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On March 4, 2026, the US Supreme Court decided Galette v. New Jersey Transit Corp., No. 24-1021, holding that New Jersey Transit Corp. (NJ Transit) is not an “arm of the state” of New Jersey, and thus it lacks sovereign immunity in personal injury suits.
NJ Transit buses struck and severely injured two men, one in Philadelphia and one in Manhattan. The two men sued NJ Transit in their respective state courts (Pennsylvania and New York). The Pennsylvania Supreme Court held that NJ Transit is an arm of the state of New Jersey and thus enjoys sovereign immunity from suit; the New York Court of Appeals held that NJ Transit is not an arm of New Jersey. The Supreme Court took this case to resolve the split between the two state courts.
The Court held that New York was correct, finding three pieces of evidence dispositive. First, “New Jersey structured NJ Transit as a legally separate entity” under state law. Second, New Jersey “is not formally liable for any of NJ Transit’s debts or liabilities.” And third, “the control that New Jersey exerts over NJ Transit does not change the overall conclusion” that NJ Transit is not a state entity.
The Court rejected NJ Transit’s counterarguments. Although the Court agreed that the “corporation” label is not dispositive, NJ Transit “is a corporation that has all the hallmarks of separate legal personhood.” Further, while NJ Transit serves important public functions, the arm-of-the-State analysis “focuses not on whether the entity serves public functions, but rather on whether the State has chosen to serve those public functions through its own apparatus or through that of a legally separate entity.” Finally, the Court rejected the argument that NJ Transit’s practical reliance on state funds necessitates an arm-of-the-State finding. The Court also declined NJ Transit’s amici invitation from 23 states to turn away from multifactor balancing and adopt a bright-line rule dependent on the State’s own characterization of the entity as lacking principle and predictability.
Justice Sotomayor delivered the unanimous opinion of the Court.
