The opinion
J-S37005-22
2023 PA SUPER 46
CEDRIC GALETTE : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
NJ TRANSIT AND JULIE E. MCCREY :
:
: No. 2210 EDA 2021
APPEAL OF: NJ TRANSIT :
Appeal from the Order Entered September 27, 2021
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): 2008000610
BEFORE: BOWES, J., LAZARUS, J., and OLSON, J.
OPINION BY BOWES, J.: FILED MARCH 21, 2023
New Jersey Transit Corporation (“NJ Transit”) appeals the
September 27, 2021 denial of its motion to dismiss the negligence claims of
Cedric Galette pursuant to the doctrine of sovereign immunity. We affirm.
This controversy stems from an August 9, 2018 incident wherein a
collision occurred between a bus owned and operated by NJ Transit and the
personal vehicle of Julie McCrey in Philadelphia, Pennsylvania. Mr. Galette
was a passenger in Ms. McCrey’s vehicle and suffered various physical injuries
as a result of the collision. He timely commenced this civil action by filing a
praecipe for a writ of summons on August 7, 2020, and, ultimately, served
both Ms. McCrey and NJ Transit. Thereafter, Mr. Galette filed a complaint
containing claims sounding in negligence against both Ms. McCrey and NJ
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Transit.1 NJ Transit filed an answer with a new matter alleging, inter alia, that
it was an “arm” of the State of New Jersey and that Mr. Galette’s claims
against it were barred by the doctrine of sovereign immunity. See Answer
and New Matter, 6/15/21, at ¶ 28 (“NJ Transit and its subsidiary, NJ Transit
Bus Operations, Inc., are arms of the State of New Jersey and are protected
by the [s]tate[-]afforded governmental and sovereign immunities and, as
such, [Mr. Galette’s c]omplaint is barred and must be dismissed.”).
Thereafter, NJ Transit filed a motion to dismiss reiterating this particular
claim.2 Mr. Galette filed a response opposing NJ Transit’s arguments.
On September 27, 2021, the trial court denied NJ Transit’s motion to
dismiss. On October 25, 2021, NJ Transit filed a timely notice of appeal to
this Court. The trial court did not direct NJ Transit to file a concise statement
of errors pursuant to Pa.R.A.P. 1925(b) and none was filed. Nonetheless, the
trial court submitted a Rule 1925(a) opinion expressing its belief that NJ
Transit’s appeal was improper and interlocutory pursuant to Pa.R.A.P. 311(b)
(requiring a party to take certain actions to take an immediate appeal from
an order sustaining venue, or personal or in rem jurisdiction). NJ Transit
submits that the order was collateral and immediately appealable.
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1 Although Ms. McCrey is listed as an appellee in this proceeding, she has not
participated in this matter. Accordingly, we will not discuss her further.
2 It is well-established that “a defense of governmental immunity is an
absolute defense and is non-waivable,” thus, “it may be raised at any time[.]”
Snead v. Society for Prevention of Cruelty to Animals of Pennsylvania,
929 A.2d 1169, 1178 n.10 (Pa.Super. 2007).
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NJ Transit has raised the following claims for our consideration:
1. Is the order denying NJ Transit’s motion to dismiss on its
defense of state sovereign immunity an appealable collateral
order?
2. Did the trial court err, as a matter of law, in denying NJ
Transit’s motion to dismiss for lack of jurisdiction where NJ
Transit, a foreign state entity, did not provide consent to be
sued in another state and rightfully asserted its state sovereign
immunity protections under the United States Constitution?
NJ Transit’s brief at 4 (cleaned up; issues reordered for ease of disposition).
We begin our analysis by assessing whether the trial court’s
September 27, 2021 order is an appealable, collateral order pursuant to
Pennsylvania Rule of Appellate Procedure 313. The appealability of an order
pursuant to the collateral order doctrine is a question of law, over which our
standard of review is de novo and our scope of review is plenary. See Brooks
v. Ewing Cole, Inc., 259 A.3d 359, 365 (Pa. 2021).
Rule 313 provides that “[a]n appeal may be taken as of right from a
collateral order of a trial court or other government unit.” Pa.R.A.P. 313(a).
