In Alvaran v New Jersey Transit Corporation, the New Jersey Transit Corporation [New Jersey Transit] appealed a New York State Supreme Court's denial of its motion to dismiss the complaint filed against it based on New Jersey Transit's claim of sovereign immunity.
The Appellate Division unanimously affirmed the Supreme Court's denial of New Jersey Transit's motion, without costs, noting that New Jersey Transit had contended that it was an arm of the State of New Jersey and thus it may invoke the doctrine of sovereign immunity in its defense.
Citing Colt v New Jersey Tr. Corp., 2024 NY Slip Op 05867, in which New York State's Court of Appeals had held that New Jersey Transit was not an arm of the State of New Jersey, Judge Rivera dissenting in an opinion, the Appellate Division opined New Jersey Transit was not entitled to invoke the doctrine of sovereign immunity in the Alvaran litigation.
The text of the Court of Appeals' decision in Colt v New Jersey Transit
Corporation is set out below:
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Colt v New Jersey Tr. Corp. |
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2024 NY Slip Op 05867 |
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Decided on November 25, 2024 |
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Court of Appeals |
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Singas, J. |
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Published by New York State Law Reporting Bureau pursuant
to Judiciary Law § 431. |
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This opinion is uncorrected and subject to
revision before publication in the Official Reports. |
Decided on November 25, 2024
No. 72
[*1]Jeffrey Colt et
al., Respondents,
v
New Jersey Transit Corporation, et al., Appellants.
Katherine
L. Pringle, for appellants.
Brian
J. Shoot, for respondents.
New
York State Trial Lawyers Association, amicus curiae.
SINGAS, J.
In Franchise
Tax Bd. of Cal. v Hyatt, the United States Supreme Court recognized that the
text and structure of the Federal Constitution not only preserved States'
pre-ratification sovereign immunity, but compelled absolute recognition of that
immunity in other States' courts as a matter of "equal dignity and
sovereignty" (587 US 230, 244-247 [2019] [hereinafter Hyatt
III], overruling Nevada v Hall, 440 US 410 [1979]). However, the Court did
not address how to determine whether a state-created entity is entitled to this
immunity. We glean from the Court's analysis that the relevant inquiry is
whether subjecting a state-created entity to suit in New York would offend that
State's dignity as a sovereign. We hold that, to answer this question, courts
must analyze how the State defines the entity and its functions, its power to
direct the entity's conduct, and the effect on the State of a judgment against
the entity. Considering these factors, we conclude that maintaining this action
against defendant New Jersey Transit Corporation (NJT) in our courts would not
offend New Jersey's sovereign dignity and accordingly hold that defendants are
not entitled to invoke a sovereign immunity defense.
I.
On
February 9, 2017, a bus owned and operated by NJT allegedly struck and injured
plaintiff Jeffrey Colt as he traversed a crosswalk on 40th Street in Manhattan.
The bus was driven by defendant Ana Hernandez, an employee [*2]of NJT. Colt and his wife, plaintiff Betsy Tsai,
commenced this action on September 18, 2017, asserting causes of action for
negligence, negligent hiring, and loss of consortium. Defendants answered the
complaint and denied many of plaintiffs' factual allegations. Defendants
asserted—as part of an exhaustive list including many boilerplate defenses—that
plaintiffs' recovery was "barred by lack of jurisdiction over NJT"
and "barred as this Court lacks jurisdiction," and that defendants
were "immune from suit." Defendants did not specifically reference
sovereign immunity. In 2018, plaintiffs filed a bill of particulars, and
defendants deposed Colt. In 2019, plaintiffs deposed Hernandez and another NJT
employee who was on the bus at the time of the accident. The parties had status
conferences and stipulated to scheduling orders six times during that period.
In November 2019, defendants moved to compel discovery and subsequently
stipulated to three more scheduling orders.
On
July 15, 2020, defendants moved to dismiss the complaint. Relying on Hyatt
III—decided 14 months prior—defendants argued that NJT is "the alter ego
of New Jersey" and therefore protected by sovereign immunity. In support
of its argument that NJT was an "arm of the state" entitled to invoke
sovereign immunity, defendants cited a decision by the United States Court of
Appeals for the Third Circuit holding that NJT is entitled to invoke sovereign
immunity in federal court (see Karns v Shanahan, 879 F3d 504, 519 [3d Cir
2018]). Defendants contended that NJT's immunity extended to defendant New
Jersey Transit Bus Operations, Inc., as a wholly owned subsidiary of NJT, and
to Hernandez because she was acting within the scope of her employment with
NJT. Defendants argued that their sovereign immunity defense could be raised at
any time because it was jurisdictional and therefore could not be waived.
Plaintiffs opposed the motion and asserted several grounds on which NJT waived
any immunity it possessed.
On
October 2, 2020, Supreme Court denied defendants' motion (2020 NY Slip Op
33260[U] [Sup Ct, NY County 2020]). The court held that, by waiting three years
from the inception of the action to raise a jurisdictionally based objection,
defendants had waived their right to assert a sovereign immunity defense
(id. at *3-4). Defendants appealed.
The
Appellate Division affirmed in a split decision (206 AD3d 126 [1st Dept 2022]).
The Court concluded that NJT did not waive its sovereign immunity defense. At
the outset, the Court noted that it had previously held that NJT was an arm of
the State of New Jersey and thus entitled to invoke sovereign immunity
(id. at 128, citing Fetahu v New Jersey Tr. Corp., 197 AD3d 1065, 1065 [1st Dept
2021]). The Court further concluded that, contrary to Supreme Court's holding,
defendants had not waived this immunity through their litigation conduct, or
otherwise (id. at 129).
The
Court nonetheless affirmed because dismissal would be "an affront to our
sense of justice and cannot be countenanced" (id. at 133). In
reaching this conclusion it considered whether plaintiffs would have been able
to bring their suit in New Jersey under the New Jersey Tort Claims Act (NJTCA).
Reviewing New Jersey's venue rules, the Court concluded that "plaintiffs
cannot commence an action in New Jersey because the cause of action arose
outside its borders" (id. at 130). Thus, the Court concluded that
there was an issue "pitting the sovereign immunity defense against an
individual's fundamental right derived from the common law to be able to seek
redress in a judicial forum for injuries inflicted by a tortfeasor"
(id. at 132). Resolving this issue by analogy to the forum non conveniens
doctrine, the Court concluded that these factors weighed in favor of retaining
the action, reasoning that NJT would not be prejudiced by allowing the suit to
proceed, given that it waited three years to move to dismiss, would not be
burdened by defending the action in New York, where all of the material
witnesses and evidence were located, and plaintiffs would not be able to sue in
New Jersey's courts (id. at 133).
Two
Justices dissented, contending that the Court's inquiry should be limited to
whether defendants could assert a sovereign immunity defense and whether they
had waived that defense (id. at 136 [Friedman, J., dissenting]). On those
questions, the dissent agreed that NJT was an arm of the State of New Jersey,
and that neither the NJTCA nor defendants' litigation conduct had waived the
sovereign immunity defense (id.). The dissent disagreed that plaintiffs'
inability to file suit in New Jersey had any relevance to the sovereign
immunity analysis because no legal authority requires States to waive their
sovereign immunity under any circumstances (id. at 138-139).
Defendants
appealed, but we dismissed the appeal for lack of finality (see 39 NY3d
954 [2022]). The Appellate Division granted defendants leave to appeal and
certified the question of whether its order was properly made (see 2023 NY
Slip Op 64078[U] [1st Dept 2023]). We now affirm, albeit on different grounds.
II.
Hyatt
III fundamentally altered the landscape of interstate sovereign immunity.
Overturning Nevada v Hall, the Court "clarif[ied] that all state
sovereign immunity derives from the structure of the Constitution which confirmed
and retained pre-ratification notions of state sovereign immunity 'except as
altered by the plan of the Convention or certain constitutional Amendments'
" (Henry v New Jersey Tr. Corp., 39 NY3d 361, 370 [2023] [some
internal [*3]quotation marks omitted],
quoting Hyatt III, 587 US at 241). Under Hall, the Supreme Court had
looked to "international-law notions of immunity," which treated the
"decision for one State to extend immunity to another State in its own
courts [ ]as a matter of comity for the forum State to decide"
(id. at 369, citing Hall, 440 US at 421, 425). Hyatt
III abrogated this aspect of Hall, concluding instead that as an
"essential component of federalism," by entering the Union, the
States, which had previously "relate[d] to each other solely as foreign
sovereigns" were "strip[ped] . . . of any power they once had to
refuse each other sovereign immunity" under international law (Hyatt III,
587 US at 245, 247 [internal quotation marks omitted]). In other respects,
however, the Court concluded that the States maintained their pre-ratification
immunity "under both the common law and the law of nations"
(id. at 241).
Because
interstate sovereign immunity was a matter of comity before Hyatt
III—constrained by the Federal Constitution's Full Faith and Credit Clause—few
decisions explored which parties, other than a State itself, are entitled to
invoke sovereign immunity in another State's courts. Wading into these
uncharted waters, we look for guidance in the Court's opinion in Hyatt
III as well as the related jurisprudence of state sovereign immunity in
federal courts. As we explained in Henry, the Supreme Court in Hyatt
III noted that
"[s]overeign immunity
derives from the common-law premise that 'no suit or action can be brought
against the king, even in civil matters, because no court can have jurisdiction
over him' (1 William Blackstone, Commentaries on the Laws of England at 235
[1765]; see Hyatt III, 587 US at [238-239]; see also Glassman v
Glassman, 309 NY 436, 440 [1956]). Because 'all jurisdiction implies
superiority of power,' no authority could hear a case 'unless that court had
power to command the execution of it; but who . . . shall command the king?' (1
Blackstone at 235). . . . Sovereign immunity also emanates from the conceit of
'the perfect equality and absolute independence of sovereigns under . . .
international law' (Hyatt III, 587 US at [239] [internal quotation marks
omitted])" (Henry, 39 NY3d at 368; see also Beers v Arkansas, 20 How
[61 US] 527, 529 [1857]; The Antelope, 10 Wheat [23 US] 66, 122 [1825]).
Before ratification, the
States—as foreign sovereigns—recognized each other's dignity by affording
immunity in their own courts as a matter of comity (see Hyatt III, 587 US at
244-245). But when the States' discretion was removed, their obligation to
respect each other's sovereign dignity in their own courts became absolute (see
id. at 245). Thus, in exploring the limits of a state-created entity's
sovereign immunity in our courts, our basic task is to determine whether
allowing the suit to proceed under the circumstances would offend our sister
State's "equal dignity and sovereignty under the Constitution" (id.).
Our
analysis aligns with the framework many courts apply in analyzing whether a
state-created entity may invoke sovereign immunity in federal court—often
called "Eleventh Amendment immunity"[FN1]—which
is rooted in the same pre-ratification notions of State dignity (see Federal
Maritime Comm'n v South Carolina Ports Authority, 535 US 743, 760 [2002]
["The preeminent purpose of state sovereign immunity is to accord States
the dignity that is consistent with their status as sovereign
entities"]; Seminole Tribe of Fla. v Florida, 517 US 44, 58 [1996]
[sovereign immunity "serves to avoid the indignity of subjecting a State
to the coercive process of judicial tribunals at the instance of private parties"
(internal quotation marks omitted)]; Hess v Port Authority Trans-Hudson
Corporation, 513 US 30, 47 [1994] [analyzing whether suit in federal court was
a "threat to the dignity" of the State]). While the text of the
Eleventh Amendment applies only to federal courts, the Supreme Court has
explained that it "stand[s] not so much for what it says, but for the
presupposition of our constitutional structure which it confirms: that the
States entered the federal system with their sovereignty intact . . . [and]
that the [federal] judicial authority . . . is limited by this
sovereignty" (Blatchford v Native Village of Noatak, 501 US 775 [1991]).
It is these same principles that underpinned the Court's rejection
of Hall in Hyatt III. Indeed, in Hyatt III, the Court
reaffirmed that the Eleventh Amendment "reflect[ed]" and reaffirmed
existing state sovereign immunity, rather than establishing a new "source
of sovereign immunity" that limits only the jurisdiction of the federal
courts (Hyatt III, 587 US at 241, 247; see also [*4]Virginia Office for Protection and Advocacy v
Stewart, 563 US 247, 253 [2011] [the Eleventh Amendment reflects "the
structural understanding that States entered the Union with their sovereign
immunity intact"]). The Supreme Court has rejected the idea that the
Eleventh Amendment represents an independent limitation on federal courts'
subject matter jurisdiction over suits involving States (see Federal Maritime
Comm'n, 535 US at 753 ["the Eleventh Amendment does not define the scope of
the States' sovereign immunity; it is but one particular exemplification of
that immunity"]; compare PennEast Pipeline Co. v New Jersey, 594 US
482, 506 [2021] [rejecting dissenting opinion's assertion that the Eleventh
Amendment imposes an independent jurisdictional limitation], with
id. at 510-512 [Gorsuch, J., dissenting] [arguing that the Eleventh
Amendment both confirms pre-ratification structural immunity and eliminates
federal judicial power in certain cases]).[FN2] Because
States' sovereign immunity in federal and state courts are analytically and
historically intertwined, we deem it appropriate to conduct our analysis
consistent with the Supreme Court's and other federal court's arm-of-the-state
jurisprudence.
The
Supreme Court has explained that "when the action is in essence one for
the recovery of money from the state, the state is the real, substantial party
in interest and is entitled to invoke its sovereign immunity from suit"
(Ford Motor Co. v Department of Treasury of Ind., 323 US 459, 464 [1945]). In
assessing whether a state-created entity is a so-called "arm of the
state," the Supreme Court has looked to the " 'the essential nature
and effect of the proceeding' " (see Regents of Univ. of Cal. v Doe, 519
US 425, 429 [1997], quoting Ford Motor Co., 323 US at 464) and the "
'nature of the entity created by state law' " (id., quoting Mt.
Healthy City Bd. of Ed. v Doyle, 429 US 274, 280 [1977]). The Court has considered
the degree of the State's control over the entity, how state law characterizes
the entity, whether the entity performs traditional state governmental
functions, and whether the State would be liable, or financially responsible,
for a judgment against the entity (see Hess, 513 US at 44-45; Lake Country
Estates, Inc. v Tahoe Regional Planning Agency, 440 US 391, 400-401
[1979]; Mt. Healthy City Bd. of Ed., 429 US at 280; Moor v County of
Alameda, 411 US 693, 717-721 [1973]).[FN3] The
Court has also analyzed whether there is evidence that the State structured the
entity "to enable it to enjoy the special constitutional protection of the
States themselves" (Lake Country Estates, Inc., 440 US at 401).
