Court Opinion

ID: 8969672
Source: CourtListenerOpinion
Date Created: 2022-11-27 10:24:49.035154+00
Date Added: 2024-06-11T17:10:23.285700
License: Public Domain

ROSENN, Circuit Judge,
dissenting.
The majority holds that NJTRO is so independent of the state as to not merit its eleventh amendment immunity. The majority reaches this result by relying, in essence, only on its analysis of one of the Urbano factors, the impact of a judgment against NJTRO on the treasury of the State of New Jersey. This court, however, has stated that funding alone does not resolve the immunity issue. Whether payment is from the state treasury or from an independent entity, although important, is not dispositive. We so held in Port Authority Police Benevolent Association v. Port Authority of New York and New Jersey, 819 F.2d 413 (3d Cir.1987). Payment is only meaningful in light of the entity’s other attributes. Blake v. Kline, 612 F.2d 718, 724 (3d Cir.), cert. denied, 447 U.S. 921, 100 S.Ct. 3011, 65 L.Ed.2d 1112 (1980). “If the state structures an entity in such a way that the other relevant criteria indicate it to be an arm of the state, then immunity may be retained even where damage awards are funded by the state at the state’s discretion.” Kovats v. Rutgers, the State University, 822 F.2d 1303, 1310 (3d Cir.1987) (footnote omitted).
Although NJTRO is unquestionably something of a hybrid, I believe that overall the factors developed in Urbano v. Board of Managers, 415 F.2d 247 (3d Cir.1969), cert. denied, 397 U.S. 948, 90 S.Ct. 967, 25 L.Ed.2d 129 (1970), relative to this eleventh amendment inquiry weigh in favor of holding NJTRO to be the alter ego of the state. I therefore respectfully dissent.
Before commencing with my analysis, I observe that NJTRO is a wholly owned subsidiary of New Jersey Transit Corporation (NJT). Therefore, any eleventh amendment immunity conferred upon NJTRO would be derivative of that possessed by NJT. See Kovats, 822 F.2d at 1306.
*665I. FUNDING
The majority combines three of the Ur-bano factors relating to finance under the general heading of “funding”: whether payment will come from the state treasury; whether the entity has the power to satisfy the judgment; and whether the sovereign has immunized itself from responsibility for the entity’s debts. Although I take no exception to that analytic approach, I cannot agree that in the end the funding factor is determinative of the alter ego status.
As a preliminary matter, I quite agree with the majority that “the nature of the state’s obligation to contribute may be more important than the size of the contribution.” Maj. op. at 660 (quoting Blake v. Kline, 612 F.2d 718, 723 (3d Cir.1979), cert. denied, 447 U.S. 921, 100 S.Ct. 3011, 65 L.Ed.2d 1112 (1980)). In fiscal year 1987 New Jersey contributed $167 million to NJT, representing about thirty-three percent of NJT’s operating funds. Although this may indeed be a “significant fact,” maj. op. at 660, what is even more significant is the extent of the state’s commitment to NJT. For, as illustrated by our holding in Port Authority, 819 F.2d at 416-18, even an entity that has become entirely independent of the state financially may nevertheless share in the state’s sovereign immunity if its statutory structure and history demonstrate state involvement with and obligation to the entity.
The majority makes three arguments in support of its conclusion that the funding factor weighs against NJT’s alter ego status. First, it argues, because New Jersey has statutorily insulated itself from liability for NJT’s debts, any increase in state appropriations to NJT to cover judgments against it would be wholly discretionary on the state’s part. Maj. op. at 661. Second, NJT does not lack the power to pay judgments against it because it can raise fares, cut its expenses or capital budget, or rely on liability insurance. Maj. op. at 661. Finally, simply because NJT is permitted to invest its money in the state’s Cash Management Fund (CMF) does not mean that all of NJT’s funds actually belong to the state. Maj. op. at 661-62. The majority concludes that the funding factor “weighs strongly” against NJT’s claim of alter ego status. Maj. op. at 663.
I address the majority’s arguments in the reverse order. I agree that NJT’s authority to invest in the CMF is of little significance. As the majority points out, the option to invest in the CMF, if relied on, would prove too much considering that other entities that place their funds in the CMF, such as counties, municipalities, and school districts, clearly do not enjoy eleventh amendment immunity. See maj. op. at 662.
