that the State Legislature’s legal classification of NJ Transit as an “instrumentality” of the State should be given priority. Therefore, the first, second, and sixth factors leaned “heavily” in favor of granting NJ Transit sovereign immunity. The Pennsylvania Supreme Court therefore reversed the decision of the lower court.

    On March 19, 2025, Galette petitioned the Supreme Court of the United States to hear this case.  The Supreme Court granted certiorari on July 3, 2025. On the same day, the Supreme Court consolidated this case with New Jersey Transit Corporation v. Colt. In Colt, NJ Transit petitioned the Supreme Court to review a decision by the New York Court of Appeals finding that interstate sovereign immunity did not apply to NJ Transit. 

    Analysis

    LEGISLATIVE INTENT

    NJ Transit argues that the New Jersey State Legislature’s intent should be given primary consideration when determining whether or not NJ Transit is an “arm” of the State. NJ Transit posits that sovereignty grants states the power to decide how to structure themselves, as well as the freedom to choose how to extend their own sovereignty.In NJ Transit’s view, sovereign immunity exists to protect states’ dignity, and this dignity would be undermined if another state’s court were to subject NJ Transit to its jurisdiction against the will of the State.NJ Transit argues that language in the original statute establishing NJ Transit as an “instrumentality of the State,” and designating it to serve “public and essential governmental functions,” is clear evidence of the Legislature’s intent to establish NJ Transit as an “arm” and extend sovereignty to the entity.

    Cedric Galette argues that regardless of the the State’s intent, NJ Transit’s sovereign immunity should be determined only by its powers, the functions the entity serves, and the State’s control over the entity. Although Galette acknowledges wording in NJ Transit’s original statute that establishes it as an “instrumentality” of the State and designates the entity to perform “essential governmental functions,” Galette maintains that mere legislative labels are not enough to make these labels true nor to grant sovereign immunity to NJ Transit. Galette claims that a court’s refusal to accept a state’s own label would not undermine the state’s dignity, as the question of sovereign immunity is substance-driven and determined by federal law, not state law. Galette highlights that states remain free to grant entities sovereign immunity through laws determining their functions, finances, and powers.

    ENTITY STRUCTURE

    NJ Transit argues that, in addition to legislative intent, its own structure supports a finding that it is an “arm” of the State and should be granted sovereign immunity. NJ Transit cites its ability to exert police power, exercise eminent domain, and create regulations related to public transit that have the force of law, as evidence of its governmental function. NJ Transit argues that the State’s statutes treat the entity like any other state agency and subjects NJ Transit to the same public records laws and review processes. NJ Transit contends that the line “public and essential governmental functions” in its original statute represents a dividing line historically used by the State to separate agencies from municipalities. NJ Transit further argues that the State’s control over NJ Transit shows that the entity is an “arm” for purposes of determining sovereign immunity. NJ Transit posits that state control demonstrates that an entity is accountable to officials elected by all citizens, as opposed to other entities (such as localities) that are only accountable to a small fraction of a state’s citizens. As evidence of the State’s control, NJ Transit presents the structure of its own board, over which the Governor of New Jersey has appointment, removal, and veto powers. Although the governor’s removal powers are only “for-cause,” NJ Transit contends that this reflects a choice by the State on how to structure its own government, rather than a lack of control. Finally, NJ Transit argues that it serves an essential public function because of the State’s need to provide “efficient, coordinated, safe and responsive public transportation,” satisfying a requirement that arms need to provide an essential public function.

    Galette argues that NJ Transit is not substantively an “arm” of the State, as the entity’s structure and powers do not support a finding that it should be granted sovereign immunity. Galette presents factors generally considered when determining whether an entity is independent: whether an entity is fully “integrated” within the state, whether it is “formally answerable to and thoroughly controlled by the state,” and whether it serves a “traditional governmental function.” Galette acknowledges that NJ Transit is granted certain powers by the State’s Legislature (such as police power, eminent domain, and the ability to create regulations) but contends that many of these powers are also extended to municipalities, which have historically not been considered arms of the State. Galette further argues that NJ Transit is an autonomous entity independent of the State. Galette cites NJ Transit’s original statute, which explicitly states that NJ Transit is independent of the State’s board of transportation, as evidence that the State and NJ Transit do not share a single legal identity. Galette contends that the governor’s power to appoint NJ Transit’s board is not enough to establish the amount of control over the entity necessary to identify it as an arm, as the governor’s power here manifests less state control than in other circumstances. Galette highlights that the Bank of Commonwealth of Kentucky, for example, was not considered an arm of the Commonwealth of Kentucky despite the fact that all its officers were appointed by the Kentucky legislature. Finally, Galette argues that NJ Transit does not serve a traditional governmental function and instead functions as a private corporation. Galette points out that NJ Transit is a service that competes with private transportation companies such as taxis, Uber, and Lyft for passengers who pay fares. Galette further claims that state commercial ventures are not traditionally granted sovereign immunity.