Federal
Circuit Courts have identified more specific considerations in an array of
multifactor and multistep tests (see e.g. Fresenius Med. Care Cardiovascular
Resources, Inc. v Puerto Rico & the Caribbean Cardiovascular Ctr. Corp.,
322 F3d 56, 68-75 [1st Cir 2003]; Mancuso v New York State Thruway Auth.,
86 F3d 289, 293-297 [2d Cir 1996]; Karns, 879 F3d at 513-519; Hutto v
South Carolina Retirement Sys., 773 F3d 536, 543-548 [4th Cir 2014]; Clark
v Tarrant County, 798 F2d 736, 744-745 [5th Cir 1986]; Ernst v Rising, 427
F3d 351, 359-361 [6th Cir 2006]; DuPage Regional Off. of Educ. v United
States Dept. of Educ., 58 F4th 326, 341-350 [7th Cir 2023]; United States
ex rel. Fields v Bi-State Dev. Agency of Mo.-Ill. Metro. Dist., 872 F3d 872,
877-883 [8th Cir 2017]; Kohn v State Bar of Cal., 87 F4th 1021, 1025-1032
[9th Cir 2023]; Hennessey v University of Kan. Hosp. Auth., 53 F4th 516,
528-542 [10th Cir 2022]; Manders v Lee, 338 F3d 1304, 1308-1328 [11th Cir
2003]; Puerto Rico Ports Auth. v Federal Maritime Commn., 531 F3d 868,
873-881 [DC Cir 2008]).[FN4] Indeed,
"courts take numerous
factors into consideration, including the statute creating the particular
agency, whether the defendant has state-court immunity, decisions by the state
courts, and decisions involving such agencies in other states. Also important
are the powers of the agency vis-a-vis the state—for example, its powers to
contract, to sue or be sued, to raise revenue, and to expend funds. In the
final analysis, central factors appear to be the degree of autonomy of the
defendant and whether recovery against it will come from state funds; if the
unit or individual is simply functioning as the alter ego of the state in
accomplishing some public purpose, it will be treated as the state and entitled
to immunity" (13 Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure § 3524.2 [3d ed, June 2024 update] [footnote omitted]).
Many Federal Circuit
Courts look to the State's dignity as a foundational principle in analyzing
arm-of-the-state status (see e.g. Mancuso, 86 F3d at 296 ["the sole
question remaining is whether suit in federal court will be an affront to the
dignity of New York State"]; Hutto, 773 F3d at 546 [analyzing factors
to determine "whether allowing suit against a state entity would offend a
State's dignity"]). The Supreme Court has not yet endorsed any particular
Circuit's formulation of the arm-of-the-state test.
III.
We
distill from Hyatt III and other federal cases the following factors,
adapted to our current use in the interstate sovereign immunity context. In
considering whether a foreign state-created entity is entitled to sovereign
immunity in New York, courts should consider: (1) how the State defines the
entity and its functions, (2) the State's power to direct the entity's conduct,
and (3) the effect on the State of a judgment against the entity. Courts need
not give equal weight to each consideration, and the underlying indicia may
vary by case and from one party to another. We do not find it necessary to list
more specific subfactors that might not be relevant to all cases. Rather, we
analyze each consideration with the fundamental goal of determining whether
allowing a suit against the foreign state-created entity to proceed in our
courts would offend our sister State's dignity. Applying these principles to
the present case, we conclude that NJT does not enjoy New Jersey's sovereign
immunity.
A.
First,
to determine whether the entity is an extension of the State and its powers, we
examine how the State defines the entity and its functions. Initially, the
State's own characterization of NJT conflicts somewhat as to whether it
envisions NJT as a separate corporation serving the public or an extension of
the State. The New Jersey Legislature created NJT to "establish and
provide for the operation and improvement of a coherent public transportation
system" (NJ Stat § 27:25-2 [b]), deeming the "provision of efficient,
coordinated, safe and responsive public transportation" to be "an
essential public purpose which promotes mobility, serves the needs of the
transit dependent, fosters commerce, conserves limited energy resources,
protects the environment and promotes sound land use and the revitalization of
our urban centers" (id. § 27:25-2 [a]). Though New Jersey law gives
NJT a separate corporate existence, it classifies NJT as a department within
New Jersey's Executive Branch, specifically its Department of Transportation
(id. § 27:25-4 [a]). It also characterizes NJT as "an instrumentality
of the State exercising public and essential governmental functions"
(id. § 27:25-4 [a]). NJT has the power to sue and be sued (id. §
27:25-5 [a]). Though New Jersey law prohibits NJT from asserting sovereign
immunity in certain actions based on federal law, in doing so, it appears to
take no position on whether NJT is entitled to sovereign immunity in the first
instance (see id. § 27:25-24.2 ["if such defense is found to be
available, the defense shall be waived"]).
Nonetheless,
some state cases describe NJT as a state agency (see e.g. New Jersey Tr. PBA
Local 304 v New Jersey Tr. Corp., 290 NJ Super 406, 408, 675 A2d 1180, 1181
[App Div 1996] [NJT "is a state agency responsible for operating and
improving public transportation in New Jersey"]). Moreover, the New Jersey
Supreme Court has held that "NJT is a public entity within the ambit of
the [NJ]TCA" notwithstanding that NJT is not included within that law's
definition of a "State" (Muhammad v New Jersey Tr., 176 NJ 185, 194,
821 A2d 1148, 1153 [2003]). However, [*5]this
carries less weight in our analysis, given that the NJTCA expansively includes
many entities that would not be considered arms of the state for sovereign immunity
purposes (see NJ Stat § 59:1-3). We must also take into account that NJT
may pass rules and regulations with the "force and effect of law" in
accordance with the New Jersey Administrative Procedure Act (id. § 27:25-5
[e]). And it is not required to pay state taxes (id. § 27:25-16).
Additionally,
it is debatable whether operating an intrastate and interstate transportation
network is a traditional state governmental function given the myriad other
non-state public and private entities that provide similar services (see Hess,
513 US at 45). Though, NJT's unique status provides few analogues.[FN5]
On
balance, we conclude that this factor leans toward according NJT sovereign
immunity.
B.
The
second factor asks whether the State directs the entity's conduct such that the
entity acts at the State's behest. NJT exercises significant independence from
New Jersey's control. "Notwithstanding" its classification under the
Department of Transportation's umbrella, NJT is "independent of any
supervision or control by the department or by any body or officer
thereof" (NJ Stat § 27:25-4 [a]). In fulfilling their duties, NJT's board
members must exercise their "independent judgment in the best interest of
[NJT], its mission, and the public" (id. § 27:25-4.1 [b]). New
Jersey's government does not direct the day-to-day operations of NJT. Rather,
in directing its own operations, NJT has the power to, among other things, "make
and alter bylaws for its organization and internal management and for the
conduct of its affairs and business," transact in real and personal
property and collect revenues for its operations, set fares and collect fare
revenue for its operations, and enter into agreements and contracts (id. §
27:25-5 [c], [j], [k], [n], [o], [v]).
On the
other hand, NJT remains beholden to the State in some respects. The members of
NJT's board are appointed by the Governor, either for that office, or by virtue
of their appointment as members of the Executive Branch, though they may be
removed only for cause (id. § 27:25-4 [b]). The Commissioner of
Transportation, an executive branch official who is the chairman of NJT's
governing board, reviews NJT's expenditures and budget (id. § 27:25-20
[a]). NJT must annually report its budget and condition to New Jersey's
Commissioner of Transportation, its Governor, and its Legislature (id. §
27:25-20 [a]-[b]). The Governor has veto authority over official actions taken
by the board, and the legislature can overrule a limited number of transactions
(id. §§ 27:25-4 [f]; 27:25-13 [h]). Thus, while NJT maintains the broad
authority to conduct its business without the State's authorization, the
Governor maintains the ability to influence its operations through their
exercise of appointment and veto powers. Therefore, this factor does not weigh
heavily in either direction.
C.
The
final factor assesses whether the entity's liability is the State's liability,
such that a judgment against the entity would be an affront to the State.
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).
The State 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 [*6]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.
IV.
Given
our holding that NJT is not entitled to invoke sovereign immunity, we need not
reach plaintiffs' arguments that defendants waived any such immunity. However,
to avoid any misimpression that we endorse the Appellate Division's reasoning
on that score, we make clear that we expressly reject it. Regardless of whether
the Appellate Division was correct that plaintiffs were unable to bring their
action in New Jersey's courts, interstate sovereign immunity is not, as the
Appellate Division theorized, founded on the equitable principles that motivate
the forum non conveniens doctrine. Inherent in the nature of sovereign immunity
is the possibility that a State may avoid liability for a wrong it has done.
Our courts may not disregard a sister State's sovereignty simply because an
individual might otherwise not be able to recover a judgment against it. We
agree with the dissent that this theory would render sovereign immunity
and Hyatt III "dead letters" (206 AD3d at 135 [Friedman,
J., dissenting]).
Accordingly,
the order of the Appellate Division should be affirmed, with costs, and the
certified question answered in the affirmative.
HALLIGAN, J. (concurring):
The
majority aptly says that Franchise Tax Board of California v
Hyatt (587 US 230 [2019] [Hyatt III]) leaves us in "uncharted
waters" on the question before us: when a party other than the State
itself may invoke sovereign immunity to block a private lawsuit commenced in
another State's courts (majority op at 6). I agree that New Jersey [*7]Transit (NJT) cannot invoke sovereign immunity
here, but write separately to address several points made by the majority and
the concurrence.
I.
The
majority holds that "the relevant inquiry is whether subjecting a
state-created entity to suit in New York would offend that State's dignity as a
sovereign" (majority op at 2). This reliance on "dignity" raises
more questions than it answers.
First,
why is "dignity" the relevant touchstone for questions of interstate
sovereign immunity? The majority draws an inference based on Nevada v
Hall (440 US 410 [1979]) (see majority op at 5-7), but the continued
force of Hall's analytical framework and historical grounding is at best
dubious after Hyatt III. Indeed, the United States Supreme Court
in Hyatt III explicitly told us that "Hall's determination that
the Constitution does not contemplate sovereign immunity for each State in a
sister State's courts misreads the historical record and misapprehends the
'implicit ordering of relationships within the federal system' " (587 US
at 237, quoting Hall, 440 US at 433 [Rehnquist, J., dissenting]).
Second,
what does it mean to "offend [a] State's dignity" (majority op at 2)?
The majority has no answer: it merely asserts that its inquiry
"aligns" with Eleventh Amendment jurisprudence (id. at 7), and
then announces another version of the "arm of the State" test (see
id. at 11-12). To be sure, the Supreme Court's case law on state sovereign
immunity, though extensive, says little more about the concept than does the
majority. Perhaps its clearest articulation came over a century ago in Ex
parte Ayers, where the Court declared that "[t]he very object and purpose
of the eleventh amendment were to prevent the indignity of subjecting a state
to the coercive process of judicial tribunals at the instance of private
parties" (123 US 443, 505 [1887]). It would "be neither becoming nor
convenient," the Court said, "that the course of [the States'] public
policy and the administration of their public affairs should be subject to and
controlled by the mandates of judicial tribunals, without their consent, and in
favor of individual interests" (id.). None of the Court's more recent
decisions give any more detail, and so, based on this fleeting explanation, the
best one can say is that a concern for State dignity reflects a reluctance to
allow a non-consenting State to be haled into court and its policy decisions
subjected to judicial dictates (cf. Hyatt III, 587 US at 247 [noting that
"a State's assertion of compulsory judicial process over another State
involves a direct conflict between sovereigns"]).
Third,
what does the notion of dignity tell us about whether an entity other than a
State itself may invoke sovereign immunity? Hall gave a clear answer:
the "source" of interstate sovereign immunity "must be found
either in an agreement, express or implied, between the two sovereigns, or in
the voluntary decision of the second to respect the dignity of the first as a
matter of comity" (440 US at 416). Thus, for the forty years
that Hall was good law, the States presumably were free to determine
as a matter of comity when a non-state entity was sufficiently akin to the
State itself to invoke sovereign immunity. But Hyatt
III overruled Hall, and even though Hyatt had sued a non-state
entity, the Court was silent about why an entity other than a State itself
could immunize itself from a private suit in another State's courts. The
majority offers no clear connection between dignity and the question of
immunity either, eliding its leap from Hyatt III's discussion of dignity
to a reliance on Eleventh Amendment jurisprudence (see majority op at
6-9). It is therefore understandable that our dissenting colleague has
concluded that a concern for state solvency, rather than dignity, drives the
majority's analysis (see dissenting op at 2).
In
short, I am skeptical that this nebulous concept of State dignity is useful in
determining what types of non-state entities may invoke sovereign immunity. It
is one thing to say that "[t]he preeminent purpose of state sovereign
immunity is to accord States the dignity that is consistent with their status
as sovereign entities" (Federal Maritime Comm'n v South Carolina State
Ports Authority, 535 US 743, 760 [2002]). It is another task altogether to
determine whether, and in what circumstances, a private suit against a
non-state entity is "an impermissible affront to a State's dignity"
(id.).
That
said, I agree with the majority that the "arm of the State" doctrine
developed in Eleventh Amendment litigation is a useful reference point. The
Court's approach to when a non-state entity can invoke immunity has evolved
over the years. Early decisions denied immunity to a state-created corporate
entity that had "the capacity to [*8]sue
and be sued" (see e.g. Bank of United States v Planters' Bank of Ga., 9
Wheat [22 US] 904, 907 [1824])[FN8].
That gave way to the "arm of the State" test by the mid-twentieth
century (see Mt. Healthy City Bd of Ed. v Doyle, 429 US 274, 279-281
[1977]; see also Hess v Port Authority Trans-Hudson Corporation, 513 US
30, 42-43 [1994]; Regents of Univ. of Cal. v Doe, 519 US 425, 429 [1997]).
The factors encompassed in this test go to the crux of what a sovereign is (see
generally Lake County Estates, Inc. v Tahoe Regional Planning Agency, 440 US
391, 401-402 [1979] [setting forth the factors]),[FN9] and
there is no apparent reason to define that differently depending on whether a
litigation is in state or federal court. Hyatt III confirms this
point, tearing down the wall that had separated Eleventh Amendment immunity
from interstate sovereign immunity, and thereby suggesting that the same
doctrinal inquiry may apply to both strands of immunity (see 587 US at
236-237 [rejecting Hall's historical and analytical distinction between
interstate and Eleventh Amendment immunity]). This approach has the additional
virtue of ensuring that a non-state entity will be amenable to suit in both
federal and state court, or neither, but not suable in one court and immune in
the other. Applying those factors, I agree that NJT is not an arm of the State
of New Jersey.
II.
Chief
Judge Wilson has proposed an unusual approach to the issue at hand. He objects
to relying on Eleventh Amendment precedent because Eleventh Amendment immunity
and interstate sovereign immunity stem from distinct sources of law and (to
some extent) serve different objectives (see concurring op at 24-30). That
is correct as far as it goes, but, as I have said, Hyatt III's treatment
of Hall reflects a unitary conception of state sovereign immunity.
Whatever it means to say the Eleventh Amendment is "an Amendment" and
therefore "not an immunity," (id. at 29 n 13), the Court has
concluded that "the 'natural inference' from [the Eleventh Amendment's]
speedy adoption is that 'the Constitution was understood, in light of its
history and structure, to preserve the States' traditional immunity from
private suits' " (Hyatt III, 587 US at 243, quoting Alden, 527 US at
723-724). That immunity, Hyatt III suggests, applies in both
state and federal courts (see id.). The concurrence's efforts to
preserve Hall's distinction sound suspiciously similar to the "the
type of ahistorical literalism" the Court repeatedly has "rejected in
interpreting the scope of the States' sovereign immunity" (Alden, 527 US
at 730; see also Hyatt III, 587 US at 247).
The
concurrence would look not to the Eleventh Amendment "arm of the
State" case law, but to "customary international law and the common
law" to determine whether sovereign immunity extends to a non-state entity
(Wilson, Ch. J. concurring op at 2). Hyatt III explains that
"[t]he Founders believed that both 'common law [*9]sovereign immunity' and 'law-of-nations sovereign
immunity' prevented States from being amenable to process in any court without
their consent" (587 US at 238). The decision instructs that sovereign
immunity rests on these historical premises, and that "the States retained
these aspects of sovereignty, 'except as altered by the plan of the Convention
or certain constitutional Amendments' " (id. at 241,
quoting Alden, 527 US at 713). The concurrence thus starts with the
proposition that sovereigns had authority to punish those who came within their
borders; points to "[m]odern conceptions of international law" that
distinguish between a State's public and commercial capacities; asserts that
the U.S. Constitution left untouched a State's right "to regulate matters
within [its] own borders"; and concludes that only activities "that
concern the essential existence and administration of a
government qua government" are cloaked with immunity (Wilson,
Ch. J. concurring op at 9, 19, 20).
