The Supreme Court ruled unanimously Wednesday that New Jersey Transit can be sued outside the Garden State.
As a result, non-residents will be able to bring cases — and have a better chance of a favorable ruling — if they were hurt while using the transportation network, which stretches into New York and Pennsylvania.
NJ Transit had argued that it enjoyed liability protections that state agencies receive under “sovereign immunity” — a concept enshrined in the 11th Amendment that protects states from being dragged without their consent into courts serving non-residents or foreigners.
The transportation authority was established by the Trenton legislature in 1979 as a state-owned corporation, with the governor retaining veto power over key decisions such as appointing members to its board.
But as Justice Sonia Sotomayor pointed out in her opinion, lawmakers “structured NJ Transit as a legally separate entity” and “the state is not formally liable for any of NJ Transit’s debts or liabilities,” while the governor can only remove eight of the agency’s 13 board members for cause.
Attorneys for the plaintiffs, who were injured in traffic accidents involving NJ Transit buses in New York City and Philadelphia, argued that the agency’s structure was intended to shield it from the downsides of functioning as either a state agency or a corporation while reaping the benefits of both.
One attorney for the plaintiffs described New Jersey’s characterization of its transportation system as a “sort of a mishmash, you-know-it-when-you-see-it” approach.
“One problem with the States’ position 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,” Sotomayor wrote in the 23-page opinion.
“There is no good reason to believe that the State intended for NJ Transit to be part of the State itself by using the word ‘instrumentality,’ when it simultaneously used the word ‘body corporate,’ a term traditionally understood to create a ‘[s]eparate legal personality,’” she added.
Sotomayor determined: “The clearest evidence that a State has created a legally separate entity is that it created a corporation with the traditional corporate powers to sue and be sued, hold property, make contracts, and incur debt.”
The case, argued in January and has the effect of resolving two separate decisions by state courts.
Plaintiff Jeffrey Colt had been struck by an NJ Transit bus in Manhattan in 2017, while Cedric Galette was a passenger a car that was rammed by an NJ Transit bus in the City of Brotherly Love a year later.
The Pennsylvania Supreme Court dismissed Galette’s case, finding that sovereign immunity applied, while the New York Court of Appeals allowed Colt’s suit to proceed.
During oral arguments, New Jersey Deputy Solicitor General Michael Zuckerman warned that a loss at the Supreme Court could be detrimental to the Garden State’s financing of its public transportation system.
“NJ Transit looks nothing like a city or town, and little like a private company,” Zuckerman told the high court. “It looks a lot like a New Jersey state agency. That means plaintiffs must sue it where the state has consented — in New Jersey.”