With respect to NJT’s ability to pay judgments against it, I think the majority’s reasoning a bit facile. The majority states that it is “not clear” that NJT would have to turn to the state to make up any shortfalls occasioned by judgments against it. It suggests that NJT could simply raise fares or reduce its expenses or capital budget to make up the deficit. The fiscal realities and operating experiences of urban mass transit systems in the United States, including NJTRO, would seem to negate such an easy answer. At some point, increases in fares or reductions in the quality or availability of service have the tendency of reducing ridership, and the reduction in ridership in turn diminishes revenue.1 Given the history of NJT’s recurring budgetary crises, and the continuing and escalating annual appropriation by the state of many millions of dollars to NJT’s operating budget,2 it is highly unlikely that NJT could make up significant shortfalls by the simple means suggested by the majority.
Nor could NJT satisfy judgments by incurring debt. Under NJT’s enabling statute (the New Jersey Public Transportation Act of 1979 or “the Act”), NJT is explicitly *666prohibited from incurring a deficit. N.J. StatAnn. § 27:26-17 (West Supp.1988). Moreover, the grant anticipation notes (GANs) mentioned by the majority, see maj. op. at 660, do not constitute a revenue raising resource. The Act permitting their use explicitly asserts that GANs are not bonds but rather a transitory tool for dealing specifically with short term cash flows arising out of delays in receiving federal subsidies. In like manner, the credit arrangements after June 30, 1987, referred to by the majority, are also limited to borrowing against section 9 grant proceeds under the federal Urban Mass Transportation Act “for future working capital.” See N.J. StatAnn. § 27:25-5 (West Supp.1988). In light of these statutory restrictions and the real economic constraints under which NJT operates, it is hard to see where NJT could turn for money other than to the state.
Lastly, the majority relies on the statutory provision specifically disclaiming the state’s liability for NJT’s debts. Because of this provision, the majority argues, any increase in the state’s appropriation to NJT would be discretionary, and the state is therefore “under no obligation” to reimburse NJT for judgments that it pays. Maj. op. at 661. The majority therefore finds this case indistinguishable from Kovats in which we held that Rutgers was not the alter ego of the state. 822 F.2d at 1312.
Granted that the state has insulated itself from liability for NJT’s debts and that this is a factor to be considered among the three funding-related Urbano criteria. In light of the economic realities facing NJT and the statutory language creating that corporation, however, I cannot agree with the majority that this protective device releases New Jersey from its obligation to financially support NJT.
NJT is by far the greatest provider of mass transit in New Jersey. The state created NJT in 1979 to take over the largest bus carrier in New Jersey, Transport of New Jersey, and to assume the state’s commuter rail operations from Conrail. It is common knowledge that the economic vitality of this densely populated and strategic northeast corridor state is heavily dependent upon the availability of mass transportation. In creating NJT, New Jersey recognized the catastrophic effects to the economy and its citizens by a collapsed mass transit and therefore committed huge funds when it undertook to structure a state controlled mass transit system.
One need not look only to economic realities and the historical concept of NJT to see the depth of New Jersey’s commitment to it. New Jersey by statute asserted that “[a]s a matter of public policy, 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.” N.J.Stat.Ann. § 27:25-2 (West Supp. 1988) (emphasis added). This succinct language mandates the state’s ongoing obligation to NJT. Implicit is the state’s obligation to provide available financial resources for the purpose of providing transportation, so long as the corporation continues to be a public entity.
Furthermore, it is prudent and good common sense in undertaking large, indefinite, and unknown risks for an enterprise to assume corporate status and limit personal liability for creditor’s claims. The insulation from liability to third parties, however, does not demonstrate a lack of financial or governmental commitment to the business or its objectives. The state, in the exercise of reasonable business judgment, may have insulated itself from creditors' claims, as do shareholders in most corporations, but it did not thereby renounce its obligation to sustain NJT. Mass transportation is at once essential to the state and in large part available only through the state-created corporation. In light of these circumstances, and the state’s consistent record of having deficit-financed NJT since its inception, I cannot agree that New Jersey is not a real party in interest, without financial obligation to maintain the operational integrity of NJT.3
*667II. AUTONOMY
The majority assesses whether NJT enjoys autonomy from the state. Reviewing both the powers granted NJT and the constraints placed on it by the Act, the majority concludes that NJT “lies somewhere between Rutgers and Port Authority of New York and New Jersey,” an agency held to be an arm of the state. See Port Authority, 819 F.2d at 418; maj. op. at 663. The majority decides that the autonomy factor only “slightly” favors according immunity. I, on the other hand, believe that the heavy governmental control is the most compelling reason for according immunity to NJT.
