Supreme Court Rules New Jersey Transit Can Be Sued In Other States

The U.S. Supreme Court issued a significant ruling Wednesday allowing two men seriously injured in bus accidents involving New Jersey Transit to pursue lawsuits outside the state of New Jersey, rejecting the transit agency’s claim that it is shielded by sovereign immunity.

In the case of Galette v. New Jersey Transit Corporation, the Court determined that the transit agency does not qualify as an “arm” of the state and therefore cannot claim the same legal protections that typically shield state governments from lawsuits filed in other states’ courts.

Court Says Transit Agency Is Legally Separate

Writing for the majority, Justice Sonia Sotomayor explained that New Jersey structured its transit authority as a separate corporate entity, which carries significant legal consequences.

According to reporting by SCOTUSblog, Sotomayor emphasized that the Court’s precedent focuses on whether a state-created organization is legally independent and financially responsible for its own liabilities.

“In making such a determination,” Sotomayor wrote, the Supreme Court’s cases “have consistently, and predominantly, examined whether the State structured the entity as a legally separate entity liable for its own judgments.”

The justice noted that the Court traditionally evaluates whether an organization operates as a corporation with powers such as the ability to sue and be sued, hold property, enter contracts, and incur its own debts.

Two Cases Combined

The ruling resolved two separate lawsuits that the Court agreed to review together.

One case stems from a 2017 incident in Manhattan, where a New Jersey Transit bus struck pedestrian Jeffrey Colt while he was crossing the street.

The second involves a 2018 accident in which a New Jersey Transit bus collided with a vehicle carrying Cedric Galette in Pennsylvania.

Colt filed suit in New York state court, while Galette pursued his claim in Pennsylvania.

New Jersey Transit attempted to have both cases dismissed, arguing that it functions as an extension of the state government and therefore enjoys sovereign immunity — a legal doctrine that often prevents states from being sued without their consent.

Conflicting Lower Court Decisions

The nation’s highest court stepped in after state courts reached conflicting conclusions.

The New York Court of Appeals — New York’s highest court — allowed Colt’s lawsuit to proceed, rejecting the immunity argument. However, the Pennsylvania Supreme Court ruled in favor of New Jersey Transit and dismissed Galette’s case.

Last year, the U.S. Supreme Court agreed to hear both disputes to settle the question.

Corporate Structure Was Key

In Wednesday’s ruling, the Court ultimately sided with both plaintiffs, concluding that the transit authority’s corporate structure makes it legally distinct from the state government.

Sotomayor pointed out that New Jersey created the agency as a corporation with powers typical of private entities, including the authority to “‘make and alter bylaws,’ ‘set and collect fares,’” and raise funding through “‘gifts, grants, or loans.’”

Importantly, she noted, New Jersey law also makes clear that the state itself is not responsible for the agency’s debts — another factor indicating that the organization is not legally identical to the state.

Labeling Alone Isn’t Enough

Sotomayor acknowledged that the law establishing the transit system describes it as an “instrumentality of the state,” but she wrote that such terminology does not outweigh the legal significance of its corporate structure.

“Historical weight” has long been given to the fact that state-created corporations are responsible for their own financial obligations, she explained.

The justice also addressed the argument that New Jersey exercises significant oversight of the transit authority — including the governor’s power to appoint and remove board members and veto board actions.

However, she noted that state law simultaneously requires the agency to operate independently.

“On the other hand,” Sotomayor wrote, “New Jersey law states that NJ Transit ‘shall be independent of any supervision or control by the [transportation] department or by any body or officer thereof,’ and requires that it ‘exercise independent judgment.’”

Rejecting States’ Argument

The Court also rejected arguments from several states that urged the justices to adopt a rule giving decisive weight to how states label their own agencies.

Sotomayor warned that relying solely on a state’s chosen label would create inconsistencies and undermine the Court’s established approach.

“One problem with” such a rule, she wrote, “is that it focuses on the label a State places on an entity, rather than assessing whether the State structured the entity as legally separate.”

“Instead,” she concluded, “what promotes consistency is adhering to a long line of cases in which this Court has found state-created corporations that are formally liable for their own judgments not to be arms of the States that created them.”

The decision ensures that both Colt and Galette will be able to move forward with their lawsuits in the courts where their accidents occurred.