Court Opinion

ID: 9380975
Source: CourtListenerOpinion
Date Created: 2023-03-21 18:06:59.489815+00
Date Added: 2024-06-11T17:17:28.743623
License: Public Domain

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.

____________________________________________

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;

____________________________________________

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

____________________________________________

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

____________________________________________

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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