Galette v. New Jersey Transit Corp.

P R E L I M I N A R Y P R I N T
Volume 607 U. S. Part 2
Pages 509–536
OFFICIAL REPORTS
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T H E S U P R E M E C O U R T
March 4, 2026
REBECCA A. WOMELDORF
reporter of decisions
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509
Syllabus
GALETTE v. NEW JERSEY TRANSIT CORPORATION
certiorari
to the supreme court of pennsylvania,
eastern district
No. 24–1021. Argued January 14, 2026—Decided March 4, 2026*
In 1979, the New Jersey Legislature created the New Jersey Transit Cor-
poration (NJ Transit) as a “body corporate and politic with corporate
succession” and constituted it as an “instrumentality of the State exer-
cising public and essential governmental functions” but “independent of
any supervision or control” by the New Jersey Department of Transpor-
tation. N. J. Stat. § 27:25–4(a). The State gave NJ Transit signifcant
authority, including the power to make bylaws, sue and be sued, make
contracts, acquire property, raise funds, own corporate entities, adopt
regulations, and exercise eminent domain powers. §§ 27:25–5, 27:25–13.
NJ Transit's organic statute provides that “[n]o debt or liability of the
corporation shall . . . constitute a debt [or] liability of the State,” and
that “[a]ll expenses . . . shall be payable from funds available to the
corporation.” § 27:25–17. NJ Transit is governed by a board of direc-
tors (Board). § 27:25–4(b). The Governor may remove Board mem-
bers and may veto Board actions; the Legislature may veto some emi-
nent domain actions. §§ 27:25–4(b), (f ); § 27:25–13(h). NJ Transit is
now the third largest provider of bus, rail, and light rail transit, operat-
ing within an area that includes New Jersey, New York City, and
Philadelphia.
In 2017, Jeffrey Colt was struck by an NJ Transit bus in Midtown
Manhattan; a year later, Cedric Galette was injured when an NJ Transit
bus crashed into a car in which he was a passenger in Philadelphia.
Both sued NJ Transit for negligence in their respective home state
courts. NJ Transit moved to dismiss both lawsuits, arguing that it is
an arm of New Jersey entitled to sovereign immunity. The New York
Court of Appeals held that NJ Transit is not an arm of New Jersey; the
Pennsylvania Supreme Court held the opposite, concluding NJ Transit is
an arm of New Jersey. This Court consolidated the cases and granted
certiorari to resolve the confict.
Held: NJ Transit Corporation is not an arm of New Jersey and thus is
not entitled to share in New Jersey's interstate sovereign immunity.
Pp. 519–536.
*Together with No. 24–1113, New Jersey Transit Corporation et al. v.
Colt et al., on certiorari to the Court of Appeals of New York.

