The U.S. Supreme Court has ruled that the New Jersey Transit Corporation is not entitled to interstate sovereign immunity, allowing negligence lawsuits against the transit operator to proceed in other states’ courts.
In Galette v. New Jersey Transit Corporation, the Court held that the state-created transit authority does not qualify as an arm of the State of New Jersey for purposes of constitutional sovereign immunity.
The ruling resolves conflicting decisions from the highest courts of Pennsylvania and New York and clarifies how courts determine whether state-created corporations share in a state’s immunity from suit under the Federal Constitution.
The Dispute in Brief
The litigation arose from a negligence lawsuit brought by Cedric Galette following a vehicle collision involving a New Jersey Transit bus.
According to the petition filed with the Supreme Court, Galette alleged that on August 9, 2018, he was a passenger in a vehicle stopped on Market Street in Philadelphia when a New Jersey Transit bus struck the car, causing injuries.
Galette sued both New Jersey Transit and the driver of the vehicle, alleging that their separate acts of negligence caused the accident.
New Jersey Transit moved to dismiss the lawsuit, arguing that it is an arm of the State of New Jersey and therefore entitled to interstate sovereign immunity when sued in the courts of another state.
Lower courts in Pennsylvania initially allowed the lawsuit to proceed. The Pennsylvania Supreme Court later reversed those rulings, concluding that the transit authority qualified as an arm of the state and therefore enjoyed sovereign immunity from the suit.
The case reached the U.S. Supreme Court after conflicting rulings from the highest courts of Pennsylvania and New York on the same constitutional question.
The Supreme Court’s Decision
The Supreme Court held that New Jersey Transit does not qualify as an arm of the State of New Jersey for purposes of interstate sovereign immunity.
As a result, the Court affirmed the judgment of the New York Court of Appeals, which had allowed a lawsuit against the transit authority to proceed, and reversed the judgment of the Pennsylvania Supreme Court, which had dismissed Galette’s lawsuit.
Both cases were remanded for further proceedings consistent with the Court’s ruling.
In reaching that conclusion, the Court explained that sovereign immunity belongs to the state itself and extends only to entities that function as an “arm of the State.”
Determining whether an entity qualifies requires examining how the state structured the organisation under its laws, including its legal status, operational autonomy, and financial relationship with the state.
Under New Jersey law, the New Jersey Transit Corporation was created as a separate corporate entity with powers typical of an independent public corporation, including the authority to sue and be sued, enter contracts, acquire property, and manage its own affairs.
The Court also emphasised that New Jersey law specifies that the corporation’s debts and liabilities are not obligations of the state treasury.
Because a judgment against New Jersey Transit would not be paid by the State of New Jersey itself, the Court concluded that this factor strongly weighs against treating the transit authority as part of the state.
Although New Jersey exercises oversight over the organisation, including appointing board members and retaining certain supervisory powers — the Court said such control does not change the corporation’s legally independent status.
Taken together, the Court concluded that New Jersey structured the transit authority as a separate corporation responsible for its own liabilities rather than as an alter ego of the state government.
Key Legal Takeaways
The decision clarifies that state-created corporations will not automatically qualify as an “arm of the State” for purposes of interstate sovereign immunity.
In determining whether an entity shares a state’s constitutional immunity, courts will examine how the entity is structured under state law, including its legal status, operational autonomy and financial relationship with the state.
The Court placed particular emphasis on whether the state treasury would be responsible for judgments against the entity.
The ruling may affect litigation involving other state-created authorities and public corporations operating across state lines.
What Happens Next
The Supreme Court remanded the cases for further proceedings.
As a result, the negligence claims brought by the plaintiffs may now proceed in the courts where they were originally filed.
Case details
Court: Supreme Court of the United States
Date: March 4, 2026
Case: Galette v. New Jersey Transit Corporation
Docket number: 24-1021
Area of law: Constitutional law / sovereign immunity
Result: Pennsylvania Supreme Court reversed; New York Court of Appeals affirmed; cases remanded