This
analysis has several flaws. First, assuming the concurrence correctly has
identified a "modern" distinction between public and commercial
activities, that contemporary categorization seems irrelevant to the question
at hand. Hyatt III instructs that States retain the sovereign
immunity they enjoyed prior to ratification, except insofar as it was altered
by the adoption of the Constitution and its later amendments (see 587 US
at 241-243). So even if we are to rely on immunities recognized at common law
and by the law of nations, our point of reference would be the time of the
Founding, not today. Hyatt III itself relied only upon pre-ratification
decisions to support its conclusion that common-law and law-of-nations
immunities are embedded in the constitutional design (see id. at 239-241
[discussing Nathan v Commonwealth of Virginia (1 Dallas 77 [Pa Com Pl
1781]) and Moitez v The South Carolina (17 F Cas 574 [Adm Pa
1981])]). Although the decision also mentioned two "early foreign immunity
decisions" post-dating ratification, it did so only to explain that they
failed to appreciate "that the Constitution affirmatively altered the
relationships between the States, so that they no longer relate to each other
solely as foreign sovereigns" (587 US at 244-245). The concurrence makes
the same mistake.
In an
effort to sidestep this problem, the concurrence asserts that under Hyatt
III, the States' common-law and law-of-nations immunities "are not static,
but rather, evolve organically with changes in customary international law . .
. because the Constitution cannot claim the power to freeze international law
(or common law) in time" (Wilson, Ch. J. concurring op at 12). But again:
if Hyatt III makes anything clear, it is that the States no longer
"maintain[] sovereign immunity vis-Ã -vis each other in the same way that
foreign nations do" (587 US at 236; see also id. at 246). By
relying on modern conceptions of international law to define the scope of state
sovereign immunity, the concurrence flouts this basic proposition. Its approach
also contradicts the historical methodology it purports to apply. When the
Court has looked to history to determine the scope of other constitutional
rights, it repeatedly has said that the meaning of the Constitution was fixed
at the time of ratification (see e.g. New York State Rifle & Pistol Assn.,
Inc. v Bruen, 597 US 1, 28 [2022], citing United States v Jones, 565 US 400,
404-405 [2012]). It is implausible that with its decision in Hyatt
III the Court meant to depart from its current practice by treating state
sovereign immunity as an "evolving" right. And if the Founding
generation had understood that the scope of a State's immunity from private
suit in a sister State's courts, unlike any other aspect of state sovereignty,
would wax and wane according to evolving sentiment, then surely the concurrence
could offer some historical evidence to that effect.
Second,
and relatedly, it is hardly apparent how the Founders would have viewed an
entity like NJT—one that is not itself a sovereign but nonetheless exercises
some powers and responsibilities that make it akin to a sovereign. The
concurrence glosses over this issue as well, instead stressing that at the time
of the Founding and beyond, government officers could be sued for certain
torts, and foreigners (including sovereigns) held liable for some harms
inflicted outside their territory (see Wilson, Ch. J. concurring op at
6-9). Even if these points might bear on the scope of immunity to which a State
itself is entitled, it is unclear how they should affect whether a non-state
entity may claim immunity. That unanswered question confirms the challenges
that courts face in undertaking such historical analysis. Like the dissenting
opinion, I would refrain from such speculation (see dissenting op at 3 n
1; see also McDonald v Chicago, 561 US 742, 910 [2010, Stevens, J.,
dissenting] ["It is not the role of federal judges to be amateur historians."]; Iowa
v Wright, 961 NW2d 396, 427-428 [Iowa 2021, Appel, J., concurring]
["History is not granular, and it rarely points only in one direction.
Even if historical truths can be discovered by judges writing opinions in a
matter of weeks (and, alas, sometimes days), the historical truths are very
difficult even for trained historians to discover and are often inconsistent
and contradictory."]).
Third,
the distinction between commercial operations and traditional (or, as the
concurrence calls them, "core") governmental functions has been
soundly rejected by the Supreme Court (see Garcia v San Antonio Metropolitan
Transit Authority, 469 US 528, 538-547 [1985], overruling National League
of Cities v Usery, 426 US 833 [1976] [disavowing "traditional government
functions" as "an organizing principle" for distinguishing state
from non-state functions]; see also Douglas Laycock, Modern American
Remedies 510 [4th ed 2010] [explaining that "no court has ever generated a
coherent set of precedents applying the distinction"]). The concurrence
acknowledges that differentiating between a State's "commercial and public
activities" may not always be "workable" for questions about
"the balance between state and federal power," but asserts that the
test can nevertheless be used "to determine the scope of interstate
sovereignty" (Wilson, Ch. J. concurring op at 10 n 1). It is true, as the
concurrence notes, that we have distinguished between governmental and
proprietary functions in determining the scope of common-law tort immunity
under state common law (see id., citing Connolly v Long Island Power Auth., 30 NY3d 719 [2018]).
But the task of doing so with respect to another State's policies is
fraught, and would necessarily inject us into the policy choices of that State
(cf. Garcia, 460 US at 546 [noting that "the people—acting not through the
courts but through their elected legislative representatives—have the power to
determine as conditions demand, what services and functions the public welfares
requires" (internal quotation marks omitted)]).[FN10]
And
beyond that, how to determine what is a core function and what is not? The
concurrence offers a minimalist view of core state functions as limited to
"the exercise of police powers within its own borders, the election or
appointment of its own officials, or the collection of taxes" (Wilson, Ch.
J. concurring op at 2-3; see also id. at 23). That view of the State
is inconsistent with the concurrence's view that state sovereignty is tethered
to modern, evolving precepts of international law, and the concurrence points
to nothing in the Constitution that necessitates this cramped understanding of
a State's role in providing for the welfare of its citizens. As the Court
explained in Garcia, "the 'traditional' nature of a particular
governmental function can be a matter of historical nearsightedness; today's
self-evidently 'traditional' function is often yesterday's suspect
innovation" (469 US at 544 n 9). The skimpy contours of state sovereign
immunity that the concurrence advances are hard to reconcile with this insight.
Perhaps the concurrence means to enhance accountability for harms inflicted by
bad actors, particularly a "billion-dollar . . . enterprise" (Wilson,
Ch. J. concurring op at 4). That goal may be salutary (see e.g. Erwin
Chemerinsky, Against Sovereign Immunity, 53 Stan L Rev 1201 [2001]), and
it may counsel against a sweeping test for when a non-state entity can invoke
sovereign immunity. But the "arm of the State" framework is not so
broad; indeed, the result here is a determination that NJT is not cloaked with
immunity.
Finally,
I would not tether our jurisprudence to the prospect that one State will
"create, operate and supervise a shooting gallery" within the borders
of another State to "cause[] dozens of deaths each day" (Wilson, Ch.
J. concurring op at 21). As even the concurrence admits, this scenario will not
come to pass (see id. at 33). And if something along those lines ever
transpired, the conduct would be plainly unconstitutional, and a federal court
would say as much (see US Const, art 1, § 10; see also Hyatt III, 587
US at 245; Ex parte Young, 209 US 123 [1908]; Ann
Woolhandler, Interstate Sovereign Immunity, 2006 Sup Ct Rev 249, 262
[2006] [explaining that the ratifiers of the Eleventh Amendment understood that
"the Constitution and judiciary acts provided an avenue for federal court
resolution of disputes when a citizen of one state complained of a wrong
inflicted by an officer of another state"]). Moreover, the hypothetical is
irreconcilable with the foundational principle of our Federalism: that, by
entering into the Union, the States agreed to throw their lot in together and
"no longer relate to each other solely as foreign sovereigns" (Hyatt
III, 587 US at 245). In crafting a jurisprudence that governs relations with
our sister States, I would not "assume the States will refuse to honor the
Constitution or obey the binding laws of the United States" (Alden, 527 US
at 755). Rather, as the Supreme Court has reminded us time and again,
"[o]ur constitutional system . . . looks to 'the good faith of the States
to provide an important assurance that "this Constitution and the Laws of
the United States which shall be made in Pursuance thereof shall be the supreme
Law of the Land" ' " (DeVillier v Texas, 601 US 285 [2024],
quoting Alden, 527 US at 755, and US Const, art VI, cl 2 [alterations
omitted]).
WILSON,
Chief Judge (concurring):
New
Jersey Transit sends hundreds of buses, trains and ferries into and out of New
York every day, transporting hundreds of thousands of passengers each day.
Unsurprisingly, a New Jersey Transit bus hit and injured a New York pedestrian
crossing a New York street. According to New Jersey Transit, the pedestrian
cannot sue in New York, but can sue only in New Jersey, and only if New Jersey
chooses to allow it. At the outset, the majority and I are answering the same
question: not whether New Jersey itself possesses sovereign immunity, but
whether New Jersey Transit does.
I
agree with the majority's result: The doctrine of interstate sovereign immunity
as reformulated in Franchise Tax Bd. v Hyatt (587 US 230
[hereinafter Hyatt III]) does not prohibit the New York courts from
hearing this lawsuit because New Jersey Transit is not clothed with sovereign
immunity. But my reasoning differs substantially from the majority's in two
respects. First, I disagree with the majority's conclusion that "courts
must analyze how the State defines the entity and its functions, its power to
direct the entity's conduct, and the effect on the State of a judgment against
the entity" (majority op at 2). The majority's test would allow a State to
extend its sovereign immunity to all sorts of functions without regard to
whether those functions are truly the sort over which a State may claim
sovereign immunity. Under the majority's rationale, if New Jersey Transit
reported directly to the Governor and was instructed to run down as many New
Yorkers as possible, New Jersey's sovereign immunity would prevent it from
being sued in [*10]the New York courts,
and it could be sued in New Jersey only if New Jersey permitted it and only to
the extent permitted.
Instead,
the correct test is whether the function performed by the entity is what would,
under customary international law and the common law, be considered a core
governmental function to which sovereign immunity would have extended, such as
the exercise of police powers within its own borders, the election or
appointment of its own officials, or the collection of taxes. As regards
interstate sovereign immunity, that determination would be impervious to the
State's intent, the particular structure created by a State, or the potential
magnitude of a judgment. Instead, the scope of sovereign immunity that extends
to a State-created entity should be determined, as Hyatt
III suggests, by examination of customary international law and the common
law, as modified, if at all, by the U.S. Constitution. The answer is not
affected by State intent, control or liability.
Second,
I disagree that the Eleventh Amendment and associated caselaw has any bearing
on the question at hand. The Eleventh Amendment does not define the common law
or law-of-nations concepts of sovereign immunity, nor is it coextensive with
those. Instead, it is a decision by the States as to how extensive the power of
the federal courts would be vis-a-vis them. In short, the question of
whether a state-created entity may invoke the Eleventh Amendment to bar an
action in federal court is irrelevant, because the relation of New Jersey to
the United States is fundamentally different from the relation between New
Jersey and New York. Transplanting the meaning of "sovereign dignity"
from the Eleventh Amendment context does not comport with Hyatt III.
Interstate
sovereign immunity, unlike the immunity of States in federal court, involves
the relation between equal sovereigns. Hyatt III holds that one State
cannot decline to recognize another State's sovereignty in its own courts.
However, when sovereignty is not at stake, there is no bar to a proceeding in
the courts of another State. A state-created entity operating a billion-dollar
interstate transportation enterprise is not a sovereign function of any State.
It is a commercial enterprise operating in daily competition with myriad
private entities that also shuttle riders back and forth between New Jersey and
New York. Any other holding would undermine our federalist system and threaten
the "'fundamental principle of equal sovereignty among the
States'" (id. at 246, quoting Shelby County v Holder, 570 US
529, 544 [2013]).
I.
No
constitutional provision addresses whether one State can be sued in another
State's courts. The Supreme Court in Hyatt III concluded interstate
sovereign immunity is implicit in the structure of the Constitution and binding
upon the States as a matter of federal constitutional law. To reach that
conclusion, Hyatt III relied on two key historical insights. First,
state sovereignty predated the Constitution and States retained their
sovereignty when they entered the Union (id. at 231). Second, the
Constitution "affirmatively altered the relationships between the States
so that they no longer relate to each other as true foreign sovereigns"
(id.). Hyatt III instructs that interstate immunity questions must
proceed from those two premises. Thus, one must examine the historical origins
of sovereign immunity and the nature of the sovereignty States held prior to
the ratification of the Constitution. Next, one must account for the changes
the Constitution provoked, transforming States from full sovereigns to
quasi-sovereign entities subject to the changes worked by the U.S. Constitution.
A.
The
modern doctrine of sovereign immunity originates from the English common-law
concept that a sovereign cannot be dragged into a court against its will. The
concept is often restated in the maxim "the King can do no wrong," or
in the words of Alexander Hamilton, "It is inherent in the nature of
sovereignty not to be amenable to the suit of an individual without its
consent" (Hamilton, Federalist No. 81). Many readings of sovereign
immunity stop here. But the rhetoric justifying expansive readings of immunity
tends to ignore the context-specific applications of the doctrine and obscures
the long historical practice of private litigation against government entities.
The
U.S. Supreme Court has identified two historical strands that inform our
contemporary doctrine of sovereign immunity: "common law sovereign
immunity" and "law-of-nations sovereign immunity" (Hyatt
III at 238). Both doctrines, as practiced at the time of the Founding,
allowed sovereign tribunals to vindicate the rights of private parties who had
been harmed by government tortfeasors. For instance, "common law"
immunity provided private individuals with wide latitude to sue government
officers for violations of the law (see Louis L. Jaffe, Suits Against
Governments and Officers: Sovereign Immunity, 77 Harv L Rev 1, 3 [1963]).
The King was also subject to suit by his [*11]consent,
which was later replaced by fictional consent or implicit authority rather than
a strict requirement (see James E. Pfander, Sovereign Immunity and
the Right to Petition: Toward a First Amendment Right to Pursue Judicial Claims
Against the Government, 91 Nw U L Rev 899, 911—912 [1997]).
Sovereign
immunity under customary international law, sometimes called
"law-of-nations" sovereign immunity, also recognized significant
limits on Sovereign A's ability to escape Sovereign B's tribunals for actions
occurring in Sovereign B's territory. A sovereign's immunity did not extend
outside its own territory unless the other sovereign chose to grant it immunity
(see The Schooner Exchange v. McFaddon, 7 Cranch [11 US 116, 136 [1812]
["All exceptions . . . to the full and complete power of a nation within
its own territories must be traced up to the consent of the nation itself. They
can flow from no other legitimate source"]).
The Hyatt
III Court expressly invoked law-of-nations principles to determine the
scope of the immunity the framers would have expected States to hold in other
States' courts. This is because, as the Hyatt III majority explained,
after independence but before the adoption of the Constitution, States
considered themselves "fully sovereign nations," entitled "to
all the rights and powers of sovereign states" (Hyatt III at 237-238,
quoting McIlvaine v Coxe's Lessee, 4 Cranch 209, 212 [1808]). Scholars
have noted that the term "State" in the Constitution is itself
"a term of art drawn from the law of nations" (Anthony J. Bellia Jr.
& Bradford R. Clark, The International Law Origins of American
Federalism, 120 Colum L Rev 835, 839 [2020]). In sum, although the law of
nations does not account for the unique structure of the Federal Constitution,
it illustrates the background expectations the Framers had in mind when they
designed the constitutional plan.
