A pair of New Jersey–centered cases is heading to the nation’s highest court, setting the stage for a consequential decision that could reshape how state-created agencies are treated in courts across the country. The U.S. Supreme Court is preparing to hear consolidated arguments involving New Jersey Transit, focusing on whether the agency can claim interstate sovereign immunity when sued outside New Jersey’s borders.
At the heart of the dispute is a deceptively simple question with far-reaching implications: Is New Jersey Transit truly an arm of the State of New Jersey, or does it function with enough independence to be treated like a separate public corporation when legal claims arise in other states?
The answer will not only affect commuters and accident victims but could also establish a nationwide framework for determining when state-affiliated entities are shielded from lawsuits beyond their home states.
The constitutional backdrop is critical. In 2019, the Supreme Court fundamentally altered the legal landscape in Franchise Tax Board v. Hyatt by overturning decades of precedent and affirming that states possess sovereign immunity not only in federal courts but also in the courts of other states. That ruling recognized interstate sovereign immunity as a core constitutional principle, rooted in the structure of the Constitution itself.
What the Court did not do, however, was define how that immunity applies to state-created entities such as transit authorities, port authorities, or other public corporations that operate across state lines. Since then, lower courts have been left to adapt tests originally developed under the Eleventh Amendment, which governs state immunity in federal court. Those tests typically examine factors such as how much control a state exercises over an entity, whether the state is financially responsible for judgments, and how state law characterizes the agency’s role.
New Jersey Transit sits squarely in the gray area those tests expose. In prior federal litigation, the U.S. Court of Appeals for the Third Circuit concluded that NJ Transit qualifies as an arm of the state and is therefore immune from certain lawsuits. But state courts in neighboring jurisdictions have reached sharply different conclusions, setting up a conflict that now demands resolution at the national level.
One of the cases before the Court stems from a 2017 incident in Manhattan, where a New Jersey Transit bus allegedly struck and injured Jeffrey Colt. When the case reached New York’s highest court, judges declined to grant NJ Transit sovereign immunity. Their reasoning emphasized the agency’s operational autonomy and the fact that New Jersey itself would not be legally or financially responsible for paying any judgment. Allowing the lawsuit to proceed, the court said, would not offend New Jersey’s sovereign dignity because the state would not be the party bearing liability.
The Pennsylvania case tells a different story. Following a 2018 collision in Philadelphia involving a New Jersey Transit vehicle, Pennsylvania’s Supreme Court ruled that NJ Transit is indeed an arm of the State of New Jersey and therefore immune from suit under the doctrine of interstate sovereign immunity. That court placed significant weight on New Jersey statutes that define NJ Transit’s mission and governance, pointing to the appointment powers held by the governor and legislature and the level of oversight embedded in the agency’s structure.
The result is a legal split that leaves plaintiffs and public agencies navigating inconsistent rules depending on where an incident occurs. For residents of the region, where NJ Transit buses and trains routinely cross state lines, the uncertainty has practical consequences that extend beyond the courtroom.
When the Supreme Court granted review in July 2025, it agreed to take up a single, pivotal issue: whether New Jersey Transit qualifies as an arm of the state for purposes of interstate sovereign immunity. A decision is expected by the end of the Court’s term in the summer of 2026, and it is likely to resonate far beyond New Jersey.
Legal observers note that the ruling could influence how a wide range of state-affiliated entities operate nationally, from transportation agencies to authorities that oversee ports, utilities, and cultural institutions. In a state as interconnected as New Jersey, where public infrastructure supports everything from daily commuting to arts and cultural destinations, clarity on this issue carries broad significance. Transit systems help connect residents and visitors alike to civic life, including cultural hubs such as local performance venues and the broader arts community reflected across the state’s vibrant theatre scene.
As the justices prepare to weigh autonomy against accountability, New Jersey finds itself at the center of a constitutional debate that blends federalism, public policy, and everyday realities. The Court’s eventual decision will help determine not only where lawsuits can be filed, but how states balance independence, responsibility, and access to justice in an increasingly interconnected nation.
