The U.S. Supreme Court made a pivotal decision to take on consolidated cases that could significantly impact state-run transportation systems that extend across state boundaries. The court will explore whether the New Jersey Transit Corporation (NJ Transit) should be considered an "arm of the state" with entitlement to interstate sovereign immunity in negligence lawsuits pursued outside its home state.

NJ Transit finds itself at the center of a legal battle due to conflicting decisions from the highest courts in New York and Pennsylvania. Each state court issued opposing rulings on whether NJ Transit, which manages a vast public transportation network, can be sued in state courts outside of New Jersey for incidents involving its buses and trains.

This controversy arose from differing legal outcomes in two cases: In Pennsylvania, the state Supreme Court ruled in Galette v. NJ Transit that the agency is immune under interstate sovereign immunity, leading to the dismissal of a lawsuit by Cedric Galette, who was injured in a 2018 bus collision in Philadelphia. Conversely, in New York, in the case of NJ Transit v. Colt, the Court of Appeals decided that NJ Transit does not have immunity for an accident in 2017 involving Jeffrey Colt, who was hit by one of its buses in Manhattan.

NJ Transit argued to the Supreme Court that this discrepancy creates an "untenable situation" where its legal liability varies merely based on geographical location. This issue of interstate sovereign immunity, revitalized by the court's 2019 decision in Franchise Tax Board v. Hyatt, is now at the forefront, questioning the extent to which this immunity protects state-affiliated entities like NJ Transit.

Courts have historically used a multi-factor test to determine if an entity qualifies as an "arm of the state," considering factors such as the state's financial responsibility for judgments, the degree of state control over the entity, and the entity's defined function by the state. While the Third Circuit has previously affirmed NJ Transit’s immunity under the Eleventh Amendment in federal courts, the New York Court's stance points to NJ Transit's financial independence and operational autonomy as reasons to deny such immunity.

The Supreme Court's upcoming session in October 2025 will include oral arguments on this matter, with a decision expected by June 2026. The ruling could establish a nationwide standard for the application of sovereign immunity to state entities operating beyond their borders, potentially reshaping the operational and legal frameworks of interstate transportation agencies.