Notably,
law-of-nations immunity left sovereigns with wide latitude to punish both
foreigners who transgressed within territorial boundaries and foreign
sovereigns that failed to force subjects to repair the harms inflicted. Here
again, rhetoric obscures the nuance of historical practice. The Hyatt
III majority quotes Emer de Vattel, the foremost expert on the law of
nations at the time of the Founding, as saying "'It does not . . . belong
to any foreign power to take cognisance of the administration of [another]
sovereign, to set himself up for a judge of his conduct, and to oblige him to
alter it . . .' The sovereign is 'exemp[t] . . . from all [foreign]
jurisdiction'" (Hyatt III, 139 S Ct at 1493—1494, citing 2 Emer de
Vattel, The Law of Nations § 55, at 155 [J. Chitty ed. 1883] and
4 id. § 108, at 486). Although sounding sweeping in scope, Vattel's
immunity mostly referred to efforts by one nation to take charge of the
internal governance of another. When he explained that a foreign power could
not "take cognisance of the administration of another sovereign," his
quintessential examples involved a foreign sovereign who supplanted a domestic
sovereign for taxing his subjects too highly, inflicting unjust punishments on
his subjects, or contravening Christian morals—"things, for which [the
domestic sovereign] was not at all accountable to [the foreign sovereign]"
(2 id. § 55, at 155-156; accord 1 James Kent, Commentaries
on American Law 20-21 [Comstock ed. 1867]). That is, the sovereign immunity
protected under customary international law related to the ability of one State
to interfere with the essential workings of another State. That interpretation
fully squares with the result in Hyatt III, in which the Supreme Court
held that California's sovereign immunity extended to protect its attempts to
collect taxes from a former California resident who had relocated to Nevada,
such that the Franchise Tax Board of California could not be sued in the Nevada
courts. Collection of taxes is a core function of States, fully protected by
their sovereign immunity.
By
contrast, Vattel acknowledged a domestic sovereign's "right to preserve
herself from all injury" because "when we cannot use constraint in
order to cause our rights to be respected, their effects are very
uncertain" (2 Vattel § 49, at 154; accord 1 Kent at 22
["Every nation has an undoubted right to provide for its own safety, and
to take due precaution against distant as well as impending danger"]).
Applying sovereign immunity to bar New York's courts from hearing a case
concerning injury to one of its own residents that occurred within its own
territory would deny an essential element of New York's own sovereignty, while
not protecting any core function of New Jersey's.
Vattel
further distinguished between types of conduct in his account of the immunity
afforded to the literal body of a foreign sovereign itself. If a prince were in
a foreign country to negotiate or "treat about some public affair" he
would be "entitled in a more eminent degree to enjoy all the rights of
ambassadors," whereas "[i]f he c[a]me as a traveler, his dignity
alone, and the regard due [his] nation" would "exempt[ ] him from all
jurisdiction," though the host country could withdraw that protection if
it so informed him (4 Vattel § 108, at 486). However, if he "act[ed] as an
enemy," the prince would be entitled to no regard at all
(4 id. § 108, at 486). Moreover, the foreign prince could not
exercise his rights in such a manner as to "affect the sovereignty of the
country in which he [was] a sojourner" (id. at 487; see also 2 id. §
92, at 169 ["the least encroachment on the territory of another is an act
of injustice"]). "Even in cases of ordinary transgressions, which are
only subjects of civil prosecution . . . with a view to [*12]the recovery of damages . . . the subjects of two
neighboring states [we]re reciprocally obliged to appear before the magistrate
of the place where they [we]re accused of having failed in their duty"
(2 id. § 76, at 162). The foreign subject's sovereign was generally
not permitted "to examine whether the accusation be true or false"
and if the sovereign "refuse[d] to cause reparation to be made for the
damage done by his subject," the sovereign would "render[] himself in
some measure an accomplice in the injury and become[ ] responsible for it"
(2 id. § 76—77, at 163). Thus, if we look to customary international
law, as Hyatt III directs, we find that sovereigns—and more
particularly the agents of sovereigns—had no immunity from torts committed in
foreign lands, and that, indeed, sovereigns were expected to recompense
injuries caused by their actions or actors occurring in foreign lands.
In the
centuries after Vattel's writing, international law hewed to the older doctrine
in ways that help clarify its application to this case. Modern conceptions of
international law distinguish between circumstances in which a State acts in a
public rather than in a commercial capacity and extend immunity only to the
former (see John M. Rogers, Applying the International Law of
Sovereign Immunity to the States of the Union, 1981 Duke L J 449, 472 [1981]).
In the United States, the so-called "restrictive theory" of sovereign
immunity is enshrined in the Foreign Sovereign Immunities Act of 1976 (FSIA),
which establishes criteria for when a foreign state can be subjected to civil
suit in the United States (28 USC §§ 1330, 1602-11; see Rogers at
472). The Act provides broad immunity to nations subject to specified
exceptions. The major exception to the Act, known as the "commercial
activity" exception, exempts from immunity actions arising out of a defendant's
commercial activity that has a nexus with the United States (28 USC § 1605).
The statute defines "commercial" and notes that whether an activity
is commercial "shall be determined by reference to the nature of the
course of conduct or particular transaction or act, rather than by reference to
its purpose" (28 USC § 1603 [d]). Courts exercise discretion in
determining whether an activity is commercial or whether it has a sufficient
nexus with the United States (see e.g. Republic of Argentina v Weltover, Inc.,
504 US 607 [1992]).[FN11]
The
development of the restrictive theory of immunity is linked to historical
changes, such as the increased phenomenon of States entering marketplaces and
engaging in commercial activities indistinguishable from those customarily
undertaken by private parties (Jasper Finke, Sovereign Immunity: Rule,
Comity or Something Else?, 21 Eur J Int'l L 4, 853-881, 859 [2010])[FN12].
However, the principles underlying that theory are not new, but rather embrace
an idea at the heart of Vattel and the law of nations. That theory balances the
need to respect the sovereignty and independence of foreign states with the
need to hold States to account when they encroach on the territory of other
States and act outside the realm of the traditional core activities of a
sovereign [FN13].
The
concurrence misconstrues Hyatt III's directives and misinterprets my
reference to modern international law. Hyatt III does not say that
the sovereign immunity of states today is precisely what it was at the time of
the founding (Halligan, J. concurring op at 7). Hyatt III instead
says: "at the time of the founding . . . States were immune under both the
common law and the law of nations. . . . [and] the States retained these aspects
of sovereignty" (Hyatt III at 241). These "aspects" are not
static, but rather, evolve organically with changes in customary international
law. That is because the Constitution cannot claim the power to freeze
international law (or common law) in time. Sovereign rights and obligations
under international law do not remain frozen based on the obligations a nation
had at the time of its founding; rather, international law conceptions of
sovereignty change over time. Thus, while the sovereignty States enjoyed at the
Founding provides a starting point, the Hyatt III analysis requires
considering the changes in the sovereignty a modern nation-state now holds (of
course, less the sovereignty the States gave up in the Constitution)[FN14].
Though the Framers in drafting the Constitution had a certain conception
of [*13]the law of nations, the Framers
themselves understood that the rules of the law of nations were subject to
change (William S. Dodge, Customary International Law, Change, and the
Constitution, 106 Geo L J 1559, 1581-1582 [2018]; see Ware v Hylton 3
US 199, 281, 1 L Ed 568 [1796] [opinion of Wilson, J.] ["When the United
States declared their independence, they were bound to receive the law of
nations, in its modern state of purity and refinement"]
[emphasis added]; US v the La Jeune Eugenie, 26 F Cas 832, 846 [CCD Mass
1822] ["It does not follow, therefore, that because a principle cannot be
found settled by the consent or practice of nations at one time, it is to be
concluded, that at no subsequent period the principle can be considered as
incorporated into the public code of nations"]; Letter from Thomas
Jefferson to Thomas Pinckney [May 7, 1793] Founders Online, National Archives,
https://founders.archives.gov/documents/Jefferson/01-25-02-0616. [Original
source: The Papers of Thomas Jefferson, vol. 25, 1 January—10 May 1793, ed.
John Catanzariti. Princeton: Princeton University Press, 1992, 674-676] [noting
that the principles of the law of nations "have been liberalized in latter
times by the refinement of manners and morals, and evidenced by the
Declarations, Stipulations and Practice of every civilized Nation"]). The
subject matter, rules, and means of enforcements in international law have all
changed since the ratification of the U.S. Constitution; the Constitution's
texts and historical understandings must be translated "in light of
[these] changes" (Dodge at 1582).[FN15]
B.
For
the purposes of this appeal, however, it does not matter whether the
sovereignty of state-created entities was frozen at the time the Constitution
was enacted (as Judge Halligan assumes) or is altered as rules of international
law change [FN16].
As Judge Halligan herself notes, "'when a [State] government becomes a
partner in any trading [*14]company, it
divests itself, so far as concerns the transactions of that company, of its
sovereign character, and takes that of a private citizen'" (Halligan, J.
concurring op at 4 n 1, quoting Bank of United States v Planters' Bank of
Ga., 9 Wheat [22 US] 904, 907 [1824]). Although in Planters' Bank the
Court considered the Eleventh Amendment, the Court determined that because
"the Planters' Bank of Georgia is not the State of Georgia, although the
State holds an interest in it," it possessed no "sovereign character,"
and therefore could be sued in any court.
Thus,
if the sovereignty of the States is as it was at the time they ratified the
Constitution, Planters' Bank instructs that entities such as New
Jersey Transit cannot invoke the sovereignty of the States. Judge Halligan
offers an explanation: that subsequently the Supreme Court has moved to an
"arm of the State" test, beginning with Mt. Healthy City Bd. of
Ed. v Doyle (429 US 274 [1977]). There are two difficulties with that
argument. First, Mt. Healthy and the other cited cases concern Eleventh
Amendment immunity, not the inherent sovereign immunity of the States. The use
of the arm-of-the-state test for that purpose does not bear on the test for the
scope of the inherent sovereign immunity of States (see section
IV, infra).
Second, Mt.
Healthy and the other cases cited by the concurrence either support my
view or are irrelevant. In Mt. Healthy, the Court relied on its
longstanding doctrine that "[t]he bar of the Eleventh Amendment to suit in
federal court . . . does not extend to counties and similar municipal
corporations" (429 US at 280). Municipal corporations are, of course,
created by States, and they serve a governmental function. Nevertheless,
settled doctrine is that such entities can be sued in federal court [FN17].
If they had some sovereign immunity (setting aside the Eleventh Amendment's
bar, which does not apply to them), they could not be sued at all. New Jersey
Transit is even less like the State than a municipal corporation; Mt.
Healthy strongly suggests it possesses no sovereign immunity.[FN18]
C.
I
turn, then, to the common law. Common law is fully in accord with the law of
nations. Although under English common law the maxim "the King can do no
wrong" is frequently found, its meaning was limited to the monarch, not
the monarch's subjects, and was not absolute even as to the monarch. Thus, for
example, although the King himself could not be brought into court, "if
the tortious act were that of an agent or servant of the King, it was
conclusively presumed to be without his sanction. The subject might sue the
actual tortfeasor, and the latter could not plead in defense that it was done
by royal authority" (Herbert Barry, The King Can Do No Wrong, 11 Va L
Rev 5 349, 356 [1925]). Barry recounts two illustrative cases under English
common law: Earl of Danby's Case (1679), in which the King assumed
responsibility for Danby's act and granted a pardon, which was deemed
ineffective because of the irrebuttable presumption that the King could do no
wrong; and Feather v The Queen (1865), which held:
"'from the maxim that
the King cannot do wrong it follows as a necessary consequence that the King
cannot authorize a wrong . . . In our opinion no authority is needed to
establish that a servant of the Crown is responsible to law for a tortious act
done to a fellow subject though done by authority of the Crown'" (id.).
Thus, under English
common law, sovereign immunity extended to the sovereign personally but did not
insulate tortious acts from suit even when directed by the sovereign (see also
supra n 6).
The
American common law concept of sovereign immunity, to the extent resting on the
proposition that if the monarch could do no wrong, neither could the
government, was cabined in the same way it had been under English common law:
"the English maxim does not declare that the government, or those who
administer it, can do no wrong; for it is a part of the principle itself that
wrong may be done by the governing power, for which the ministry, for the time
being, is held responsible" (Langford v United States, 101 US 341, 343
[1879]).
II.
The
next question is whether and to what degree the unique structure of the federal
Constitution altered the sovereignty States held under the law of nations or
common law. Hyatt III soundly rejected Hyatt's argument that States
retained the power of fully independent nations completely to deny immunity to
fellow sovereigns. The Court observed that Hyatt's argument failed to account
for how the Constitution and the "deprivation of traditional diplomatic
tools" reordered the States' relationships with one another (Hyatt
III at 248). The Constitution "divests the States of the traditional
diplomatic and military tools that foreign sovereigns possess" and
"deprives them of the independent power to lay imposts or duties on
imports and exports, to enter into treaties or compacts, and to wage war"
(id. at 245). Each State's equal dignity and sovereignty under the
Constitution implies certain constitutional "limitation[s] on the
sovereignty of all of its sister States" (id., quoting World-Wide
Volkswagen Corp. v Woodson, 444 US 286, 293 [1980]). One of those limitations
is the States' inability to ignore the sovereign immunity of their sister
States (Hyatt III at 245).
Under
the plan of the Constitution, the same federalist principles that protect
interstate sovereign immunity bear on the question of what entities can claim
sovereign immunity. Although not disturbing many of the attributes of State
sovereignty, the Constitution deprived States of certain remedies they
previously held as sovereigns to respond to harm caused by other States inside
their own borders. Thus, if New York disapproves of New Jersey Transit's
operations within New York, New York cannot cut off trade with New Jersey,
forbid New Jersey Transit from operating in New York (see e.g. City of
Philadelphia v New Jersey, 437 U S 617 [1978]), or declare war on New Jersey.
But
just as the Constitution did not expressly disturb the right of States to be
haled into the court of another State, it did not expressly disturb the
law-of-nations attribute of sovereignty entitling States to regulate matters
within their own borders. Hyatt III itself presented a situation in
which those two rights of a sovereign were at least arguably in tension: the
alleged torts occurred in Nevada, but the actions were taken by agents of
California pursuing an alleged tax evader. However, whether the Franchise Tax
Board was, effectively, the State of California was not at issue before the
Supreme Court in any of the three Hyatt decisions. Turning back to
the law-of-nations principles discussed earlier, we can see that Hyatt
III, which concerned California's ability to obtain tax revenues from its own
residents, involved Nevada's interference with that core governmental function.
As Hyatt III observed, "'[i]t does not . . . belong to any
foreign power to take cognizance of the administration of [another]
sovereign,'" which is precisely what Nevada's lawsuit would have done by
allowing a tort recovery for California's attempt to pursue an alleged tax
evader. Here, however, New Jersey Transit's operations are not core functions
necessary to the operation of a state government; they are commercial
operations that, though undeniably important, would not have been clothed with
sovereign immunity when causing torts in another sovereign's jurisdiction.
Instead, the sovereign in whose territory the tort occurred was the forum in
which claims would be adjudicated, and a foreign sovereign refusing to make
recompense would have been in violation of the law of nations.
Thus,
the constitutional structure would not deem New Jersey Transit to be clothed
with the immunity of the State of New Jersey. States are immune in other
States' courts for their activities that are core governmental
functions—functions that concern the essential existence and administration of
a government qua government. Under law-of-nations principles,
however, other activities by state-created entities are not.
III.