In support of NJT’s independent status, the majority notes that the agency is governed by a board of directors, which can cause NJT to enter contracts, bring lawsuits, buy and sell property, buy insurance, structure the corporation’s internal management and set and collect fares. In these respects, the Port Authority, held an arm of the state, is not significantly different. The Port Authority is run by a board of commissioners, N.J.Stat.Ann. § 32:1-5 (West 1963), which has the power to appoint officers and hire employees as it sees fit for the performance of its duties. Id. at § 32:1-15. The Authority has the power to buy, build, or lease any terminal within its district. Id. at § 32:1-7. It may set charges for the use of its terminals or facilities. Id. It may own real and personal property, id., and borrow money and secure the debt by bonds or mortgages on its property. Id.
The majority notes, however, that the Port Authority in other respects is less autonomous than NJT. I agree. For example, the Port Authority is forbidden by statute from undertaking new projects without legislative authorization. Port Authority, however, does not represent the threshold level of state control that must be exercised for an entity to be an alter ego of the state. Without attempting to exactly locate that level, I believe that NJT, like the Port Authority, exceeds it.
NJT’s seven member board of directors consists of four public members who are appointed by the state governor and confirmed by the senate, N.J.Stat.Ann. § 27:25-4(b) (West Supp.1988), and three members who sit on the board by virtue of their positions within the state government. These include the commissioner of transportation, the state treasurer, and another member of the executive branch appointed by the governor. Id. Thus, the appointment of the four public members is controlled by the state and the remaining members of the board are high ranking appointments of the executive branch of the state government. The governor is empowered to remove any public board member for cause. Id. Although the Act declares that NJT “is independent of any *668supervision or control” by the department of transportation, id. at § 27:25-4(a), it requires the commissioner of transportation to chair the board. Id. at § 27:25-4(d). All board meetings are subject to the New Jersey Open Public Meetings Act. Id. at § 27:25-4(g). Importantly, all proposed board action is subject to gubernatorial veto and the minutes of every board meeting must be delivered to the governor. Id. at § 27:25 — 4(f). Thus, the state retains vital policy, organic, and operational control over NJT through its power to appoint NJT’s board members and through the governor’s veto power and consequent control of the entity’s pursestrings.
Furthermore, NJT must submit annual operational and financial reports for the preceding fiscal year to the governor and to the transportation and communications committees of both houses of the legislature. Id. at § 27:25-20(b). The Act authorizes the state auditor to examine the corporation’s accounts, id. at § 27:25-20(e), and makes its records and papers open to public inspection. Id. at § 27:25-20(d). Finally, the commissioner of transportation annually receives a report containing the corporation’s operational, capital, and financial reports or plans for the previous, current, and ensuing fiscal years. Id. at § 27:25-20(a).
NJT is required to consult with state authorities in developing its employee compensation schedule. Id. at § 27:25-15. On its completion, the schedule must be filed with the state along with a list of all of NJT’s full and part time officers and employees. Id. The corporation is additionally subject to New Jersey’s competitive bidding statutes. Id. at § 27:25-11. Significantly, rules and regulations must be adopted and published in accordance with the Administrative Procedure Act. Id. at § 27:25-5(e).
The control that the state has over NJT’s board and over NJT operations bears no similarity to the state’s relationship to its counties, cities, or school districts or their funds. An examination of the enabling statute reveals pervasive state control over NJT. The corporation’s very limited autonomy effectively attenuates the significance that the majority gives to the funding factor.
The majority relies heavily on Kovats, 822 F.2d 1303 (3d Cir.1987), for its position that NJT is not the alter ego of the state. The majority believes that as in Kovats the facts here are just as strong for the proposition that NJT is not the alter ego of the state. Maj. op. at 661. I disagree.
