Galette v. New Jersey Transit Corp.

Background

In 2017 and 2018 two people were seriously injured after New Jersey Transit buses collided with them in Manhattan and Philadelphia. The injured individuals sued New Jersey Transit in their home state courts for negligence. New Jersey Transit argued it could not be sued in other States’ courts because it was an arm of the State and entitled to New Jersey’s sovereign immunity. New York’s highest court held NJ Transit was not an arm of the State; Pennsylvania’s highest court held the opposite. The Supreme Court agreed to decide which court was right.

Reasoning

The central question was whether New Jersey had structured NJ Transit as part of the State so that it could share the State’s protection from suit. The Court looked to New Jersey law and found NJ Transit was created as a body corporate with powers to sue and be sued, enter contracts, hold property, and manage its own finances. The Court emphasized that formal legal liability—whether the State is formally responsible for the corporation’s debts or judgments—matters most. Because New Jersey’s law states the State is not liable for NJ Transit’s debts and the corporation has traditional corporate features, the Court concluded NJ Transit is not an arm of the State.

Real world impact

The ruling means the two injury suits may proceed in the plaintiffs’ home courts and that similar state-created corporations will generally not get interstate state immunity unless the State formally assumes their liabilities. States that want their agencies to share immunity can change their laws to make the State formally liable.