New
Jersey Transit contends that New Jersey's own characterization of New Jersey
Transit is controlling, and the majority, though rejecting that notion,
concludes that the characterization is relevant. I disagree. As Hyatt
III makes clear, the source of the sovereign immunity of the States is the
law of nations and the common law, as modified by the U.S. Constitution. There
is no suggestion in Hyatt III that state law figures into the
equation (except to the extent it might evidence a waiver of sovereign
immunity), and for good reason: if it did, States could extend their sovereign
immunity to any manner of activity occurring outside of their borders, simply
by enacting statutes that, for example, placed a commercial entity under direct
executive branch control, stated that the entity possessed sovereign immunity,
and made the State directly liable for judgments against it.
New
Jersey Transit's theory would not only insulate it from all torts its buses
commit in New York, but even from liability if it used the right statutory
words to create, operate and supervise a shooting gallery with live ammunition
in Times Square that caused dozens of deaths each day [FN19].
The same problem, to a lesser degree, infects [*15]the
majority's reliance on New Jersey law to determine whether New Jersey Transit
is entitled to be treated as New Jersey itself for sovereign immunity purposes.
A cabining principle is required, and Hyatt III directs that the law
of nations and common law, as modified by the U.S. Constitution, must be the
source of that cabining principle—not State law.
To preserve
the equal sovereignty between States, interstate sovereign immunity must
protect those acts that are necessary to a State's functioning as a government,
but cannot extend to acts that do not carry with them the essential attributes
of sovereignty. Providing public transportation is undoubtedly an important
function of a modern government. But the analysis for whether an entity
constitutes the State for interstate immunity purposes is not whether a
function is important. Rather, it is about whether that function is a necessary
attribute of a State's existence and operation as a State.
In
sum, both historical practice and constitutional structure protect States from
being subjected to suits in sister States' courts when engaged in core
governmental functions. At minimum, core functions include collecting taxes,
running elections, and use of police power—acts necessary for the State to
maintain its sovereign status and sustain itself as a government [FN20]. Hyatt
III involved exactly that. In contrast, when a governmentally created
entity is not acting in a sovereign capacity, it is no different from an
individual tortfeasor. That was true under the law of nations and the common
law, and the plan of the U.S. Constitution did not change that.[FN21]
[*16]IV.
The
other point where I depart from the majority is its reliance on Eleventh Amendment
jurisprudence to inform whether New Jersey Transit possesses New Jersey's
sovereign immunity. The considerations pertaining to whether a state-created
entity is deemed to be the State for purposes of Eleventh Amendment
jurisprudence are not germane to the determination of whether a State is
sovereign for interstate sovereign immunity purposes. The doctrines come from
two very different sources and are fundamentally different in purpose and
character.
Although
the inability of federal courts to hear claims brought by citizens against
States is often referred to as an "immunity," it is not a sovereign
immunity, but a restriction of the judicial power of the federal courts alone.
The Amendment reads:
"The Judicial power
of the United States shall not be construed to extend to any suit in law or
equity, commenced or prosecuted against one of the United States by Citizens of
another State, or by Citizens or Subjects of any Foreign State" (US Const
Amend XI).
The amendment does not
mention sovereign immunity, but instead places a limit on the power of the
federal courts. Indisputably, the Amendment was passed as a swift response
to Chisolm v Georgia (2 US 419, 429 [1793]), in which a citizen of
South Carolina, sued the State of Georgia to recover a debt. The Supreme Court
held that Georgia had no sovereign immunity and allowed the claim to proceed.
Although the U.S. Supreme Court's decisions have not been consistent as to
whether Chisolm was correctly decided (compare New Hampshire v
Louisiana, 108 US 76, 91 [1883] ["Under the Constitution, as it was
originally construed, a citizen of one State could sue another State in the
courts of the United States for himself"] with Alden v Maine, 527 US
706, 722 [1999] ["The text and history of the Eleventh Amendment also
suggest that Congress acted not to change but to restore the original
constitutional design"]), in any event the Eleventh Amendment concerned
the power of the federal courts to entertain suits against States. The federal
government itself is a creation of the States; the extent to which the courts
of the States' new creation could adjudicate claims against them was a
political question to which the States were free to provide any answer on which
they agreed. It was not limited by law-of-nations or common law rules.
Thus,
even if the motivation for the Eleventh Amendment rested, ultimately, in the
States' interest in the preservation of their sovereignty, they were completely
free to limit the federal power as they saw fit—without regard to the law of
nations or the common law. The question the States answered, both in the Tenth
and Eleventh Amendments, was how powerful they wished the federal government to
be. The factors the majority borrows from federal Eleventh Amendment
jurisprudence (the State's intent in creating an entity; its direction of the
entity's conduct; and the effect of an adverse judgment on the State's fisc)
are fine considerations when fashioning the contours of a doctrine created by
the States to restrict the power of the federal courts they created, but are
wholly unmoored from the dictates of law-of-nations or common law conceptions
of sovereignty, which the States are not free to modify.
That
difference leads to my disagreement with the majority's resort to Eleventh
Amendment jurisprudence instead of the law-of-nations and common law
jurisprudence to which Hyatt III directs us. Factors such as the
extent to which a State will have to pay a judgment or the degree of control a
State has chosen to exercise over an entity may [*17]be
relevant in settling the constitutional balance between state and federal
power. But those concepts have no basis in law-of-nations or common law
jurisprudence.[FN22]
The majority's
criticism of my approach evidences a misunderstanding both of U.S. Supreme
Court precedent and of my approach. The majority understands my approach as
rejecting the proposition that the Eleventh Amendment "reflects" the
inherent sovereign immunity of the States or the proposition that the Eleventh
Amendment confirms that the States have some measure of sovereignty not
diminished by the Constitution. I accept both. The majority has confused motive
and means. States had sovereignty before they ratified the Constitution. It is
hardly a novel proposition, as Hyatt III notes, that States ceded
some of that sovereignty by ratifying the Constitution. It is certainly true
that the States viewed Chisolm as something that was an unintended
and undesirable consequence of the Constitution they had just adopted, and that
their view of sovereignty led them to assert their sovereignty by disabling the
federal courts from hearing cases in which they were defendants. The means they
chose—disabling the federal courts—was unquestionably motivated by their view
as to state sovereignty vis-Ã -vis the federal government, and
collectively they had the power to regulate that relationship as they saw fit.
Although their view of their sovereignty was the reason they chose to act, the
rules that have been developed to define the contours of the means they chose
do not bear on the extent of sovereignty they had vis-Ã -vis each
other. Whereas States were able to constrict or expand the power of the federal
government, motivated by sovereignty or otherwise, they had no power to affect
the inherent sovereignty that they possessed before ratification unless the
plan of the Constitution altered it. The means chosen to restrict the federal
government—the Eleventh Amendment and jurisprudence thereunder—certainly tell
us that States were motivated by sovereignty, but do not tell us that the means
adopted to restrict the federal government (or the jurisprudence related
thereto) have import when determining the scope of interstate sovereign immunity
or—more particularly—that the jurisprudence defining how to implement the
chosen means helps to define the scope of interstate sovereign immunity.
To put
this into a simple illustration, I post signs around my property saying,
"no trespassing; persons engaged in solicitation will be prosecuted as
trespassers." My motivation is my sovereignty (if we could call it that)
over the property I own. I develop a system of rules about who is engaged in
solicitation (e.g., it excludes solicitation for local charities but not
national charities, excludes solicitation by businesses I already deal with,
and excludes people who merely drop off advertising circulars without ringing
the bell). Additionally, neighborhood families sometimes play catch on my lawn
without permission, and I don't prosecute them. My "no trespassing"
sign surely evidences my belief that I have sovereignty in my property that is
important to me, but it would be a huge mistake to infer from the solicitation
rules that those rules (or my disregard of ball-playing families) determines
the scope of my sovereignty. By relying on the Eleventh Amendment jurisprudence
to determine the scope of interstate sovereign immunity, the majority is
importing my rule barring solicitations to define the extent of my
sovereignty. Hyatt III affirms that "The 'sovereign immunity of
the States,' we have said, 'neither derives from, nor is limited by, the
terms of the Eleventh Amendment'" (Hyatt III [587 US at 243],
quoting Alden [527 US at 713] [*18][emphasis
added]). As I read Hyatt III, it says that interstate sovereign immunity
exists independently of the Eleventh Amendment and is not defined or cabined by
the jurisprudence thereunder.[FN23]
Doubtless,
the States quickly ratified the Eleventh Amendment out of concerns for an
incursion on their sovereignty, which preexisted the Constitution. Thus, the
Eleventh Amendment "is but one particular exemplification" of the
sovereign immunity of the States (see majority op at 8,
quoting Federal Maritime Comm'n v South Carolina Ports Authority, 535 US
743, 753 [2002]). But using that "one particular
exemplification"—crafted by the States to set their relationship with the
new federal courts—to set the rules for determining whether State actions are
sovereign vis-Ã -vis each other, makes no sense. For example, the need
for food might cause a university to negotiate a meal plan for students, but we
would be mistaken to use the contours of the meal plan to set rules the
university would use to provide food for the faculty club or at alumni events
or, as relevant here, to define the limits of the university's authority to
provide food to persons on campus. Indeed, the majority's recognition that "the
Eleventh Amendment does not define the scope of the States' sovereign
immunity" (majority op at 8 [quoting Federal Maritime Comm'n, 535 US
743, 753]), makes one wonder why the majority would rely on Eleventh Amendment
jurisprudence to define, or even inform, the scope of state sovereign immunity.
The
majority's reliance on Penn East is particularly curious.
In Penn East, the Court held that the States ceded their sovereign
immunity to permit the federal government to take state-owned lands through
condemnation and could delegate that power to private entities. The Court
rejected Justice Gorsuch's view that the Eleventh Amendment independently
barred the federal courts from hearing the condemnation action because once the
States ceded that sovereignty as part of the plan of the Constitution (and, as
the Court noted, such actions had long been prosecuted in federal court), the
Eleventh Amendment could not be read to disable the federal courts from
adjudicating such actions. Contrary to the majority's assertion, this does not
bear on my approach at all. I do not contend that the Eleventh Amendment has
nothing to do with state sovereignty or dispute that its underlying [*19]motivation was state sovereignty. But to
determine the scope of state sovereign immunity, I turn to rules that define
sovereign immunity, not rules that pertain to Eleventh Amendment immunity. The
majority's approach is infamously used in the parable of the blind men and the
elephant, with the majority using a single body part (Eleventh Amendment
doctrine) to determine the entirety of the animal (state sovereign immunity
doctrine).[FN24]
Under
the majority's approach, a State could create an entity and vest it with
sovereign immunity regardless of its function or location—even if it operated
exclusively within another State's territory—so long as the creating State
announced its intent to make it a sovereign entity, directly controlled its
actions, and would be responsible for a judgment against it. In my view, none
of those factors is salient in determining whether a State-created entity has
the sovereign immunity of the State. That analysis turns on the function of the
entity. If it is the sovereign itself—meaning engaged in a function that is an
essential feature of existing as a government—it is immune. If not, it is not,
regardless of the intent, control or ultimate monetary liability of the State.
A commercial entity licensed or run by a sovereign could not escape liability
by explaining that the sovereign would have to pay a large judgment itself, or
that the sovereign controlled and directed the commercial entity's
actions [FN25].
As A. V. Dicey explained:
"'The King can do no
wrong' . . . means, in the first place, that by no proceeding known to the law
can the King be made personally responsible for any act done by him; if (to
give an absurd example) the Queen were herself to shoot the Premier through the
head, no court in England could take cognisance of the act. The maxim means, in
the second place, that no one can plead the orders of the Crown or indeed of
any superior officer in defence of any act not otherwise justifiable by
law" (A. V. Dicey, Introduction to the Study of the Law of the
Constitution 24 [5th ed. 1897]).
The Queen would not shoot
the Prime Minister through the head, nor would New Jersey establish a shooting
gallery in Times Square to murder tourists. My point, though, is that the test
used to determine whether a state-created entity is entitled to sovereign
immunity must account for the fanciful as well as the realistic, else it is not
a logically sound test.[FN26]
The
majority backtracks a little from its three-element test drawn from Eleventh
Amendment jurisprudence, saying that it "analyze[s] each consideration
with the fundamental goal of determining whether allowing a suit against the
foreign state-created entity to proceed in our courts would offend our sister
State's dignity" (majority op at 12). But if that, not the three-factor
test (with freedom to diverge based on unnamed "more specific subfactors that
might be relevant to some cases" [id.]), is the majority's test, it sounds
suspiciously like Hall's comity test, which was emphatically overturned
by Hyatt III. Moreover, what would not offend a sister State's dignity is
an amorphous question. The test I propose is clear and consistent with the
narrowness of the law of nations and common law understanding of the extent to
which actors other than the sovereign itself would be amenable to suit, even if
the sovereign, ultimately, paid the judgment.
V.
I appreciate
that the path forward from Hyatt III is unclear, that the U.S.
Supreme Court must ultimately provide the rule and rationale, and that history
provides room for disagreement. Very simply, though, I see nothing in history,
the law of nations, the common law, the U.S. Constitution or Hyatt
III that would suggest that New Jersey Transit can send buses into New
York, injure New York pedestrians (whether accidentally or intentionally), and
claim immunity from suit in New York.
RIVERA, J. (dissenting):
The
primary issue on appeal is whether New Jersey Transit (NJT) may invoke
sovereign immunity in plaintiffs' personal injury action filed in our state
courts. I conclude it may do so, in accordance with the reasoning and holding
of Franchise Tax Bd. of Cal. v Hyatt (587 US 230, 244-247 [2019]
[hereinafter Hyatt III]). Although we reach different conclusions on this
ultimate question, I agree with the majority that our analysis should consider
whether this suit against NJT in a New York court offends New Jersey's dignity
as a sovereign (see majority op at 2). However, unlike the majority, I do
not believe that the primary consideration is whether New Jersey has disavowed
"legal liability or ultimate financial responsibility" for a judgment
against NJT (majority op at 16). Instead, sovereign immunity bars private suits
against NJT in our courts because New Jersey: (1) regards NJT as an arm of the
State; (2) empowers NJT to perform an essential governmental function; and (3)
endows NJT with exclusive powers of the State in furtherance of the enabling
act's statutory purpose. The latter include eminent domain, police power, and
ownership of tax-exempt property in the State's name.
Notably,
New Jersey has consented to private suit against NJT for alleged injurious conduct
only in its own state courts. We are without constitutional power to ignore
this choice and have no authority to demand that NJT answer for its conduct in
New York. Doing so would be an act of superiority over New Jersey, in
derogation of interstate sovereign immunity and an affront to New Jersey's
dignity as a coequal, independent state.
I.
In Hyatt
III, the United States Supreme Court overruled its prior precedent and held
that the Constitution prohibits a state from being privately sued without its
consent in the courts of another state (587 US at 244-247). The Court clarified
that, "[a]lthough the Constitution assumes that the States retain their
sovereign immunity except as otherwise provided, it also fundamentally adjusts
the States' relationship with each other and curtails their ability, as
sovereigns, to decline to recognize each other's immunity" (id. at
237).
To
understand Hyatt III's implications for interstate sovereign immunity, we
must examine the legal principles the Supreme Court extracted from the
doctrine's history.[FN27] The
interstate sovereign immunity retained in the Constitution derives from
well-known and well-accepted common law and law of nations' doctrines
(id. at 237-239). Preratification, "[t]he common-law rule was that no
suit or action [could] be brought against the king, even in civil matters,
because no court [could] have jurisdiction over him. The law-of-nations rule
followed from the perfect equality and absolute independence of sovereigns
under that body of international law" (id. at 238-239 [citation and
internal quotation marks omitted]). And according to the "founding era's
foremost expert on the law of nations":
"[i]t does not . . .
belong to any foreign power to take cognisance of the administration of
[another] sovereign, to set himself up for a judge of his conduct, and to
oblige him to alter it. The sovereign is exemp[t] . . . from all [foreign]
jurisdiction" (id. at 239 [internal quotation marks and citations
omitted]).