Thus, the collateral order doctrine is a “specialized, practical application of the
general rule that only final orders are appealable as of right.” Price v.
Simakas Co., Inc., 133 A.3d 751, 755 (Pa.Super. 2016). An order is
considered “final and appealable” under the collateral order doctrine if: (1) it
is separable from and collateral to the main cause of action; (2) the right
involved is too important to be denied review; and (3) the question presented
is such that if review is postponed until final judgment in the case, the claimed
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right will be irreparably lost. See Brooks, supra at 370; Pa.R.A.P. 313(b)
(same). If an order satisfies this test, then “an appellate court may exercise
jurisdiction even though the order is not final. If the test is not met, however,
and in the absence of another exception to the final order rule, there is no
jurisdiction to consider an appeal of such an order.” Brooks, supra at 370.
In Brooks, our Supreme Court addressed whether a decision denying a
governmental party’s assertion of the sovereign immunity defense meets the
collateral order doctrine. Therein, the High Court concluded that a claim of
sovereign immunity is: (1) “separable” from civil claims of negligence since it
presents a “purely legal question” that can be resolved without “an
examination of the merits of [the plaintiff’s] negligence claims;” (2) “is too
important to evade review before final judgment;” and (3) “irreparably lost if
appellate review of an adverse decision on sovereign immunity is postponed
until after final judgment.” Id. at 371-73. Accordingly, it found that an order
denying a party’s petition for relief pursuant to the sovereign immunity
doctrine was a collateral order that was immediately appealable as of right.
Id. at 373 (“Subjecting a governmental entity, which claims it is immune, to
the legal process undermines the purposes of sovereign immunity.”).
Pursuant to Brooks, we find that the September 27, 2021 order denying
NJ Transit’s motion to dismiss is a collateral order that was immediately
appealable as of right. Accordingly, our jurisdiction over this appeal is proper
pursuant to Rule 313. Thus, we proceed to the merits.
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In its substantive claim for relief, NJ Transit asserts the trial court erred
in declining to dismiss based upon sovereign immunity. See Appellant’s brief
at 9 (“[NJ Transit] is an arm of the State of New Jersey who was hauled into
a foreign [s]tate court without its consent.”). Our standard of review is de
novo, and our scope of review is plenary. See Goldman v. Southeastern
Pennsylvania Transp. Authority, 57 A.3d 1154, 1170 (Pa. 2012).
Sovereign immunity is a venerable legal doctrine that has its origins in
the old adage of the English common law that “the Crown could not be sued
without consent in its own courts.” Alden v. Maine, 527 U.S. 706, 715
(1999). After examining the relevant history and case law, the United States
Supreme Court has concluded that this general legal principle was “universal”
in terms of its recognition at the time that the United States Constitution was
“drafted and ratified.” Id. at 716. Specifically, the Court has recognized that
the historical circumstances of the passage of the Eleventh Amendment clearly
evince an intent “to preserve the States' traditional immunity from private
suits.” See id. at 724; see also U.S. CONST., Amend XI (“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.”).
Specifically, “[t]he Eleventh Amendment confirmed that the [United States]
Constitution was not meant to raise up any suits against the States that were
anomalous and unheard of when the Constitution was adopted.” Franchise
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Tax Board of California v. Hyatt, 139 S.Ct. 1485, 1496 (2019) (cleaned
up). However, the Court has also emphasized that “the bare text of the
Amendment is not an exhaustive description of the States’ constitutional
immunity from suit.” Alden, supra at 736.
Sovereign immunity often arises in the context of interstate lawsuits.
In the landmark ruling of Nevada v. Hall, 440 U.S. 410 (1979), the High
Court held that the question of “any one State’s immunity from suit in the
courts of another State” was “a matter of comity.” Thus, it was not
automatically incumbent upon one State to recognize the sovereign immunity
of another State. See also Flamer v. New Jersey Transit Bus Operations,
Inc., 607 A.2d 260, 262 (Pa.Super. 1992) (citing Hall, supra at 425)
(“[W]hether one [S]tate is required to accord sovereign immunity in its courts
to another [S]tate is purely a question of comity and is not a constitutional
mandate.”).
