Under our constitutional system, states like New Jersey have sovereign immunity, which protects them from being sued unless they have agreed to it. But states can create corporations that are distinct from the state to carry out public functions like transportation. Buses operated by one such entity, the New Jersey Transit Corporation (NJTC), struck and injured people in New York and Pennsylvania. When defending against suits to recover damages, the NJTC insisted that it was immune from suit as an arm of the State of New Jersey. The Court of Appeals of New York disagreed, while the Supreme Court of Pennsylvania agreed that the NJTC was immune. The United States Supreme Court agreed to review both decisions.

In November 2025, CAC filed an amicus brief explaining that the NJTC lacks sovereign immunity and can be sued for injuries it causes.

State sovereign immunity derives from the traditional immunity held by governments at the time of the Constitution’s ratification. And under English common law at that time, corporations like the NJTC were considered legal entities distinct from the sovereign, which could sue and be sued, regardless of whether they served a public purpose. As a wealth of scholarly treatises and judicial decisions makes clear, the common law inextricably associated the capacity to sue and be sued with corporate status. Accordingly, even corporate entities associated with the monarch, like the East India Company, the Bank of England, and others, were routinely sued in the decades preceding ratification of the Constitution.

The American Framers embraced the English rule that state-affiliated corporations could be haled into court. As Chief Justice John Marshall recognized, American “ideas of a corporation, its privileges and its disabilities,” were “derived entirely from the English books.” Throughout the federal and state constitutional conventions, participants consistently distinguished corporations from true sovereigns like the states. Precisely because the states were not corporations, it was understood that states would retain their sovereignty and be immune from suit without their consent.

It was also understood, however, that state-affiliated corporations, unlike the states themselves, were amenable to suit. In the early decades of the new nation, the Supreme Court regularly exercised jurisdiction over these corporations, such as state-created and state-controlled banks. The Court was clear that “public corporations,” i.e., those “founded by the government, for public purposes,” could be sued just like any others. These cases demonstrate that corporations like the NJTC traditionally lacked the sovereign immunity of the states that created them.

In March 2026, the Supreme Court unanimously ruled that the NJTC can be held accountable in other states’ courts for the injuries it causes in those states. In her opinion for the Court, Justice Sotomayor echoed our argument that corporations like the NJTC were historically considered separate legal entities from the states that created them, and therefore could be sued for harms they caused. Citing the same early-nineteenth-century cases concerning state-affiliated banks that our brief identified, the Court recognized the significance of the corporate form as indicating that the NJTC was not an arm of the state.