There may be similarities in legislative satisfaction of the shortfalls in the two entities, Rutgers University and NJT, but the majority wholly ignores vast differences in origin, public purpose, and state control between the two organizations. The majority disregards these differences, rigidly compartmentalizes the funding factor, and actually regards this as the decisive factor despite its references to other Urbano considerations.
Rutgers University had its origin in Queens College as a private educational institution chartered by King George III of Great Britain in 1776, with a requirement that the president be a member of the Dutch Reformed Church. In 1825, after some previous minor amendments in its charter, it changed its name to the Trustees of Rutgers College in New Jersey. In 1920, by board resolution the college formally excised from its charter all religious and sectarian qualifications and the specific requirement that the president be a member of the Reformed Church. Over the years, Rutgers expanded, became in part a land grant school under federal legislation, and by 1956 consisted of twenty-one colleges and divisions at graduate and undergraduate levels. In 1956 the university was reorganized by the state legislature and its charter substantially amended under an act known as “Rutgers, the State University Act of 1956.” 4
In 1956 the state undertook a more active financial role in the university, and the *669school became an “instrumentality of the state” for the purpose of providing public higher education. N.J.Stat.Ann. § 18A:65-2 (West 1968). The University’s purpose, like that of so many other educational institutions in New Jersey, essentially is to provide access to higher learning. Although it serves a highly important function in the educational life of New Jersey, Rutgers is neither unique nor indispensable. There are other institutions of higher learning in New Jersey and elsewhere, perhaps not as convenient or as inexpensive, which also provide higher education.
On the other hand, NJT was in the first instance conceived and fathered by the state to provide an indispensable service in its economic, commercial, and social life. It offers a vast network of mass railroad and bus transportation throughout the state. Created as the successor to the Commuter Operating Agency of the New Jersey Department of Transportation, NJT received from the state at cost the transit system’s operating property, plant, and equipment. See reply brief app. at 73. Section 27:25-4(a) of the Act asserts that NJT was created within New Jersey’s executive branch as “a body corporate and politic” and proclaims that “the corporation is hereby constituted as an instrumentality of the State exercising public and essential governmental functions.... ”
Although the Act of 1956 declares that Rutgers is an “instrumentality of the state for the purpose of operating the state university,” N.J.Stat.Ann. § 18A:65-2 (West 1968), it does not assert, as compared with the 1979 Act creating NJT, that the university is exercising “essential governmental Junctions.” N.J.Stat.Ann. § 27:25-4(a) (West Supp.1988) (emphasis added). Moreover, and perhaps more significant, the state of New Jersey does not have the operational, fiscal, and appointive controls over Rutgers that it has over NJT. Based upon the differences in historical origin, purposes, and state control, I believe that Kovats is not determinative of NJT’s alter ego status.
III. STATUS UNDER STATE LAW
Under the heading “status under state law,” the majority gathers the following Urbano factors: how local law and decisions treat the agency; whether the agency is separately incorporated; whether it may sue or be sued; and whether it is immune from taxation. Examination of the various factors leads the majority to conclude that, although overall the factors tilt “slightly” in favor of alter ego status, maj. op. at 663, NJT’s status under state law does not significantly help in the eleventh amendment analysis because it is “uncertain.” Maj. op. at 662. I agree with the majority that the status under state law analysis tilts in favor of NJT’s being the arm of the state, but I believe that the tilt is more than slight.
The treatment of NJT by New Jersey courts favors the agency’s alter ego status. The majority notes that the New Jersey Supreme Court declared NJT to be a “public entity” in deciding a case concerning uninsured motorist coverage. See Ross v. Transport of New Jersey, 114 N.J. 132, 553 A.2d 12, 13 (Sup.Ct.1989); maj. op. at 663. New Jersey courts addressed NJT’s status in two earlier cases as well. Applying the alter ego analysis developed in federal courts for eleventh amendment purposes, the superior court in Travelers Insurance Co. v. Transport of New Jersey, 204 N.J. Super. 63, 497 A.2d 900 (1985), concluded that NJT was a public entity. A like decision was announced in Transport of New Jersey v. Matos, 202 N.J.Super. 571, 495 A.2d 503 (1985), which held NJT subject to the New Jersey Tort Claims Act.5
*670The majority would introduce ambiguity into this inquiry by seeing in the decision of Fuchilla v. Layman, 109 N.J. 319, 537 A.2d 652 (1988), a “reluctance on the part of New Jersey courts to accord immunity” to hybrid agencies. I find this ambiguity illusory. In Fuchilla the court considered the status of a state university. Whereas the majority sees a close analogy between the school and the mass transit operation, I do not. Not only do they differ in kind, but, for example, amendments to the enabling statute of the school at issue in Fuchilla explicitly declared it to be the “public policy of the State that the university shall be given a high degree of self-government.” See Fuchilla, 537 A.2d at 657 (quoting N.J.Stat.Ann. § 18A:64G-3.1). It is, in any event, quite unnecessary to resort to analogies when the New Jersey decisions treating NJT itself leave no room for speculation.