In Hyatt, the Court revisited and explicitly overruled Hall:
Interstate sovereign immunity is . . . integral to the structure of
the Constitution. Like a dispute over borders or water rights, a
State’s assertion of compulsory judicial process over another
State involves a direct conflict between sovereigns. The
Constitution implicitly strips States of any power they once had to
refuse each other sovereign immunity, just as it denies them the
power to resolve border disputes by political means. Interstate
immunity, in other words, is implied as an essential component of
federalism.
....
[Hall] is irreconcilable with our constitutional structure and with
the historical evidence showing a widespread preratification
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understanding that States retained immunity from private suits,
both in their courts and in other courts. We therefore overrule
that decision.
Hyatt, supra at 1497-99. Thus, Hall no longer animates the contours of
sovereign immunity and “States retain their sovereign immunity from private
suits brought in the courts of other States.”3 Id. at 1492.
Although the State of New Jersey is not directly named as a defendant
in this matter, it is well-established that sovereign immunity extends to
“entities which are agents or instrumentalities of the [S]tate such that a suit
brought against them would be, for all practical purposes, a suit against the
[S]tate itself.” Goldman, supra at 1171. NJ Transit maintains it is an
instrumentality of the State of New Jersey. See Appellant’s brief at 10-14.
At a basic level, the determination of whether a particular entity qualifies
as an alter ego of a State for the purposes of sovereign immunity is a question
of federal law that concomitantly relies upon a searching examination of state
law provisions. See Goldman, supra at 1173. Interpreting the relevant
precedents of the United States Supreme Court, the Pennsylvania Supreme
Court has distilled this inquiry into six factors of “equal importance,” namely:
(1) the legal classification and description of the entity within the
governmental structure of the State, both statutorily and under its caselaw;
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3 The holding in Franchise Tax Board of California v. Hyatt, 139 S.Ct.
1485 (2019) did not include any discussion of the determinative issue in the
instant appeal, i.e., whether a particular entity qualifies as an instrumentality
of a State for the purposes of sovereign immunity.
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(2) the degree of control the State exercises over the entity; (3) the extent to
which the entity may independently raise revenue; (4) the extent to which the
State provides funding to the entity; (5) whether the monetary obligations of
the entity are binding upon the State; and (6) whether the core function of
the entity is normally performed by the State. See id. at 1179.
Rather than discuss Pennsylvania law, however, NJ Transit has relied
entirely upon the jurisprudence of the U.S. Court of Appeals for the Third
Circuit, which has previously concluded that NJ Transit qualifies as an
instrumentality of the State of New Jersey for the purposes of sovereign
immunity under its own three-part test.4 See Karns v. Shanahan, 879 F.3d
504, 513 (3d Cir. 2018). It is well-established that the holdings of the Third
Circuit are not binding upon this Court, even in the context of a question of
federal law.5 See Werner v. Plater-Zyberk, 799 A.2d 776, 782 (Pa.Super.
2002) (“[A]bsent a United States Supreme Court pronouncement, the
decisions of federal courts are not binding on Pennsylvania state courts, even
when a federal question is involved.”). Rather, such decisions have only
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4 Specifically, the Third Circuit examines the following factors in determining
whether an entity qualifies as an alter ego of state government: “(1) whether
the payment of the judgment would come from the state; (2) what status the
entity has under state law; and (3) what degree of autonomy the entity has.”
Karns v. Shanahan, 879 F.3d 504, 513 (3d Cir. 2018).
5 Our Supreme Court has rejected identical attempts to render Third Circuit
jurisprudence controlling in this context. See Goldman v. Southeastern
Pennsylvania Transp. Authority, 57 A.3d 1154, 1169 n.12 (Pa. 2012).
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persuasive value. See Chiropractic Nutritional Associates, Inc. v.
Empire Blue Cross and Blue Shield, 669 A.2d 975, 980 (Pa.Super. 1995).
