The US Supreme Court is considering a case that could reshape how public agencies are sued across state lines, as justices examine whether New Jersey Transit enjoys constitutional protection from lawsuits filed outside New Jersey. The outcome could have far-reaching implications for interstate transportation agencies and other state-owned entities operating beyond their borders.
At the center of the dispute is whether New Jersey Transit qualifies as an “arm of the state” entitled to sovereign immunity when operating in neighboring states such as New York and Pennsylvania. Two state supreme courts have reached opposite conclusions, prompting the nation’s highest court to step in and resolve the conflict.
A Legal Question With National Consequences
The Supreme Court heard arguments on January 14 in two consolidated cases: New Jersey Transit Corporation v. Colt and Galette v. New Jersey Transit Corporation. Both lawsuits stem from accidents involving New Jersey Transit buses that allegedly occurred outside New Jersey.
In one case, Jeffrey Colt sued the transit agency in New York state court after claiming he was struck by a bus in 2017. In the other, Cedric Galette filed suit in Pennsylvania following a 2018 accident. While courts in Pennsylvania ruled that New Jersey Transit was immune from being sued there, New York courts reached the opposite conclusion, allowing the case to proceed.
The Supreme Court is now tasked with determining whether a constitutional doctrine known as interstate sovereign immunity bars such lawsuits.
Understanding Sovereign Immunity
Sovereign immunity is a long-standing legal principle that prevents governments from being sued without their consent. In the United States, state sovereign immunity is rooted in the 11th Amendment to the Constitution. A related doctrine, interstate sovereign immunity, holds that one state cannot be sued in another state’s courts unless it agrees to that jurisdiction.
The question before the court is whether New Jersey Transit — which operates buses, trains, and light rail systems mainly within New Jersey but also serves the New York and Philadelphia metropolitan areas — should be treated as the state itself or as a separate corporate entity.
New Jersey Transit’s Argument
Representing the transit agency, attorney Michael Zuckerman argued that New Jersey Transit functions much like a state agency and should therefore be protected from lawsuits outside New Jersey.
He told the court that the agency “looks a lot like a New Jersey state agency,” noting that it operates within the executive branch and is subject to oversight by the governor, including veto power over certain actions. According to Zuckerman, plaintiffs should only be able to sue the agency in New Jersey, where the state has consented to such lawsuits.
He also warned that allowing states to lose sovereign immunity simply because they adopt efficient or modern organizational structures would undermine constitutional protections. In his view, New Jersey’s choice to incorporate the transit authority should not override its fundamentally governmental nature.
Skepticism From the Justices
Several justices, however, raised concerns about that reasoning. Justice Ketanji Brown Jackson questioned why New Jersey chose to structure the agency as a corporation if it intended it to be treated as the state itself.
She suggested that incorporation could reflect an attempt to distance the state from liability, a point that complicates claims of sovereign immunity. Justice Sonia Sotomayor echoed that skepticism, noting that the court has previously held that corporate form can indicate an entity is not the state.
Sotomayor emphasized that formal legal liability — not informal arrangements or indemnification — has traditionally played a central role in determining sovereign immunity.
The Biden v. Nebraska Precedent
Justice Elena Kagan pointed to the court’s 2023 decision in Biden v. Nebraska, which struck down President Joe Biden’s student loan forgiveness program. In that case, the court ruled that the Missouri Higher Education Loan Authority (MOHELA), a state-created public corporation, was an arm of the state of Missouri.
Kagan suggested that the reasoning in Biden v. Nebraska could support New Jersey Transit’s position, as MOHELA was also a “sue-and-be-sued” entity that nonetheless qualified as part of the state. Zuckerman agreed, calling the ruling “very good” for his client.
Plaintiffs Push Back
On the other side, attorney Michael Kimberly, representing Colt and Galette, argued that New Jersey intentionally created the transit agency as a separate legal entity — and in doing so, accepted that it would not share the state’s sovereign immunity.
Kimberly told the court that for more than 200 years, Supreme Court precedent has treated such entities differently from the states themselves. He also sought to distinguish Biden v. Nebraska, arguing that the MOHELA decision focused on legal standing rather than sovereign immunity.
Justice Clarence Thomas pressed Kimberly on this point, highlighting the potential overlap between the two doctrines. Kagan reiterated that the court explicitly described MOHELA as “part of Missouri,” underscoring the complexity of applying past rulings to the New Jersey Transit case.
Why the Ruling Matters
The Supreme Court’s eventual decision, expected by the end of June, could affect far more than one transit agency. Many public authorities — including transportation systems, port authorities, and utilities — operate across state lines under similar legal structures.
A ruling in favor of New Jersey Transit could shield such entities from lawsuits outside their home states, potentially limiting legal recourse for injured parties. A ruling against the agency, on the other hand, could expose state-run corporations to broader liability and encourage more cross-border litigation.
Either way, the case highlights a growing tension between modern, multi-state public services and centuries-old constitutional doctrines. As states increasingly operate beyond their borders, the Supreme Court’s interpretation of sovereign immunity may redefine where, and how, citizens can seek justice.