To
illustrate the "founding generations" preratification understanding,
the Hyatt III Court highlighted Nathan v Virginia, where a
private individual sought to collect an alleged debt of the state of Virginia
by attaching certain [*20]Virginia-owned
property in Pennsylvania (id. at 240, citing 1 Dall 77, 78, 1 L Ed 44 [C P
Phila Cty 1781]). James Madison, as a Virginia delegate to the Confederation
Congress, objected along with several others, arguing that to allow process
issued by another state's court "would require Virginia to abandon its
Sovereignty by descending to answer before the Tribunal of another Power"
(id. at 239 [internal quotation marks and citation omitted]).
Pennsylvania's Attorney General similarly advocated for dismissal of the
action, arguing that it violated international law
"because all
sovereigns are in a state of equality and independence, exempt from each
other's jurisdiction. All jurisdiction implies superiority over the party, []
but there could be no superiority between the States, and thus no jurisdiction,
because the States were perfectly equal and entirely independent" (id. at
240 [citations and internal quotation marks omitted]).
Hyatt
III's historical discussion indicates that the animating principle of these
preratification notions of sovereign immunity was protection of a sovereign's
equal standing among its peers. The former colonies—having recently fought for
independence from the British monarchy—ensured that the newly formed
constitutional structure would preserve this coequal status. Therefore, the
resulting constitutional design reflects that equal standing among the states.
Because one sovereign cannot be forced to cede to another's demand without
relinquishing its independence, no sovereign can be "haled
involuntarily" before another State's courts (id. at 239). Conversely,
derogation of interstate sovereign immunity by one state offends the other
state's dignity as an independent sovereign possessing rights of no lesser or
greater significance than those of any other state in the Union.
II.
Plaintiffs
commenced the underlying personal injury suit against NJT and an NJT bus driver
in New York state court for damages incurred when a NJT bus struck plaintiff
spouse on a New York City street. If plaintiffs had named "New
Jersey" as a defendant, there would be no doubt that the State could
assert sovereign immunity from this suit on its own behalf. Plaintiffs maintain
that neither defendant constitutes the "State" and therefore may not
invoke immunity in its place. Since defendant bus driver is sued in her
capacity as an NJT employee, she may assert an immunity defense coextensive
with that of NJT (Karns v Shanahan, 879 F3d 504, 519 n 5 [3d Cir 2018],
citing Kentucky v Graham, 473 US 159, 167 [1985]). Accordingly, the
dispositive question is whether NJT—as a public entity charged with creating
and maintaining the State's public transportation system—may invoke sovereign
immunity in an action arising from NJT's performance of its governmental
functions.
To
resolve that question, we must determine whether NJT's relationship vis-Ã -vis
New Jersey and its political branches is of a kind that NJT may fairly be
called an arm of the State, meaning, whether within its sphere of authority, NJT
acts as the State in all but name. The State's intent that a public entity
should be regarded as an arm of the State informs the analysis and is entitled
to certain deference, but the State cannot expand the boundaries of its
sovereignty by pronouncement alone. Instead, a public entity is only an arm of
the State for sovereign immunity purposes if it actually serves in that
capacity. As I discuss, NJT is both recognized by New Jersey as an arm of the
state and de facto functions as such.
[*21]III.
The historically-grounded
reasoning of Hyatt III must be the lodestar of a proper analysis. The
protection of the states' coequal status embedded in the constitutional design
thus frames the relevant inquiry as to whether New Jersey controls NJT to such
extent and in such manner that a suit against NJT is the intended equivalent of
a suit against the State. The characteristics which establish that equivalence
are (1) performance of an essential governmental function as delineated by the
State; (2) the exercise of powers exclusive to the State; and (3) oversight by
the political branches that constrain the public entity's autonomy. NJT bears
all of these characteristics.
A.
New
Jersey enacted the Public Transportation Act of 1979, which established NJT,
because:
"[t]he provision of
efficient, coordinated, safe and responsive public transportation is an
essential public purpose which promotes mobility, serves the needs of the
transit dependent, fosters commerce, conserves limited energy resources,
protects the environment and promotes sound land use and the revitalization of
our urban centers" (NJSA § 27:25-2 [a]).
The State's role in this
venture is "a matter of public policy" for "it is the
responsibility of the State to establish and provide for the operation and improvement
of a coherent public transportation system in the most efficient and effective
manner" (id. § 27:25-2 [b]). "In furtherance of these findings
and declarations," the legislature created NJT "as an instrumentality
of the State exercising public and essential governmental functions," and
endowed it "with the necessary powers to accomplish the purposes and
goals" of the Act, "including the power to acquire and operate public
transportation assets" (id. § 27:25-2 [b], [e]). Thus, NJT was
established to develop and maintain an efficient statewide public
transportation system accessible "to the transit dependent" with its
attendant benefits to the State-at-large (id. § 27:25-2 [a]). Indeed, NJT
asserts that it is the largest public statewide transportation system in the
United States, "providing nearly 270 million passenger trips each
year" ("NJT Plans," New Jersey Transit,
https://www.njtransit.com/plans [accessed Oct. 1, 2024]; "About Us,"
New Jersey Transit, https://www.njtransit.com/our-agency/about-us [accessed
Sept. 29, 2024]). In furtherance of its accessibility goals, NJT also states
that it provides "publicly funded transit programs for people with
disabilities, senior citizens and people living in the state's rural areas who
have no other means of transportation" (id.).[FN28]
Thus,
because NJT's enabling Act expressly declares that NJT is "an
instrumentality of the State" (NJSA § 27:25-2 [b]) and assigns to NJT
the State's responsibility for New Jersey's public transportation
system, the legislature intended for NJT to be regarded as an arm of the State
in the constitutional sense.[FN29] The
fact that this is the [*22]position
advanced by New Jersey's Attorney General in other litigation (see e.g. Maison
v New Jersey Tr. Corp., 245 NJ 270, 245 A3d 536 [2021]) further confirms New
Jersey's view that NJT is its legal equivalent for sovereign immunity purposes.
B.
The
New Jersey Legislature has also endowed NJT with core powers of that State. NJT
may acquire property through eminent domain (NJSA §§ 27:25-13 [a], [c] [1]), a
recognized "attribute of sovereignty" that "appertains to every
independent government" (Mississippi & Rum River Boom Co. v Patterson,
98 US 403 [1878]). And NJT has its own security force with "general
authority, without limitation, to exercise police powers and duties . . . in
all criminal and traffic matters at all times throughout the State" (NJSA
§ 27:25-15.1 [a]), powers solely "vested in the States" (Natl. Fedn.
of Ind. Bus. v Sebelius, 567 US 519, 536 [2012]; see also Karns, 879 F3d
at 517 [noting NJT security force powers are "the official police powers
of the state"]). Further, NJT is exempt from State taxation and under the
Act, "any property owned by [NJT] or any wholly owned business corporation
or other entity shall be considered 'State' property" (NJSA § 27:25-16).
In
holding that NJT could invoke immunity against suit in federal court, the Third
Circuit observed that these powers and tax-exempt status are judicially
recognized as hallmarks of sovereignty (879 F3d at 517). And
although Karns involved Eleventh Amendment immunity, that is a
distinction without a difference when it comes to analyzing NJT's powers as
traditional exemplars of State sovereignty (see Alden v Maine, 527 US 706, 713
["The phrase ('Eleventh Amendment immunity') is convenient shorthand but
something of a misnomer, for the sovereign immunity of the States neither
derives from, nor is limited by, the terms of the Eleventh Amendment. Rather,
as the Constitution's structure, its history, and the authoritative
interpretations by this Court make clear, the States' immunity from suit is a
fundamental aspect of the sovereignty which the States enjoyed before the
ratification of the Constitution, and which they retain today (either literally
or by virtue of their admission into the Union upon an equal footing with the
other States) except as altered by the plan of the Convention or certain
constitutional Amendments."]). On that point, the Third Circuit's
comparison of NJT's statutory authority to powers reserved to sovereign States
is both instructive and compelling.
[*23]C.
New
Jersey's political branches wield significant control over NJT by way of
appointment and veto powers. NJT is situated within the New Jersey's Department
of Transportation, a principal department of the Executive Branch (NJSA §
27:25-4 [a]). Although NJT is statutorily "independent of any supervision
or control by the [Department] or by any body or officer thereof" (id.),
the political branches constrain NJT's power. The Governor appoints NJT's
entire 13-person governing Board (see NJSA § 27:25-4 [b]). Several are members
of the Executive Branch and the eight public members are appointed upon the
advice and consent of the New Jersey Senate—with one each appointed upon
recommendation of the President of the Senate and the Speaker of the General
Assembly and two upon the Governor's recommendation (id.). The Commissioner of
Transportation is an Executive Branch officer who serves as chair of the Board
with the power to review NJT's expenditures and budget (id. § 27:25-4
[d]). NJT is statutorily required to submit an extensive annual report to the
Governor and Legislature on topics including NJT's budget and operating
expenses, personnel, safety violations, and, as relevant here, detailed
accident data (id. § 27:25-20 [b]). NJT is also subject to audit at any
time by the State auditor—a legislative official—or their authorized
representative (id. § 27:25-20 [e]).[FN30] Furthermore,
the Governor has authority to veto any and all actions of the NJT board, and in
fact "[n]o action taken at such meeting by the board shall have force or
effect until approved by the Governor or until 10 days after such copy of the
minutes shall have been delivered" (id. § 27:25-4 [f]). The legislature
may also veto certain NJT proposed acquisitions by condemnation (id. §
27:25-13 [h]). Although NJT has the authority to sue and the capacity to be
sued, that pales in comparison to the political branches' extensive influence
over NJT's governing body and budgetary policies. "All of these facts
suggest that [NJT] is an instrumentality of the state, exercising limited
autonomy apart from it [, and] weigh[ ] in favor of immunity" (Karns, 879
F3d at 518).
It is
also significant that New Jersey has chosen to waive its immunity from suits
against NJT solely in the state of New Jersey. The New Jersey Tort Act provides
that every "public entity" in New Jersey is liable in tort "in
the same manner and to the same extent as a private individual under like circumstances"
(NJSA § 59:2-2[a] - [b]). New Jersey has thus chosen to permit plaintiffs and
others alleging injury by NJT to seek redress, but only in their own courts. We
cannot refuse to honor that choice by elevating the interests of our residents
in a New York forum over those of the State of New Jersey to decide whether and
when to permit such private suit.
For
the reasons I have discussed, in accordance with the reasoning and holding
of Hyatt III, I would hold that NJT is an arm of the state that may invoke
sovereign immunity from private suit in our state courts as it has done here.
IV.
The
majority "distill[s] from Hyatt III and other federal
cases" three factors to be considered when determining the applicability
of sovereign immunity and then proceeds to apply those factors to NJT in
support of its conclusion that NJT is not an arm of New Jersey (majority op at
11). The first and second factors are similar to those I have identified as
relevant to our analysis: "how the State defines the entity and its
functions" (id. at 12; supra at 5), and "whether the
State directs the entity's conduct such that the entity acts at the State's
behest" (majority op at 14; supra at 6). Notwithstanding the
majority's attempt to recast their "balancing test," the majority
erroneously undervalues both of the first two factors. As to the first, the
majority concludes the State's interest "leans toward according NJT
sovereign immunity" (majority op at 14). The second is even less
consequential because, the majority concludes, the State's power over NJT
"does not weigh heavily in either direction" (id. at 15).
However, these overlapping considerations support sovereignty for the reasons I
have discussed above (supra at 6-11).
The
majority's most significant mistake is its adoption as a third factor
"whether the entity's liability is the State's liability, such that a
judgment against the entity would be an affront to the State" (majority op
at 15), which the majority weighs against immunity because the State has
"disclaimed legal liability for judgments against NJT" (id. at
16). That last factor weighs heavily, and is often the deciding factor, in an
Eleventh Amendment analysis (see Regents of the Univ. of California v Doe, 519
US 425 [1997]; Hess v Port Auth. Trans-Hudson Corp., 513 US 30, 51 [1994]; but
see Karns, 879 F3d at 518). As the Supreme Court has explained, "the
States' solvency and dignity" are "the concerns . . . that underpin
the Eleventh Amendment" (Hess, 513 US at 52-53). But the State's solvency
is of [*24]little consequence here when we
are dealing with interstate sovereign immunity, and the inquiry at hand is
whether allowing plaintiffs' suit to proceed in New York state court alters New
Jersey's coequal status among the states, in contravention of the
constitutional design (see Hyatt III, 587 US at 246).
The
majority compounds its error by rendering this third factor dispositive.
According to the majority, one factor weighs on each side of the scale and
another has no effect at all on its analysis, thus, the majority could just as
easily have concluded that NJT is an arm of the State. Indeed, the majority
provides no rational basis—and I can see none—for holding that New Jersey's
lack of legal liability for a verdict against NJT tilts the scales and
outweighs the first and second factors—the State's intent in creating NJT and
its power over NJT's conduct. On its own terms, then, the majority's analysis
is illogical and its conclusion unjustifiable.[FN31]
Even
viewed through the majority's ill-selected Eleventh Amendment prism, the
majority's conclusion that NJT may not invoke immunity as an arm of New Jersey
is an outlier view. The Third Circuit has expressly abandoned "an
analytical framework [that] 'ascribe[s] primacy to the [state-treasury]
factor'" (Karns, 879 F3d at 513 [internal citation omitted]), and,
instead, "each of the factors is considered 'co-equal,' and 'on the same
terms'" (id.). Applying this "evolved approach,"
the Karns court concluded that, even though the state-treasury factor
did not favor immunity, NJT was nonetheless an arm of the State and entitled to
Eleventh Amendment immunity (id. at 516, 519). Other federal and state courts
have also found NJT to be an arm of the State (see, e.g., Davis v New Jersey
Tr., 2012 WL 3192716, *3 [NJ Super Ct App Div Aug. 8, 2012, No.
A-4901-10T1]; Dykman v NJT, 685 F Supp 79, 80 [SD NY
1988]; Williamson v NJT, 1987 US Dist LEXIS 115, *1-2 (SD NY Jan. 9,
1987); Brotherhood of Locomotive Engineers v NJT, 608 F Supp 1216, 1217-18
(SD NY 1985). And post-Hyatt III, the Commonwealth Court of Pennsylvania held
that NJT is an arm of New Jersey (Marshall v Southeastern Pennsylvania
Transportation Auth., 300 A3d 537, 543 n 8 and at 546 n 14 [Pa Commw Ct 2023]).
V.
The
Appellate Division held that NJT was an arm of the State under its departmental
precedent holding the same (206 AD3d 126, 128 [1st Dept 2021],
citing Fetahu v NJT, 197 AD3d 1065 [1st Dept 2021]). But the Appellate
Division refused to afford NJT immunity because, under that Court's reading of
New Jersey law, plaintiffs would have no forum to litigate their claim, an
intolerable result (id. at 129). I agree for the reasons stated by the
majority here that the Appellate Division's application of a forum non
conveniens analysis to reach its conclusion was error (majority op at 17).