NJ Transit is mistaken to the extent it suggests Karns or other holdings from
the Third Circuit controls the result here. Nonetheless, Karn does offer
significant clarification as to the issues at play and we considered it for its
proper persuasive value.
The first element in Pennsylvania’s six-part test entails an examination
of NJ Transit’s status under New Jersey law, which clearly evinces support for
the conclusion that it should be considered an instrumentality of the State of
New Jersey. See N.J.S.A. § 27:25-4 (“[NJ Transit] is hereby constituted as
an instrumentality of the State exercising public and essential governmental
functions, and the exercise by [NJ Transit] of the powers conferred by this act
shall be deemed and held to be an essential governmental function of the
State.”). Similarly, the second factor regarding relative autonomy is also
supportive of a finding that NJ Transit is an alter ego of the State’s
government. See Karns, supra at 518 (reviewing New Jersey statutes to
document the “operational constraints” placed upon NJ Transit by the state
government, which controls the appointment of its governing board, reviews
and audits its expenditures, and possesses veto power over actions taken by
its board and certain acquisitions). Finally, the sixth factor also supports the
same conclusion, as NJ Transit’s activities are explicitly identified as an
“essential governmental function” of New Jersey. See N.J.S.A. § 27:25-4.
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By contrast, however, the remaining three factors augur in favor of the
opposite conclusion. Specifically, NJ Transit is independently empowered to
raise revenue through several different avenues. See N.J.S.A. § 27:25-5(k),
(n)-(o) (providing NJ Transit may generate revenue through the disposition of
“real and personal property,” by setting and collecting fares, rentals, fees, and
other charges, and/or by depositing corporate revenues in interest-bearing
accounts). Moreover, NJ Transit is funded from a “combination of federal,
state, and local funds,” such that “it is not entirely reliant on state funds[.]”
Karns, supra at 516. Finally, New Jersey law provides that “[n]o debt or
liability of the corporation shall be deemed or construed to create or constitute
a debt, liability, or a loan or pledge of the credit of the State.” N.J.S.A.
§ 27:25-17. Accordingly, “the [S]tate is under no legal or other obligation to
pay NJ Transit’s debts or to reimburse NJ Transit for any judgments that it
pays.” Karns, supra at 516. Thus, the third, fourth, and fifth factors do not
support NJ Transit’s alleged status as an instrumentality of New Jersey.
Where, as here, the six-factor test is not dispositive, we must reach a
conclusion by inquiring as to whether allowing NJ Transit to be sued in this
particular manner would “thwart the two principal purposes of the Eleventh
Amendment,” namely, “the protection of [New Jersey’s] dignity as a sovereign
[S]tate and the protection of [New Jersey’s treasury] against involuntary
depletion from suits brought by private persons.” Goldman, supra at 1181.
In this context, we are “mindful” that “state dignity is the paramount purpose
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of the Eleventh Amendment.” Id. at 1182 (citing Federal Maritime Comm’n
v. South Carolina State Ports Authority, 535 U.S. 743, 769 (2002)).
Goldman is highly instructive on the merits of these related points of
inquiry. Therein, the Pennsylvania Supreme Court considered whether it
would offend the dignity or the finances of the Commonwealth to permit the
Southeastern Pennsylvania Transportation Authority (“SEPTA”) to be sued in
a Pennsylvania state court pursuant to the Federal Employees Liability Act
(“FELA”).6 Ultimately, the Court found a lawsuit naming SEPTA as a defendant
would not offend Pennsylvania’s sovereign dignity, reasoning as follows:
In such a suit, the Commonwealth is not a named defendant, as
SEPTA has been designated by the legislature of the
Commonwealth as a distinct legal entity with the power to sue and
be sued in its own capacity. Thus, it is not any purported negligent
act of the Commonwealth at issue in a suit, but, rather, the alleged
negligent act of SEPTA itself. Neither can the Commonwealth be
joined as a defendant in any action against SEPTA since the
Commonwealth has specifically repudiated any legal responsibility
for obligations incurred by SEPTA; hence, having explicitly
disclaimed all responsibility for any financial liability incurred by
SEPTA, it may not be joined in a suit against SEPTA under our
rules of civil procedure. See Pa.R.C.P. 1076.1, 2252(a)(1), (4)
(allowing joinder by plaintiff or defendant in a civil action of only
those parties which are solely liable to the plaintiff, liable to the
joining party, or jointly or severally liable with the joining party on
the plaintiff’s cause of action). Further, the Commonwealth does
not enter its appearance to defend a suit on SEPTA’s behalf, and
it does not otherwise participate in the litigation, as the legislature
has explicitly placed the responsibility on SEPTA to manage all of
its own legal affairs, which responsibility includes the defense of
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6 While Goldman was an intrastate legal dispute, it directly adjudicates the
salient issue of whether an entity should be considered an “arm” of state
government for the purposes of sovereign immunity under federal law.