Admittedly, there are some characteristics relating to NJT’s status under state law that suggest the entity’s independence from the state. NJT has been granted the power to sue and be sued. NJ.Stat.Ann. § 27:25-5(a) (West Supp. 1988). Other statutory provisions enable NJT to enter into contracts, id. at § 27:25-5(r) and (v), buy land, id. at § 27:25-13, and purchase stock, equipment, and personal property. Id. at §§ 27:25-5(u), 27:25-10, and 27:25-50).
At the same time, there are other factors that place NJT within the realm of the state. Claims against the corporation are governed by the New Jersey Tort Claims Act, Transport of New Jersey v. Matos, 202 N.J.Super. at 573, 495 A.2d at 505, and by the New Jersey Contractual Liability Act. N.J.Stat.Ann. § 27:25-19 (West Supp. 1988). NJT is exempted by statute from all state taxation including, but not limited to, sales taxes, real property taxes, corporate franchise taxes, or income taxes. Id. at § 27:25-16. NJT additionally is subject to the provisions of the state administrative procedure act, id. at § 27:25-5(e), and has been given the power of eminent domain. Id. at § 27:25-13(aMc).
The majority would diminish the significance of these last factors by pointing to entities that share those characteristics but are not alter egos of the state. See maj. op. at 664 (“We must be wary of taking these arguments too far, however.”). We must also be wary, I believe, of taking comparisons on the basis of discrete factors too far. As the court observed in Kovats, “ ‘[t]he decisions in other cases, while helpful in terms of analytic models, cannot govern our decision [here]_’” 822 F.2d at 1312 (quoting Soni v. Board of Trustees, 513 F.2d 347, 353 (6th Cir.1975), cert. denied, 426 U.S. 919, 96 S.Ct. 2623, 49 L.Ed.2d 372 (1976)). Each entity “ ‘exists in a unique governmental context, and each must be considered on the basis of its own peculiar circumstances.’ ” Id. It is, after all, the balance of the factors that matters.
In sum, NJT has been granted many of the powers and privileges characteristic of a state, and specifically has been placed within the executive branch of the government. Of necessity, as a corporation transacting business in the commercial world, it enjoys many of the powers relative to operating a business. I believe, however, that overall the criteria decidedly favor alter ego status. Importantly, I think, the New Jersey courts applying the eleventh amendment alter ego analysis to NJT for other purposes have concluded that NJT is a public entity. Cf. Skehan v. Board of Trustees, 538 F.2d 53, 62 (3d Cir.1976) (in banc) (holding dispositive a state court decision finding state colleges such as Blooms-burg State College to be agencies of the state for sovereign immunity purposes). On the whole, therefore, the status of NJT under state law favors alter ego status in this case.
*671Based upon my belief that the essential criteria under Urbano and our prior decisions weigh in favor of NJT’s alter ego status, I would hold that its wholly owned subsidiary, NJTRO, is entitled to eleventh amendment protection.
IV. ELEVENTH AMENDMENT IMMUNITY
Because of the result I reach with respect to NJTRO’s status as an arm of the state, I turn to the question not discussed by the majority but actually raised by the plaintiff in the trial court: whether the FELA contains the unequivocal statutory language necessary to abrogate the state’s eleventh amendment immunity and subject NJTRO to suit in the federal court.
