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PA Court Holds NJ Transit Is Not An Arm Of The State of New Jersey

July 7, 2023

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The case stems from an incident on August 9, 2018, wherein a collision occurred between an NJ Transit bus and a personal vehicle in which plaintiff, Galette, was a passenger in Philadelphia, PA.  <em><a href="https://www.wcmlaw.com/wp-content/uploads/2023/07/Galette-v.-NJ-Transit.pdf">Galette v. NJ Transit</a></em>, 293 A.3d 649, 652 (PA. Super. Ct. 2023).  Galette suffered various physical injuries as a result of the collision and filed suit alleging negligence against, among others, NJ Transit.  <em>Id. </em>The lawsuit was filed in Pennsylvania.

In its answer, NJ Transit raised a New Matter alleging it was an “arm” of the State of New Jersey, and that the plaintiff’s claims against it were barred by the doctrine of sovereign immunity.  <em>Id. </em>

Sovereign immunity is rooted in the idea that the “Crown could not be sued without consent in its own courts.”  <em>Id. </em>(citing <em>Alden v. Maine</em>, 527 U.S. 706, 715 (1999).  The United States Supreme Court has held that the Eleventh Amendment provides for the doctrine’s application to the states; specifically, the Amendment is evidence of an intent to “preserve the States’ traditional immunity from private suits.”  <em>Id. see also </em>U.S. Const. Amend. XI.  However, the Court has also emphasized that, “the bare text of the Amendment is not an exhaustive description of the States’ constitutional immunity from suit.” <em>Id. </em>

Although the State of New Jersey was not directly named as a defendant in this matter, courts have long held that sovereign immunity extends to “entities which are agents or instrumentalities of the state such that a suit brought against them would be, for all practical purpose, a suit against the state itself.” <em>Id. </em>

The PA Supreme Court has determined whether an entity qualifies for sovereign immunity treatment depends upon the following six factors of “equal importance:” (1) the legal classification and description of the entity within the governmental structure of the State, both statutorily and under its caselaw; (2) the degree of control the State exercises over the entity; (3) the extent to which the entity may independently raise revenue; (4) the extent to which the State provides funding to the entity; (5) whether the monetary obligations of the entity are binding upon the State; and (6) whether the core function of the entity is normally performed by the State.  <em>Id. </em>

Here, the Court held that NJ Transit satisfies the first three elements of Pennsylvania’s six-part test.  <em>Id.  </em>First, under New Jersey law, NJ Transit is constituted as an “instrumentality of the State exercising public and essential governmental functions, and the exercise by [NJ Transit] of the powers conferred by this act shall be deemed and held to be essential government functions of the state.” <em>Id; See also </em>N.J.S.A. § 27:25-4.  The second factor regarding relative autonomy is also supportive of a finding that NJ transit is an “alter ego” of the State’s government.  <em>Id.</em>  Finally, the sixth factor supports the same conclusion as NJ Transit’s activities are explicitly identified as an “essential governmental function” of New Jersey.  <em>Id;</em> <em>see also </em>N.J.S.A. §27:25-4.

Conversely, the remaining three factors point to the opposite conclusion.  <em>Id.  </em>Specifically, NJ Transit is independently empowered to raise revenue though “the disposition of real and personal property by setting and collecting fares, rental fees, and other charges, and/or by depositing corporate revenues in interest-bearing accounts.”  <em>Id;</em> <em>see also</em> N.J.S.A. § 27:25-5(k).  Further, “NJ Transit is funded from a combination of federal, state, and local funds, such that it is not totally reliant on state funds.”  <em>Id.  </em>Accordingly, “the State is under no legal obligation to pay NJ Transits debts or to reimburse NJ Transit for any judgments that it pays.” <em>Id. </em>

Because not all of the six factors could be established, NJ Transit is not an arm of the State of New Jersey, and the Pennsylvania Superior Court found “no risk to the sovereign dignity of New Jersey” in permitting a suit against NJ Transit to proceed.  <em>Id. </em>Hopefully, this does not raise tensions with the State of New Jersey.

Thanks to Hannah Garber for her contribution to this article.  Should you have any questions, contact <a href="mcare@wcmlaw.com">Matthew Care</a>.

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