A state-created transit corporation providing service in multiple states is not entitled to sovereign immunity when sued for negligence by plaintiffs in New York and Pennsylvania who suffered injuries in separate accidents involving the corporation’s buses, the U.S. Supreme Court has ruled.
The case involves two negligence suits against the New Jersey Transit Corp., which the New Jersey legislature created in 1979 as a corporation deemed an “instrumentality of the State exercising public and essential governmental functions” but “independent of any supervision or control” of the state’s transportation department.
In 2017, plaintiff Jeffrey Colt sustained injuries when struck by a NJ Transit bus in Midtown Manhattan. In 2018, plaintiff Cedric Galette sustained injuries when a NJ Transit bus struck a car in which he was a passenger in Philadelphia. Both plaintiffs sued NJ Transit for negligence in their respective state courts.
The defendant moved to dismiss on grounds that the corporation was entitled to sovereign immunity as an instrumentality of the state of New Jersey. In Colt, the New York Court of Appeals determined that NJ Transit is not an arm of New Jersey.
On the other hand, the Pennsylvania
Supreme Court in Galette ruled that, for purposes of sovereign immunity, NJ Transit is an arm of New Jersey state government.
The U.S. Supreme Court consolidated the cases and granted certiorari to resolve the conflict.
A unanimous court held that NJ Transit Corp. is not an arm of New Jersey and thus is not entitled to share in New Jersey’s interstate sovereign immunity. In reaching this conclusion, the court pointed to the defendant’s corporate status as “strong” evidence it is not an arm of the state.
The U.S. Supreme Court’s March 4 decision is Galette v. New Jersey Transit Corporation.
“To start, New Jersey structured NJ Transit as a legally separate entity,” Justice Sonia Sotomayor wrote for the court. “NJ Transit was created as a ‘body corporate and politic with corporate succession.’ Consistent with that label, NJ Transit possesses typical corporate powers, such as the power to
‘[s]ue and be sued,’ ‘enter into contracts,’ and ‘[p]urchase, … or otherwise acquire, … real or personal property,’ among others. It also has the power to ‘[m]ake and alter bylaws,’ ‘[s]et and collect fares,’ raise funds from ‘gifts, grants, or loans,’ ‘[e]stablish’ its own ‘operating divisions,’ ‘[a]dopt and maintain’ its own ‘employee benefit programs,’ and even ‘[o]wn’ and ‘control’ any ‘corporate entity’ that it ‘acquired’ or ‘formed’ to carry out its statutory objectives. NJ Transit’s corporate status serves as strong evidence that it is not an arm of the State.”
Sotomayor added that NJ Transit “is therefore structured as a legally separate entity under state law” and that the state “is not formally liable for any of NJ Transit’s debts or liabilities.
“Finally, the control that New Jersey exerts over NJ Transit does not change the overall conclusion here,” Sotomayor wrote. “Undoubtedly, the State exerts a substantial amount of control over NJ Transit. The Governor has appointment and removal powers over the Board; a state cabinet member (the Commissioner of Transportation) chairs the Board; the Governor may veto any of the Board’s actions; and the Legislature may veto some eminent-domain actions. On the other hand, 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.’ In addition, the Governor’s removal authority for 8 of the 13 board members is limited to for-cause removal. This level of control does not meaningfully affect NJ Transit’s status, given the fact that it is a legally separate corporation and is responsible for its own judgments.”