Eleventh amendment immunity may be avoided by congressional abrogation under the power granted by the enforcement provisions of section 5 of the fourteenth amendment, see Fitzpatrick v. Bitzer, 427 U.S. 445, 456, 96 S.Ct. 2666, 2671, 49 L.Ed.2d 614 (1976), or, as we have previously held, under the commerce clause of Article I. See United States v. Union Gas Co., 832 F.2d 1343, 1356 (3d Cir.1987), aff'd. sub nom. Pennsylvania v. Union Gas Co., 57 U.S.L.W. 4662 (1989). Furthermore, a state can waive its eleventh amendment immunity and consent to suit in federal court. Welch v. State Dep’t of Highways and Public Transp., 483 U.S. 468, 473, 107 S.Ct. 2941, 2945, 97 L.Ed.2d 389 (1987). Fitchik argues that both exceptions apply.
Plaintiff argues that the FELA, considered in conjunction with the wealth of federal safety legislation applicable to state owned railroads, manifests Congress’ unmistakable intention to abrogate the state’s eleventh amendment immunity. Fitchik additionally contends that New Jersey waived its eleventh amendment immunity when it undertook to operate an interstate railroad while Parden was prevailing law. Both contentions require examination into the impact that the Supreme Court’s recent decision in Welch has upon Parden.
In Welch, the petitioner, an employee of the Texas Department of Highways and Public Transportation, filed a personal injury suit against the respondent pursuant to the Jones Act. 483 U.S. at 471, 107 S.Ct. at 2944. Significantly, the Jones Act applied the remedial provisions of the FELA to seamen. Initially, the Court recognized that the eleventh amendment functions as an affirmative limitation on Article Ill’s grant of judicial authority. Id. at 472, 107 S.Ct. at 2945. The Court, however, then considered the two exceptions that limit states’ eleventh amendment protection. Discussing the waiver exception, the Court cautioned that because “constructive consent is not a doctrine commonly associated with the surrender of constitutional rights,” a court will find “a waiver by the state only where stated by such overwhelming implications from the text as [will] leave no room for any other reasonable construction.” Id. (quoting Edelman, 415 U.S. at 673, 94 S.Ct. at 1360). Discussing the abrogation exception, the Court explained that Congress may abrogate the eleventh amendment without the states’ consent when it expresses “its intention ... in unmistakable language in the statute itself.” Id. (quoting Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 243, 105 S.Ct. 3142, 3147, 87 L.Ed.2d 171 (1985)).
Applying the preceding analysis to the case before it, the Court held that the Jones Act’s reference to “any seaman who shall suffer personal injury” did not constitute the unmistakable statutory language necessary for congressional abrogation of eleventh amendment immunity.6 It reasoned that because the doctrine of sovereign immunity implies a constitutional distinction between the states and other employers of seamen, “a general authorization for suit in federal court is not the kind of unequivocal statutory language necessary to abrogate the eleventh amendment.” Id. 483 U.S. at 476, 107 S.Ct. at 2947 (quoting Atascadero, 473 U.S. at 246, 105 S.Ct. at 3149).
*672The Court next considered the effect of its decision upon Parden, a case holding that Congress intended to abrogate the states’ eleventh amendment immunity merely by making the FELA applicable to every common railroad carrier. See Parden v. Terminal Railway, 377 U.S. 184, 190, 84 S.Ct. 1207, 1211, 12 L.Ed.2d 233 (1964). The Court concluded that Parden was mistakenly decided insofar as it interpreted Congress’ failure to explicitly exclude state railway workers from the scope of the FELA as a sufficient indication of its desire to subject the states to suit in federal court. Observed the Court: “Although our later decisions do not expressly overrule Parden, they leave no doubt that Par-den ’s discussion of congressional intent to negate Eleventh Amendment immunity is no longer good law.” Welch, 483 U.S. at 478, 107 S.Ct. at 2948. Thus, the Court overruled Parden to the extent that it was inconsistent with the requirement that congressional abrogation of eleventh amendment immunity be expressed in unmistakably clear language.
In light of Welch, plaintiff’s argument that the FELA manifests Congress’ intention to abrogate the states’ immunity is simply incomprehensible. Welch’s rejection of Parden unequivocally stands for the proposition that the language of the FELA is insufficient to subject the states to suit in federal court. The Rail Safety and Service Improvement Act, 45 U.S.C. § 431, federal legislation transferring the railroad to state control, and other federal legislation applicable to state owned railroads on which Fitchik relies similarly fail to manifest the unmistakable congressional intention necessary to abrogate the eleventh amendment.