The
remaining issue is whether there is any other legal basis to reject NJT's
sovereign immunity defense. Plaintiffs contend that, even if NJT may invoke
sovereign immunity, it implicitly waived that defense based on its dilatory
conduct below.[FN32] NJT
maintains that immunity is not waivable, but claims, in the alternative, that
it has not waived its defense. NJT's first argument is foreclosed by Henry
v New Jersey Tr. Corp., wherein we stated that "[t]he history and nature
of interstate sovereign immunity guide us to the conclusion that the doctrine
more closely aligns with jurisdiction over a party, rather than over all
subject matter concerning that party" and accordingly this defense can be
waived "based on litigation conduct" (39 NY3d 361, 372 [2023]).
Whether on the record before us NJT has waived immunity as a matter of law is a
close question.
In its
answer, NJT asserted, in conclusory language, that "Plaintiffs' recovery,
and/or claims in this litigation [ ] against Defendants is barred by lack of
jurisdiction over NJT," that "Plaintiffs' recovery should be barred
as this [*25]Court lacks
jurisdiction," and that "Defendants are immune from suit." But
NJT failed to move for dismissal on sovereign immunity grounds until July 2020,
over a year and a half after filing its answer in January 2018, over year after Hyatt
III was decided, and after the New Jersey statute of limitations expired
in February 2019. This conduct suggests the type of gamesmanship we frowned
upon in Henry (see 39 NY3d at 366). Moreover, between
commencement of plaintiffs' personal injury action and NJT's motion to dismiss,
three depositions were held, a discovery motion disputed, and nine stipulations
entered. NJT made no effort to avoid potentially unnecessary litigation and the
costs associated with a wasteful expenditure of party and judicial resources. Nevertheless,
NJT asserted immunity in its pleading, which we must construe liberally and
which preserved the defense (34-06 73, LLC v Seneca Ins. Co., 39 NY3d 44, 51 [2022]). And
although NJT's delay is troubling, it acted earlier than it did
in Henry where it raised sovereignty after litigating to a jury
verdict (39 NY3d at 361, 365). On the totality of this record, I conclude that
NJT's conduct does not constitute an implicit waiver of its sovereign immunity
defense.
VI.
New
Jersey regards NJT as an arm of the State in its exercise of the essential
governmental function to provide a statewide accessible public transportation
system, a function that is the sole responsibility of the State. The New Jersey
Legislature has endowed NJT with powers traditionally and exclusively exercised
by the State, and New Jersey's Legislature and Executive branch exercise
significant control over NJT's management, expenditures and budget. Therefore,
NJT is an arm of the State authorized to invoke interstate sovereign immunity.
The majority's contrary decision requires that New Jersey "abandon its
Sovereignty by descending to answer before the Tribunal of another Power"
(Nathan v Virginia, 1 Dall 77, n, 1 LEd 44 [C P Phila Cty 1781]). The
Constitution forbids that result, and I therefore dissent.
Order
affirmed, with costs, and certified question answered in the affirmative.
Opinion by Judge Singas. Judges Garcia, Cannataro, Troutman and Halligan
concur, Judge Halligan in a concurring opinion. Chief Judge Wilson concurs in
result in an opinion. Judge Rivera dissents in an opinion.
Decided
November 25, 2024
Footnotes
Footnote 1: The
Supreme Court has explained that the phrase "Eleventh Amendment
immunity" is a "misnomer" because "States' immunity from
suit is a fundamental aspect of the sovereignty which the States enjoyed before
the ratification of the Constitution" (Alden v Maine, 527 US 706, 713
[1999]; see Northern Ins. Co. of N. Y. v Chatham County, 547 US 189, 193
[2006]).
Footnote 2: The
concurrence's analysis eschewing the use of federal court arm-of-the-state
jurisprudence (see Wilson, Ch. J., concurring op at 24-34) rests on this
flawed premise.
Footnote 3: The
Court has cautioned, however, that a State's actual control over a
state-created entity is not necessarily dispositive, because "ultimate
control of every state-created entity resides with the State, for the State may
destroy or reshape any unit it creates" (Hess, 513 US at 47).
Footnote 4: The
Third Circuit previously considered NJT not to be an arm of New Jersey for
nearly three decades (see Fitchik v New Jersey Tr. Rail Operations, Inc.,
873 F2d 655 [3d Cir 1989]). Recently, however, the Third Circuit overruled that
precedent, in part, based on its view that the Supreme Court has shifted away
from emphasizing the state fisc in the context of state sovereign immunity in federal
court, therefore tipping the result of the Third Circuit's balancing test the
other way (Karns, 879 F3d at 518-519; but see Galette v NJ Transit, 2023
PA Super 46, 293 A3d 649 [2023], appeal granted 313 A3d 450 [Pa 2024]
[holding that NJT is not an arm of New Jersey in the interstate immunity
context]). While we of course respect the Third Circuit's analysis, we
"remain at liberty to answer" this question "in a manner that
may conflict with the determinations of courts in our [or other] federal
circuit[s]" (Sue/Perior Concrete & Paving, Inc. v Lewiston Golf Course
Corp., 24 NY3d 538, 551 [2014]).
Footnote 5: We
decline to adopt the concurrence's circular "core functions"
framework (Wilson, Ch. J., concurring op at 23 [an entity is entitled to
sovereign immunity if it performs functions that are "necessary for the
State to maintain its sovereign status and sustain itself as a
government"]), which pays lip service to, but is entirely unmoored
from Hyatt III. The concurrence also disregards that the U.S. Supreme
Court maintains original and exclusive jurisdiction over disputes between
States (see US Const, art III, § 2).
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]).
Footnote 8: Some
have recommended reviving this approach (see e.g. Puerto Rico Ports Auth. v
Federal Mar. Commn., 531 F3d 868, 881-884 [DC Cir 2008, Williams, J.,
concurring] [arguing for a return to the test that existed "in the days
before Mt. Healthy"]; Springboards to Educ., Inc. v McAllen Ind.
Sch. Dist., 62 F4th 174, 187-199 [5th Cir 2023, Oldham, J., concurring]
[same]). It rested on the "principle[] that when a government becomes a
partner in any trading company, it devests itself, so far as concerns the
transactions of that company, of its sovereign character, and takes that of a
private citizen" (Planters' Bank, 22 US at 907). Under this theory, the
State could not "identify itself with [a] corporation" created by yet
independent of the sovereign (id.), because at common law a corporate entity
was understood as "an artificial person, existing in contemplation of law,
and endowed with certain powers and franchises . . . considered as subsisting
in the corporation itself" (Trustees of Dartmouth College v Woodward, 4
Wheat [17 US] 518, 667 [1819, opinion of Story, J.]). The Supreme Court has not
indicated it agrees with these recommendations.
Footnote 9: The
dissent contends that a court should not consider whether the entity's
liability is the State's liability because this factor does not impact a
State's "coequal status among the states" (dissenting op at 12-13).
Although the Supreme Court has instructed that protection of the State fisc is
not the singular focus of state sovereign immunity (see Federal Maritime
Comm'n, 535 US at 765), a concern for state solvency plainly must be relevant
given that any significant impact on a State's finances will hinder its ability
to serve the basic needs of the polity. As the Supreme Court has explained,
"state sovereign immunity serves the important function of shielding state
treasuries and thus preserving 'the States' ability to govern in accordance
with the will of their citizens' " (id., quoting Alden, 527 US at
750-751).
Footnote 10: Congress's
treatment of foreign sovereigns does not implicate principles of federalism,
and thus the concurrence's reliance on the "commercial activity"
exception of the Foreign Sovereign Immunity Act of 1976 (28 USC § 1605) is
misplaced.
Footnote 11: The
extensive use of the distinction between commercial and public activities by
Congress and the Court in determining the scope of international sovereignty
helps explain why the concurrence's observation, based on Garcia v San
Antonio Metro. Tr. Auth. (469 US 528 [1985]) is
inapposite. Garcia overruled National League of Cities v
Usery (426 US 833 [1976]), a case that limited Congress' commerce power
over the States. In overruling National League of Cities, Garcia held
that state sovereignty was not a bar to federal legislation subjecting state
employees to the Fair Labor Standards Act (FLSA). Both cases concern the rules
to determine the balance between state and federal power as set out in the
Constitution—not the rules to determine questions of interstate sovereignty.
Conceptually, relying on those rules instead of rules concerning co-equal
sovereigns is the same mistake as made when relying on Eleventh Amendment rules
to determine the scope of interstate sovereignty (see Part III, infra).
(As a result of the Garcia decision, Congress amended the FLSA to
modify its application to public sector employees—which further illustrates
that the "vertical" separation-of-powers questions in that case are
inapposite here). It is also worth noting that similar distinctions are
routinely made in other areas of law. For example, our courts must determine
whether New York State government entities are acting in a
"proprietary" or "governmental" capacity to assess their
immunity from tort liability (see e.g. Connolly v. Long Island Power Auth., 30 NY3d 719 [2018]).
Although this New York doctrine does not inform the substance of interstate
sovereignty, it does undercut the concurrence's reliance
on Garcia outside of its specific context to support a more general
proposition that distinctions between governmental and commercial functions are
not workable. The concurrence's observation that the FSIA does not involve
federalism concerns, and reliance on it is therefore misplaced, assumes the
answer to the question posed here (Halligan, J. concurring op at 11, n 3).
Federalism altered some aspects of the sovereignty of States but left others
intact. The question here is whether a State-created entity engaged in a
commercial activity was clothed with the State's sovereignty before the
Constitution was adopted, and whether the Constitution altered that. To say
"federalism"—that the States are now part of the Union—does nothing
to illuminate the answer to that question. To the extent the States retained
sovereignty that was unaffected by the Constitution, the FSIA is directly
relevant, because as to that sovereignty the States are no different that
foreign nations. If the Constitution in some way augmented or restricted the
scope of State sovereign immunity applicable to commercial entities of their
creation, the FSIA remains relevant at least to disprove the majority's and
concurrence's statements that a distinction between governmental and
proprietary functions is not workable.
Footnote 12: When
the U.S. Constitution was ratified, and for more than a century thereafter,
transportation was conducted by private companies, whether stagecoaches,
railroads or ships (see Robert Jay Dilger, American Transportation Policy
5, 8-10 [1954]). Even early American roads, such as turnpikes, were operated by
private companies chartered by States (id. at 8; see Russell
Bourne, Americans on the Move: A History of Waterways, Railways, and Highways
27-30, 34). There was, at the time the U.S. Constitution was adopted, no
evidence to suggest that transportation across state lines was considered a
governmental function at all, much less a sovereign one (Bourne at 34). I do
not rely on the above history as imposing a limit on state sovereignty simply
because these facts existed at the time of the Founding, but rather as evidence
that, at the time of the Founding, it was understood that state governments
could function without operating private transportation companies.
Footnote 13: Other
than in result, there are only small differences between my approach and that
of the dissent. Both our analyses are informed by pre-ratification history, and
although the dissent mischaracterizes my approach as solely based on that
history, my approach is not so hidebound. As explained immediately above, the
current conception of state sovereignty is also informed by modern conceptions
of international law. The material difference between our approaches is that,
whereas the dissent looks to New Jersey law to inform the determination of the
reach of its state sovereignty, I disagree that an individual State's statutory
definition is relevant to determine the entity's immunity outside that State's
borders.
Footnote 14: Contrary
to the concurrence's claim, I fully accept Hyatt III's holding that
"the States no longer "maintain[] sovereign
immunity vis-Ã -vis each other in the same way that foreign nations
do" (Halligan, J. concurring op at 8 [quoting Hyatt III, 587 US at
236]). Many provisions in the Constitution, including the Commerce Clause, Full
Faith and Credit Clause and virtually all of the Constitutional provisions
organizing the federal government, constitute incursions on State sovereignty. But
this does not mean the law of nations is irrelevant. To the contrary,
the Hyatt III Court affirmed that state sovereignty is an attribute
of the law of nations and cited law-of-nations principles in its own analysis
(Hyatt III, 587 US 230, 239-240; see supra at 6). Those principles
are not the only factor in the analysis, as they do not account for the unique
structure of Constitution and the sovereignty States gave up in enacting it,
but they must be considered, and they should be considered in their modern
form. When the Constitution was enacted, there was no jus cogens norm
prohibiting slavery. Today there is, and that would restrict the States'
sovereignty to reinstitute slavery with or without the Constitution. Thus, the
concurrence's observation that the Court has "fixed" the meaning of
the Constitution's text in its interpretation of certain constitutional rights
(such as the Second Amendment in the Bruen line of cases) is off
point (Halligan, J. concurring op at 8). The Constitution has no power to fix
the scope of state sovereignty in time, and the States have no sovereign power
to violate jus cogens norms of international law today even if those
norms did not exist at the time of the Constitution's ratification.
Footnote 15: For
example, at the time of the Constitution's ratification, slavery and genocide
were not violations of customary international law. In Vattel's time,
sovereigns could support slavery or commit genocide within their own territory
and no other sovereign would have had the right to interfere. The international
prohibition of both was first expressed in conventions; today, both are
recognized as jus cogens norms of customary international law
(see Restatement [Third] of the Foreign Relations of the United States §
702; see also Silvia Scarpa, Slavery, Oxford Bibliographies in
International Law,
https://www.oxfordbibliographies.com/display/document/obo-9780199796953/obo-9780199796953-0097.xml
[last updated May 29, 2014] ["Prohibitions of slavery and the slave trade
in times of both peace and war are unanimously considered to be customary rules
of international law, and they have attained the level of peremptory norms (jus
cogens principles)"]; United Nations, The Global Fight for Justice:
How Genocide Prevention Became Law,
https://www.un.org/en/video/global-fight-justice-how-genocide-prevention-became-law
[last accessed Oct. 11, 2024] ["The International Court of Justice (ICJ)
has repeatedly stated that the Convention embodies principles that are part of
general customary international law. This means that whether or not States have
ratified the Genocide Convention, they are all bound as a matter of law by the
principle that genocide is a crime prohibited under international law"];
Reservations to the Convention on the Prevention and Punishment of the Crime of
Genocide, Advisory Opinion, 1951 I.C.J. 15, 23 [May 28] ["(T)he principles
underlying the (Genocide) Convention are principles which are recognized by
civilized nations as binding on States, even without any conventional
obligation"]). The Constitution is no more able to freeze the customary
law of sovereignty in time than it is able to do so for genocide or slavery.
Footnote 16: The
concurrence observes that the expansion of "traditional" functions of
State governments is inconsistent with my position that sovereignty is informed
by changes in international law, but it does so by conflating
"traditional" with "core." In 1600, the King of England
created the East India Company; several other European nations followed suit.
The East India Company is "traditional," in the sense that it existed
centuries ago, but—quite pertinently here—it was subject to suit for its
commercial activities but not for its governmental acts in Asia, where it acted
essentially as a sovereign (see Philip J. Stern, The English East
India Company and the Modern Corporation: Legacies, Lessons, and Limitations,
39 Seattle U L Rev 423, 432-33 [2016] ["the East India Company was subject
at various times to common law and equity courts, civil law courts, or the
prerogatives and obligations of the law of nations . . . (but) the East India
Company in Asia nonetheless continued to operate its own courts and establish
its own law"]; compare Nabob of the Carnatic v East India Company, 30
Eng. Rep. 521, 523 [1793] [Ch.] [dismissing action on sovereign immunity
grounds where the East India Company's challenged acts were in the nature of
treaty making] with Moodalay v Morton, 28 Eng. Rep. 1245, 1246 [1785]
[Ch.] [rejecting sovereign immunity where the East India Company's challenged
acts were commercial]). In short, all core functions are traditional, but not
all traditional functions are core.
Footnote 17: See,
e.g., Lake Country Estates, Inc. v Tahoe Regional Planning
Agency (440 US 391, 401 [1979] ("the Court has consistently refused
to construe the [Eleventh] Amendment to afford protection to political
subdivisions such as counties and municipalities, even though such entities
exercise a 'slice of state power'").