    FINANCIAL RELATIONSHIP

    NJ Transit argues that the State has a broad financial relationship with NJ Transit, and that liability for judgments against NJ Transit will indirectly harm the State’s treasury. NJ Transit claims that in addition to protecting states’ dignity, sovereign immunity serves to protect states’ finances, as a liability of a state-funded entity would also impact the finances of that state. NJ Transit posits that it is financially integrated within and dependent on the State, and although the State is not directly responsible for adverse judgments, NJ Transit’s liabilities will cause financial injuries to the State. As evidence of this financial relationship, NJ Transit cites considerable subsidies granted to the entity by the State, which have historically comprised between 15–46% of the entity’s operating costs. NJ Transit claims that the State’s Legislature deliberately structured NJ Transit in a way that would make it financially reliant on the State, as NJ Transit is reliant on the State to acquire necessary funding (unlike private companies), and is prevented by the State from maximizing profits in the same way as a private business for public policy reasons. NJ Transit contends that although the entity is liable for its own suits, this liability reflects a policy choice to protect taxpayers’ funds and does not reflect the State’s intent to remove NJ Transit’s sovereign immunity.

    Galette posits that whether or not the State itself is liable for adverse judgements is the most important factor in determining whether NJ Transit is an “arm” of the State. Galette argues that historically, corporations’ ability to “sue and be sued” and their ability to pay damages from their own funds separated them as distinct legal entities. Galette cites NJ Transit’s original statute, which declares that the State is not responsible for NJ Transit’s debts, liabilities, or loans, and that all NJ Transit’s expenses will be paid out of the entity’s own funds. Although NJ Transit argues that an adverse judgement would indirectly impact the State’s finances, Galette counters that what truly matters is whether or not the State has legal liability for NJ Transit, not merely a “financial relationship” with the entity. According to Galette, even if the State decided to indemnify NJ Transit, an indemnification is not the same as liability for suit. Galette claims that a test for a “broad financial relationship” would be unworkable if used to determine sovereignty, as the State’s subsidies for and financial involvement with NJ Transit have fluctuated dramatically over the years.

    Discussion

    FEDERALISM, STATE SOVEREIGNTY AND ACCOUNTABILITY

    In support of NJ Transit, the National Governors Association (“NGA”) argues that denying states’ entities immunity would disrupt the federal balance by interfering with state prerogatives and policies.  NGA explains that federalism protects states’ choices as to determining what public functions to undertake and what structures to deem as instrumentalities. NGA posits that an out-of-state court may misunderstand how another state’s entities operate and are governed, which would undermine state sovereignty. Moreover, the State of Missouri and Higher Education Loan Authority of The State of Missouri (collectively “MOHELA”), in support of NJ Transit, contend that federalism is fundamental to the federal system and allows states to adapt to changing societal needs embracing nontraditional or creative arrangements. The Commuter Rail Coalition (“CRC”), in support of NJ Transit, asserts that limiting sovereign immunity penalizes states that step in to provide critical infrastructure, thus undermining the federal balance and states’ ability to respond to evolving public needs. 

    The Constitutional Accountability Center, in support of Galette, argues that extending immunity to state-affiliated corporations would go against the founders’ understandings of sovereign immunity.  In support of Galette, the New York State Academy of Trial Lawyers, argues that granting immunity to NJ Transit would be an affront to the dignity of other states, as it would bar their courts from hearing the claims of citizens who were injured within their borders by a foreign state’s entity.  Furthermore, Public Citizen, in support of Galette, argues that granting immunity to these entities undermines access to justice for out-of-state consumers because unlike in-state residents, out-of-state consumers do not have any means to influence the political processes that impact these entities. Additionally, Professors William Baude and Stephen E. Sachs (“Baude and Sachs”), in support of Galette, assert that if states could always confer sovereign immunity on their own creations, it would reduce legal clarity concerning the responsibilities and liabilities of various entities and undermine deliberate structural decisions to create separate legal persons, such as public corporations.

    ECONOMIC CONSEQUENCES AND STATES’ ECONOMIC HEALTH

    In support of NJ Transit, CRC argues that denying NJ Transit immunity would put the continued provision and affordability of public transportation at risk. CRC posits that allowing lawsuits against these entities would raise insurance premiums, forcing state-affiliated commercial entities to prioritize avoiding litigation over delivering vital services that serve the public interest. MOHELA, in support of NJ Transit, claims that sovereign immunity is designed to protect state’s treasuries.  MOHELA explains that litigating claims indirectly harms the state by reducing revenues directed to state purposes or forcing the state to redirect its own treasury funds. According to MOHELA, even where the state is not directly liable for an instrumentality’s debts, exposing that entity to suit can require it to divert resources away from its public mission which harms the state’s sovereign interests and policy choices.

    Public Citizen, in support of Galette, counters that granting immunity to state-affiliated commercial entities would harm out-of-state consumers who conduct business with the entities. This is significant, Public Citizen argues, because state-affiliated commercial entities frequently operate out-of-state, meaning that economic consequences for out-of-state operations can be substantial. The American Association for Justice, in support of Galette, argues that attempting to apply sovereign immunity to state-affiliated commercial entities is really a way to avoid these economic consequences.  Baude and Sachs, in support of Galette, assert that New Jersey chose to create NJ Transit as a separate entity, allowing the State to “offload risks” and ensure that a failure of one component, such as bankruptcy, does not impact the entire State or its taxpayers. Buade and Sachs argue that states can choose to create a separate entity to serve public and fiscal interests, but states should not be able take advantage of sovereign immunity at the same time.

    Conclusion

    Authors

    Written by:    Brenda Narvaez and Ria Panchal

    Edited by:      Domnick Q. Raimondo

    Additional Resources