Plaintiff further contends that New Jersey constructively waived its immunity when it chose to operate a railroad while Parden was the law of the land. Parden was premised at least in part upon the conclusion that the state had consented to suit in federal court. Fitchik argues that Welch does not reject entirely the notion of constructive consent; it merely holds that finding consent in Parden was inappropriate because the FELA did not provide a sufficiently clear statement that a state’s operation of a railroad would work a waiver of eleventh amendment immunity. Plaintiff distinguishes this case by reasoning that the Supreme Court’s decision in Parden, rather than the FELA itself, provided the clear statement that New Jersey would waive its immunity by assuming control of an interstate railroad.
Although this argument may have some initial appeal, it cannot withstand scrutiny. By 1982, when New Jersey undertook to operate the railroad, it was already questionable whether Parden was good law. Significantly, in Employees v. Missouri Department of Public Health & Welfare, 411 U.S. 279, 93 S.Ct. 1614, 36 L.Ed.2d 251 (1973), the Supreme Court refused to extend the reasoning of Parden to hold states subject to suit in federal court under the Fair Labor Standards Act, even though the FSLA and the FELA did not differ greatly in terms relevant to eleventh amendment immunity. See Employees, 411 U.S. at 299, 93 S.Ct. at 1625 (Brennan, J., dissenting); see also Edelman, 415 U.S. at 673-74, 94 S.Ct. at 1360-61 (rejecting argument that state waived eleventh amendment immunity by participating in federal program when legislation creating program lacked clear language that participation would signal constructive consent to suit in federal court). It is therefore arguable whether Parden provided a clear statement that New Jersey would waive its eleventh amendment immunity by operating the railroad. Consequently, it is uncertain whether New Jersey consented to federal jurisdiction when NJTRO began operations.
The ambiguity in decisional law at the time New Jersey began operation of the railroad is especially significant in light of the rule that a court will find waiver only where it is stated explicitly or is the only “ ‘reasonable construction.’ ” See Welch, 483 U.S. at 473, 107 S.Ct. at 2945 (quoting Edelman, 415 U.S. at 673, 94 S.Ct. at 1360 (citation omitted)). Plaintiff has not established that New Jersey has waived its immunity by “express language.” See id. Moreover, I am unwilling to draw the broad inference that New Jersey accepted the *673doubtful rule of Parden and waived its immunity to suit in federal court as a condition to operating the railroad. It is equally reasonable to assume that New Jersey chose to operate the railroad despite Parden, and was willing to challenge the decision in that case should the need arise. I would, therefore, decline to hold that New Jersey constructively consented to suit in federal court, and would hold that the eleventh amendment precludes plaintiff from maintaining a FELA action against NJTRO in federal court.7
V. CONCLUSION
Facing the potential disaster that was threatened by a decaying public transportation system, the state of New Jersey in 1979 chose to enter the mass transit business. It did so not by creating yet another governmental subdepartment, but by the practical means of establishing a transportation corporation sheltered from the perennial delays, costs, and frustrations of a governmental structure. At the same time, however, the state retained control over corporate policies and the power to select the members of the board. Moreover, so long as the state maintains its statutory policy to provide mass public transportation and exercises its powers of control over NJT, the state remains implicitly obligated to sustain the financial vitality of the corporation it created. Thus, NJT is the alter ego of the state and New Jersey never stripped it of eleventh amendment immunity. As such, NJTRO is entitled to eleventh amendment immunity in an action against it in federal court.
For the foregoing reasons, the district court’s order dismissing plaintiffs complaint for lack of subject matter jurisdiction should be affirmed.
Judges HIGGINBOTHAM, GREENBERG, HUTCHINSON, and NYGAARD join in this dissenting opinion.

. New Jersey’s supplemental appropriation in 1986 of five million dollars designed to reduce the amount of a proposed NJT fare increase demonstrates the legislature’s belief in the impracticality and undesirability of raising passenger fares. P.L.1986 c. 48.

. According to the supplemental information supplied by NJT to this court, annual appropriations to NJT have increased steadily from $88 million in 1980-1981 to $194 million in 1988-1989. See NJT’s supplemental submission at 5.

