In Colt v New Jersey Transit Corporation [NJT], 2024 NY Slip Op 05867, posted on NYPPL on January 29, 2025, the N. Y. Court of Appeals, in pertinent part, held:
"Regarding the legal effect of a judgment against NJT," New Jersey law provides:
All expenses incurred by [NJT] in carrying out the previsions of this act shall be payable from funds available to [NJT] therefor and no liability or obligation shall be incurred by the corporation beyond the extent to which moneys are available. No debt or liability of [NJT] shall be deemed or construed to create or constitute a debt, liability, or loan or pledge of the credit of the State (id. § 27:25-17)."
Thus, said the court, New Jersey "has thus clearly disclaimed any legal liability for judgments against NJT, counseling against treating NJT as an arm of New Jersey. Additionally, defendants have not established that New Jersey would bear ultimate liability for a judgment against NJT.
"Balancing each consideration, we conclude that New Jersey's lack of legal liability or ultimate financial responsibility for a judgment in this case outweighs the relatively weak support provided by the other factors. Put simply, allowing this suit to proceed would not be an affront to New Jersey's dignity because a judgment would not be imposed against the State, and the entity that would bear legal liability has a significant degree of autonomy from the State.[FN6]* We therefore conclude that NJT is not an arm of New Jersey and may not invoke sovereign immunity.[FN7]** The remaining defendants' claims of sovereign immunity also fail, because these claims depend on NJT's status as an arm of New Jersey."
Article 8-B, §396, of New York State's Education Law establishing the State University of New York's Optional Retirement Program, in pertinent part, provides:
"§396. Employer not liable for payment of benefits. Neither the state, nor state university, nor any electing employer or its local sponsor shall be a party to any contract purchased in whole or in part with contributions made under the optional retirement program established and administered pursuant to this article. No retirement, death, or other benefits shall be payable by the state, or by state university, or by any electing employer or its local sponsor under such optional retirement program. Such benefits shall be paid to electing employees or their beneficiaries by the designated insurer or insurers in accordance with the terms of their contracts."
See, also, New York State's Education Law Part 5 EDUCATION DEPARTMENT OPTIONAL RETIREMENT PROGRAM, §186: State not liable for payment of benefits and New York State's Education Law Article 125-A BOARD OF HIGHER EDUCATION OPTIONAL RETIREMENT PROGRAM, §6255: City not liable for payment of benefits.
* Footnote 6: We reject the dissent's strawman argument that the practical impact of a judgment is our "primary consideration" (dissenting op at 2). As with all balancing tests, the impact of individual factors will vary from case to case.
** Footnote 7: Defendants' argument that allowing this suit to proceed contravenes the Full Faith and Credit Clause fails. Our analysis seeks only to apply federal constitutional sovereign immunity principles—we neither apply New York law, nor decline to apply New Jersey's (see Franchise Tax Bd. of Cal. v Hyatt, 578 US 171, 176 [2016]).