Footnote 18: Hess
v Port Auth. Trans-Hudson Corp. (513 US 30 [1994]) holds that the Eleventh
Amendment does not bar the federal courts from hearing claims against an entity
formed with federal approval pursuant to the Compact Clause, because in such
cases "the federal tribunal cannot be regarded as alien in this
cooperative, trigovernmental arrangement." That holding is unrelated to
any issue present here. In Regents of the Univ. of California v
Doe (519 US 425 [1997]), the Court answered the "narrow question . .
. [of] whether the fact that the Federal Government has agreed to indemnify a
state instrumentality against the costs of litigation, including adverse
judgments, divests the state agency of Eleventh Amendment immunity"
(id. at 426). The Court expressly declined to address whether the
University enjoyed the sovereign immunity of California (id. at 431-32).
Thus, the case says nothing about even the scope of Eleventh Amendment immunity,
much less the inherent sovereign immunity of state-created entities. Finally,
in Lake Country Estates, another Eleventh Amendment case involving an
entity created pursuant to the Compact Clause, "California and Nevada have
both filed briefs in this Court disclaiming any intent to confer immunity
on" the entity they had created with federal approval (440 US at 401).
Both Eleventh Amendment immunity and sovereign immunity are waivable,
so Lake Country tells us nothing about the scope of New Jersey
Transit's claim to immunity.
Footnote 19: By
referring to the Supreme Court's original jurisdiction over disputes between
States (majority op at 14, n 5), the majority may be suggesting that New York
could bring a parens patriae suit against New Jersey directly in the
U.S. Supreme Court under some unspecified circumstance and under some
unspecified theory, that somehow would prevent New Jersey from either setting
up a shooting gallery in Times Square or negligently running over New York
pedestrians on New York City streets. The majority's suggestion is novel in its
vagueness and in historical practice. The Court's original jurisdiction is
commonly used in cases of boundary disputes or interstate water rights (see
e.g. Kansas v Missouri, 322 US 213, 654 [1944]; New Jersey v New York, 283
US 336 [1931]). It is difficult to envision a scenario in which New York could
bring suit against New Jersey under the Supreme Court's original jurisdiction
to resolve a citizen's ordinary tort claim (whether intentional or negligent),
or even a collection of them. Were such a claim viable, in asking the source of
the rule of decision when weighing the sovereignty interests of one state
against the sovereignty (or other) interest of the other, it is worth noting
that, in exercising its original jurisdiction, the Court has applied principles
of international law to resolve interstate disputes (see e.g. Louisiana v
Mississippi, 202 US 1, 49-50 [1906] [applying the "thalweg" doctrine
of international law to a boundary dispute]). Unlike the Eleventh Amendment
jurisprudence on which the majority relies, such cases, which involve disputes
between co-equal States, suggest that my approach, not the majority's, is correct.
As to the concurrence's terse observation that New Jersey's operating a
shooting gallery in Times Square "would be plainly unconstitutional"
(Halligan, J. concurring op at 12), it is not clear what part of the
Constitution would support that claim. It is also unclear why a suit to enjoin
New Jersey from running a negligently constructed shooting gallery in Times
Square would not offend New Jersey's sovereignty but a suit to enjoin it from
driving buses negligently would. Perhaps the analysis rests on the difference
between injunctive and monetary relief, though the citations to Ex
Parte Young and the Woolhandler article do not illuminate the point. The
former suggests that the Eleventh Amendment would not bar a suit in federal
court against the bus driver to stop driving negligently (or perhaps against
the New Jersey Transit official responsible for hiring drivers, to enjoin that
person from hiring negligent drivers), and latter suggests that before the
Eleventh Amendment, the Constitution would have allowed a federal damage suit
against the driver, though not after. In any event, the shooting gallery might
be immensely profitable, and shutting it down via an injunction might have a
very substantial impact on New Jersey's fisc. My view is much simpler: unless a
New York lawsuit would impair the core governmental functions of New Jersey,
what happens in New York stays in New York.
Footnote 20: The
concurrence critiques my approach for offering a "skimpy"
"minimalist" view of a State's core functions (Halligan, J.
concurring op at 11). Again, the question here is not whether a function is
socially useful; the question is whether a State is immune for that function
when a commercial actor of its creation and under its supervision inflicts
injuries upon persons outside its own borders. My answer may or may not
"enhance accountability for harms inflicted by bad actors," but it
does not cramp the ability of a State to "provid[e] for the welfare of its
citizens" (Halligan, J. concurring op at 11)—except in the sense that it
might stop a State from pillaging a neighbor. It establishes a limiting
principle to distinguish between those functions that are inherently "State-like,"
and those functions that are not (i.e., when a State is acting no differently
than a private party might). Distinguishing by function also offers the benefit
of simplicity, in contrast to the majority's absence of a test—refraining from
choosing among the several different multi-factored tests offered by the
federal appellate courts on the ground that they all lead to the same result in
this case.
Footnote 21: For
two reasons, I disagree with the concurrence that drawing this distinction with
respect to another State's policies is "fraught" (Halligan, J.
concurring op at 10). First, New York is not drawing the distinction with
respect to another State's policies—the U.S. Constitution is, and the test will
ultimately be determined by the Supreme Court, not any State court. We just
happen to be the ones with this case at this moment, but even we are not trying
to determine the question based on any New York law, but rather on the U.S.
Constitution, about which we are required to make interim judgments from time
to time.
Second, the concurrence again cites Garcia, this time for the proposition
that distinguishing between another State's governmental and proprietary
functions is a matter be left to the people "acting not through the courts
but through their elected legislative representatives" (Halligan, J.
concurring op at 10). However, although New Yorkers and New Jerseyans are
represented in Congress (and through their representatives can
decide, apropos of Garcia, whether they want state employees to
be subjected to federal labor laws), New Yorkers are not represented in New
Jersey's legislature. With respect to New Jersey Transit's operation within New
York borders, New Yorkers have no power to "determine. . . what services
and functions the public welfares requires"
(id., quoting Garcia, 460 US at 546 [internal quotation marks
omitted]). The dissent makes the same mistake (see dissenting op at 7, n 2
["(A) judge is not in a better position than a duly-elected legislature to
choose for its population what are its government's core functions"]). The
New Jersey legislature may have the power to determine what functions are
"essential" and thereby immune within New Jersey's borders
(dissenting op at 7), but when New Jersey inflicts injuries within the
territory of another sovereign, it cannot be the case that New Jersey can
decide which of its acts are immune. The dissent would not give New Jersey the
final say, but rather, would have the judiciary determine "whether that
state has sufficient control over a public entity" such that it is an arm
of the State (dissenting op at 7, n 2). I agree with the dissent that the
judiciary—ultimately the U.S. Supreme Court—must determine whether an entity
like New Jersey Transit benefits from the State's sovereign immunity, but I
disagree that the State's self-described statutory "control" over the
entity should be relevant to that determination.
Footnote 22: The
disagreement between the majority and dissenting opinions as to whether the
impact on a State's fisc affects the determination of the scope of sovereign
immunity is better resolved by my approach (compare majority op at
15-16 with dissenting op at 2). The question, as I see it, is not
whether or how much a State's fisc is affected, but the nature of function the
foreign state seeks to adjudicate. If State A would impair State B's fisc by
rendering a decision that interferes with State B's core governmental functions
(as in Hyatt II), State B's sovereignty acts to bar that suit. But if, as
in this case, State A's adjudication of an injury caused within the borders of
State A by an entity created by State B would impair State B's fisc through a
judgment against State B's injury-causing entity, State B's sovereignty would
not bar that suit. In the first example, State B cannot avoid an adjudicatory
effect on its fisc without curtailing a core governmental function (taxation of
its residents, in Hyatt III); in the second, State B can avoid an
adjudicatory effect on its fisc by curtailing its operations within State A's
borders. Or, more sensibly, it can account for the cost of foreign tort judgments
in the business plan for its extraterritorial commercial operations.
Footnote 23: The
concurrence claims that Hyatt III tore "down the wall that had
separated Eleventh Amendment immunity from interstate immunity" and
"suggest[ed] that the same doctrinal inquiry may apply to both strands of
immunity" (Halligan, J. concurring op at 5). The support for the
concurrence's contention appears to be the section in the Hyatt III opinion
that rejected Hall's reading of history that inferred from "the lack
of an express sovereign immunity granted to the States and from the Tenth
Amendment that the States retained the power in their own courts to deny
immunity to other States" (Hyatt III, 587 US 237; Halligan, J. concurring
op at 6). I fully accept Hyatt III's proposition
that Hall misread the historical record on this point. I also accept
that there may be overlap in the historical materials to which courts turn in interpreting
the Eleventh Amendment and the sources to which Hyatt III directs.
But it simply does not follow (and is a misreading of Hyatt III)
that Hyatt III "reject[ed] [the] historical and analytical
distinction between interstate and Eleventh Amendment immunity" or in any
way implied the two inquiries are indistinguishable (Halligan, J. concurring op
at 5-6). It is not an "ahistorical literalism" to say that the
Eleventh Amendment is not an immunity: The Eleventh Amendment is an Amendment.
The Amendment affirmed and gave constitutional force to aspects of the
preexisting immunity of the States, but it is not itself that immunity, and it
is a mistake to treat "the written text of the Amendment, and the
unwritten doctrines of state sovereign immunity, as one and the same"
(William Baude & Steven E. Sachs, The Misunderstood Eleventh
Amendment, 169 U Pa L Rev. 609, 611 [2021]). The true ahistorical
literalism is the concurrence's assumption that there is "virtue" in
"ensuring that a non-state entity will be amenable to suit in both federal
and state court" (Halligan, J. concurring op at 5). Again, because
Eleventh Amendment "immunity" is not an immunity but rather a
disability imposed on federal courts, there is no reason the two doctrines
should be aligned, and it is axiomatic that the federal courts are courts of
limited jurisdiction, whereas state courts are courts of general jurisdiction,
able to hear many cases that federal courts cannot hear. It is not an anomaly
for an entity to have no immunity from suit in one jurisdiction and yet be
protected from suit in another because the courts of that jurisdiction have
been disabled from hearing such suits; rather, the anomaly is to treat New
Jersey's relation to New York's courts as equivalent to New Jersey's relation
to the federal judicial power in the context of the constitutional design. The
underlying action in Hyatt III, like the action at issue here,
"involved no federal power at all" (Baude & Sachs at
621).
Footnote 24: There
is a slight difference: all the observed elephant parts were subsets of the
elephant. Although Eleventh Amendment "immunity" is an intersecting
set with, not a subset of, state sovereign immunity, that distinction does not
matter for the purpose of explaining the faults in majority's approach. Indeed,
because one is not a subset of the other, it would be as if one of the blind
men touched not just a part of the elephant but something else as well.
Footnote 25: See,
e.g. Farnell v Bowman (12 App. Cas. 643, 649 [1887] ["(T)he local
Governments in the Colonies, as pioneers of improvements, are frequently
obliged to embark in undertakings which in other countries are left to private
enterprise, such, for instance, as the construction of rail ways, canals and
other works for the construction of which it is necessary to employ many
inferior officers and workmen. If, therefore, the maxim that 'the king can do
no wrong' were applied to Colonial Governments in the way now contended for by
the appellants, it would work much greater hardship than it does in
England"]).
Footnote 26: I
disagree with my concurring colleague's view that scenarios that are unlikely
to come to pass are not relevant to test a rule. As one can see, the eminent
British scholar A.V. Dicey subscribes to my view. More to the point,
though, Hyatt III changed the prevailing law on sovereign immunity,
and the question is how to formulate a rule that has a sound theoretical
underpinning and does not wreak havoc in the real world. A rule that a
state-owned entity is immune from damage cause in another State—no matter how
severe or how negligent (let's presume that a State would not intentionally
cause harm in another State)—would give States the incentive to enter the
commercial arena more broadly than simply by owning transportation companies.
Perhaps Michigan should purchase an automobile company and maintain complete
immunity from automobile defect lawsuits, or require them to be brought only in
Michigan courts. In the real world, we deal with these sorts of issues
regularly, because many foreign sovereigns own commercial entities and, as
described briefly herein, in the real world we do not consider them immune from
suit in our courts for those sorts of activities (see supra at 9-11).
Footnote 27: Chief
Judge Wilson's concurrence proposes more broadly to look to the common law and
to customary international law, "as Hyatt III directs"
(Wilson, Ch. J. concurring op at 9). Hyatt III, however, does not demand
any such inquiry. In determining the bounds of interstate sovereign immunity
under the Federal Constitution, we are bound not by the Supreme Court's
historical analysis or even by its historical method, but only by its
statements of law. The statements relevant here were relatively
narrow. Hyatt III does not command that states' immunity today
encompasses precisely what a historian or a judge might think was conferred by
the common law and the law of nations before ratification, as modified by the
Constitution. Rather, that case teaches that "States retained immunity
from private suits" before ratification, "both in their own courts
and in other courts" (Hyatt III, 587 US at 249). Hyatt
III leaves open whether other common-law and law-of-nations principles
were among those "shared by the States that ratified the
Constitution" (id. at 236). Until the Supreme Court instructs that
our Constitution requires otherwise, I would refrain from speculating about the
contemporary significance of preratification doctrines.
Footnote 28: Chief
Judge Wilson's concurrence fails to explain why accessible public
transportation is not a "core function" under its test (Wilson, Ch.
J. concurring op at 16). Although I do not adopt Chief Judge Wilson's core
functions test, in my view, it fails on its own terms here. It appears that the
core function test is fundamentally normative. But a judge is not in a better
position than a duly-elected legislature to choose for its population what are
its government's core functions. To illustrate the difference between the Chief
Judge's and my positions, in my view, a state can determine its essential
functions. It is then the judiciary's role to determine whether that state has
sufficient control over a public entity that exercises its governmental
functions such that the entity has structurally become an arm of the state.
Footnote 29: Chief
Judge Wilson's concurrence posits that my approach "looks to New Jersey
law to inform the determination of the reach of its state sovereignty"
(Wilson, Ch. J. concurring op at 11 n 3). To clarify, as I have explained
above, "The State's intent that a public entity should be regarded as an
arm of the State informs the analysis and is entitled to certain deference, but
the State cannot expand the boundaries of its sovereignty by pronouncement
alone" (supra at 5). Thus, the Chief Judge and I agree that a state
cannot unilaterally cloak an entity with the protection of sovereign immunity.
In my view, structurally, the entity must actually be an arm of the state, as
evidenced by my analysis of multiple factors here.
Footnote 30: The
New Jersey State auditor "is a constitutional officer appointed by the
Legislature," and the Office of the State Auditor is located within New
Jersey's legislative branch (Office of the State Auditor, New Jersey
Legislature, https://www.njleg.state.nj.us/audit-reports [accessed Oct. 1,
2024]).
Footnote 31: Judge
Halligan's concurrence argues that, in a state sovereign immunity analysis,
"concern for state solvency plainly must be relevant given that any
significant impact on a State's finances will hinder its ability to serve the
basic needs of the polity" (Halligan, J. concurring op at 5 n 2). But this
has no limiting principle. Any damages that the State must pay could interfere
with the State's ability to pay for other services. After all, a State has
budgetary constraints. Thus, under the concurrence's view, when the state is
liable for judgments against a public entity, there is always an intrusion on
state sovereignty, making this in practice a one-step test.
Footnote 32: Plaintiffs'
claim that the New Jersey Tort Claims Act is an express waiver of immunity is
wrong on the merits. That statute applies to claims filed in New Jersey's state
courts and does not limit NJT's interstate sovereign immunity defense.