. Although this court has identified funding as the "most significant factor" in the alter ego balancing test. Urbano, 415 F.2d at 251, it has never decided what weight this factor should *667carry especially when it is suffused by other germane factors. That a judgment would be paid out of the state treasury thus may not be enough to cloak an entity with eleventh amendment immunity if other factors dictate to the contrary. Funding is therefore not always a controlling condition of alter ego status.
Moreover, this court has suggested that funding is not even a necessary condition of alter ego status. Although in Kovats the decision was against alter ego status, the court allowed for the possibility that an entity may be the alter ego of the state even though a judgment would not be paid out of the state treasury.
Although no reported case has squarely presented such a situation, our understanding of the extent of eleventh amendment protection has always provided for the possibility that an entity may enjoy alter ego status even if payment of the judgment would not derive from the state treasury. Such a result would not be inconsistent with the Supreme Court’s eleventh amendment jurisprudence that disallows federal jurisdiction over suits against states for damage awards but allows jurisdiction for suits seeking prospective injunctive relief. See Edelman v. Jordan, 415 U.S. 651, 667-68, 94 S.Ct. 1347, 1357-58, 39 L.Ed.2d 662 (1974); see also Green v. Mansour, 474 U.S. 64, 73-74, 106 S.Ct. 423, 428-29, 88 L.Ed.2d 371 (1985) (eleventh amendment bars even retroactive declaratory relief against state officials if not coupled with prospective relief). As Judge Sloviter explained in Kovats: “Those cases address the forms of relief available when it is clear that relief will run against a state; they do not address the preliminary issue of when relief is deemed to run against the state. As to the former issue, whether the primary relief sought is monetary and/or retroactive is conclusive; as to the latter, it is not.” 822 F.2d at 1310 n. 7. Thus, there is no mandate against according alter ego status to an entity even though a judgment would not be paid from the state treasury.

. For a more detailed history, see Trustees of Rutgers College v. Rickman, 41 N.J.Super. 259, 125 A.2d 10 (1956).

. NJTs alter ego status has also been the subject of a multitude of reported and unreported federal district court decisions. To our knowledge, every district court that has considered the question has held that NJT is the alter ego of New Jersey. See Dykman v. New Jersey Transit Rail Operations, Inc., 685 F.Supp. 79 (S.D.N.Y.1988); Johnson v. New Jersey Transit Rail Operations, Inc., Civ. No. 87-0173, slip op., 1988 WL 24148 (D.N.J. Mar. 15, 1988); Cianfrani v. New Jersey Transit Bus Operations, Inc., Civ. No. 87-3707, slip op., 1987 WL 15624 (E.D.Pa. Aug. 11, 1987); Worrell v. New Jersey Transit Bus Operations, Inc., Civ. No. 86-2075, slip op., 1987 WL 4400 (D.N.J. Jan. 29, 1987); Williamson v. New Jersey Transit Rail Operations, Inc., Civ. No. 86-5353, *670slip op., 1987 WL 5791 (S.D.N.Y. Jan. 9, 1987); Dunn v. New Jersey Transit Rail Operations, Inc., 681 F.Supp. 246 (D.N.J.1987); Brotherhood of Locomotive Engineers, 608 F.Supp. 1216 (S.D.N.Y.1985); Brotinsky v. New Jersey Transit Auth., Civ. No. 85-0314, slip op. (E.D.Pa. Mar. 20, 1985); Hightower v. New Jersey Transit Rail Operations, Inc., Civ. No. 84-1268, slip op. (D.N.J. Aug. 27, 1984); Saddle River Tours Ltd. v. New Jersey Dep't of Transp., Civ. No. 83-1776, slip op. (D.N.J. Oct. 31, 1983), aff’d, 745 F.2d 48 (3d Cir.1984); Gibson-Homans Co. v. New Jersey Transit Corp., 560 F.Supp. 110 (D.N.J.1982).

. The Court observed that the question of whether Texas had waived its immunity was not before it.

. I would additionally reject Fitchik’s assertions that the district court improperly characterized the issue before it as one of subject matter jurisdiction, and that denying state railroad employees access to federal court on FELA claims violates the equal protection clause.