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any suits against it. In sum, then, SEPTA bears the sole and
exclusive burden of any litigation against it in our state courts.
Because a suit against SEPTA in the courts of common pleas of
this Commonwealth proceeds against SEPTA, alone, as a wholly
independent entity without the involvement of the
Commonwealth, the Commonwealth cannot, therefore, be subject
to any decree or order of court as the result of such a suit. Thus,
no right or interest of the Commonwealth will be affected by the
outcome of a suit against SEPTA in our Commonwealth’s courts,
and so a suit poses no danger that the Commonwealth will be
involuntarily subject to and controlled by the mandates of judicial
tribunals, without its consent, at the instance of private parties.
Goldman, supra at 1183-84 (cleaned up).
We find the particulars of NJ Transit’s status with respect to the State
of New Jersey to be in complete parity with this analysis. NJ Transit is a
distinct legal entity that is empowered to sue, and be sued, in a capacity that
is independent from the State. See N.J.S.A. §§ 27:25-4(a), 27:25-5(a). To
that end, NJ Transit is authorized “[t]o employ and retain legal counsel” at its
own discretion and, thereby, manage its own legal affairs. See N.J.S.A.
§ 27:25-5(z). New Jersey has also disclaimed any and all financial
responsibility as to the liabilities of NJ Transit. See N.J.S.A. § 27:25-17.
We discern no risk to the sovereign dignity of New Jersey in permitting
a suit against NJ Transit to proceed. For the purposes of such legal disputes,
it seems beyond cavil that NJ Transit operates as a “wholly independent entity”
that cannot bind the State of New Jersey or otherwise place it in a position
where it will be “subject to and controlled by the mandates of judicial
tribunals,” without its consent, “at the instance of private parties.” Goldman,
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supra at 1183. Thus, the paramount consideration of the Eleventh
Amendment does not support a finding that NJ Transit is a state
instrumentality for the purposes of sovereign immunity. See id. at 1183-84.
Likewise, we also find that any potential judgment against NJ Transit
would have no discernible impact upon the New Jersey treasury. While such
an inquiry cannot be reduced to a formalistic assessment of “ultimate financial
responsibility,” the “controlling question is whether [the State] would be
legally liable to pay” if a bevy of legal claims overwhelmed NJ Transit’s ability
to pay. Goldman, supra at 1184 (emphasis in original) (citing Regents of
the Univ. of California v. Doe, 519 U.S. 425, 431-32 (1997)).
Comparatively, “the mere prospect that a [S]tate might render financial
assistance to cover an unforeseen budgetary shortfall of an entity it created
does not create a legal obligation of the [S]tate to pay.” Id. at 1184
(emphasis in original) (citing Hess v. Port Auth. Trans-Hudson Corp., 513
U.S. 30, 43-44 (1994)). Overall, New Jersey bears no culpability with respect
to the financial liabilities of NJ Transit. See N.J.S.A. § 27:25-17. Accordingly,
this secondary factor also supports a conclusion that NJ Transit is not an
instrumentality of the State of New Jersey.
Based on the foregoing analysis, we discern that Mr. Galette’s lawsuit
poses no threat to either the sovereign dignity or the state treasury of New
Jersey. Accordingly, we conclude that NJ Transit is not an arm of the State of
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New Jersey and, thus, it is not entitled to the protections of sovereign
immunity which it has asserted. See Goldman, supra at 1185.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/21/2023
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