510 GALETTE
v. NEW JERSEY TRANSIT CORP.
Syllabus
(a) Sovereign immunity is “ `personal' ” to the State and extends only
to
arms of the State itself, College Savings Bank v. Florida Prepaid
Postsecondary Ed. Expense Bd., 527 U. S. 666, 675, not to legally inde-
pendent entities that the State creates. Whether an entity is “an arm
of the State . . . is a question of federal law” answered by considering the
“provisions of state law that defne the agency's character.” Regents
of Univ. of Cal. v. Doe, 519 U. S. 425, 429, n. 5. Pp. 519–523.
(1) The Court's early cases focused on whether an entity was a
separate legal person from the State, with the corporate form serving
as a key marker of separate legal personhood. A “corporation” was
understood as “an artifcial person” that could “sue and be sued by its
own members” and “contract with them . . . as with any strangers.”
Trustees of Dartmouth College v. Woodward, 4 Wheat. 518, 667–668.
In Bank of United States v. Planters' Bank of Ga., 9 Wheat. 904, the
Court held that a state-chartered bank was not an arm of Georgia be-
cause it was a “corporation” and judgments would be satisfed by the
corporation's property, not the State's. Subsequent cases reaffrmed
this holding even when the State exerted signifcant control over the
bank. See, e. g., Bank of Kentucky v. Wister, 2 Pet. 318, 323–324. The
Court also applied the same reasoning to cities and counties created as
municipal corporations. See Lincoln County v. Luning, 133 U. S. 529,
530–531. Pp. 520–521.
(2) Beginning in the mid-20th century, the Court began taking a
more holistic view of an entity's relationship with the State, but re-
mained focused on whether the State structured the entity to be legally
separate, with corporate status remaining central. In Moor v. County
of Alameda, 411 U. S. 693, 719–721, the Court held that a county was
not an arm of the State because it was created as a “body corporate and
politic” with “ `corporate powers' ” and the county alone would be “liable
for all judgments against it.” In Mt. Healthy City Bd. of Ed. v. Doyle,
429 U. S. 274, 280, the Court framed the inquiry as asking whether an
entity is “more like a county or city” than “like an arm of the State,”
and concluded a local school board was not an arm of the State. In
Lake Country Estates, Inc. v. Tahoe Regional Planning Agency, 440
U. S. 391, and Hess v. Port Authority Trans-Hudson Corporation, 513
U. S. 30, the Court found that two bistate entities were not arms of the
State where they were created as separate legal entities, judgments
against the entities were not binding on the States, and the entities
generated their own revenues and paid their own debts. Pp. 521–523.
(b) The Court's precedents have consistently and predominantly ex-
amined whether the State structured the entity as a legally separate
entity liable for its own judgments. The clearest evidence of legal sepa-
rateness is when the State created a corporation with traditional corpo-
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511
Syllabus
rate powers to sue and be sued, hold property, make contracts, and incur
debt.
A State might create a corporation precisely because of its inde-
pendent legal status, allowing the State to distance itself from burdens
the corporate entity may incur. When a State makes such a decision,
courts should presume the corporation enjoys all the advantages and
disadvantages of separate legal status, including that it is no longer part
of the State itself. Other aspects of state law may also indicate legal
separateness, such as defning the entity as a “separate legal entity” or
excluding it from the defnition of “State” for other purposes.
The Court's precedents also focus on whether the entity is liable for
its own judgments or whether the State is formally liable. One central
rationale for sovereign immunity is protecting States' “ability to make
[their] own decisions about `the allocation of scarce resources.' ” Lewis
v. Clarke, 581 U. S. 155, 167. If the State is formally liable for judg-
ments against an entity, that entity is more likely an arm of the State.
An entity's practical fnancial relationship with the State, such as an
expectation that the State would cover its judgments if needed, or the
State's history of subsidizing the entity, has less relevance.
Finally, courts may consider the degree of control the State exerts
over the entity, but should do so with caution because “ultimate control
of every state-created entity resides with the State,” even those that
are not arms of the State. Hess, 513 U. S., at 47. “Gauging actual
control” can be a “ `perilous' ” and “ `unreliable' ” inquiry. Ibid. The
Court has never found a corporation liable for its own judgments to be
an arm of the State, even when the State had signifcant control, includ-
ing cases where the State was sole shareholder, possessed appointment
and removal powers, and managed the entity's affairs. See Wister, 2
Pet., at 323–324. Pp. 523–527.
(c) Even if an entity is not an arm of the State, a particular suit or
remedy may require dismissal due to sovereign immunity if the State is
nevertheless the real party in interest. See, e. g., Hopkins v. Clemson,
221 U. S. 636. Because NJ Transit never argued that New Jersey is the
real party in interest in either of these cases, dismissal on this ground
is not implicated here. Pp. 527–528.
(d) Applying these principles, NJ Transit is not an arm of New Jersey.
To start, New Jersey structured NJ Transit as a legally separate entity:
It was created as a “body corporate and politic with corporate succes-
sion” possessing typical corporate powers, such as the power to “[s]ue
and be sued,” “enter into contracts,” and “acquire . . . property.”
§§ 27:25–4(a), 27:25–5(a), ( j), (r). NJ Transit's corporate status serves
as strong evidence it is not an arm of the State. Although NJ Transit's
organic statute labels it an “instrumentality of the State,” § 27:25–4(a),
that term lacks the historical weight of the corporate form and says

512 GALETTE
v. NEW JERSEY TRANSIT CORP.
Syllabus
little about arm-of-the-State status. Other aspects of New Jersey law
undercut
any inference from the term “instrumentality”: The New Jer-
sey Tort Claims Act and Contractual Liability Act exclude entities with
sue-and-be-sued authority from the defnition of “State.” §§ 59:1, 59:3,
59:13–2.
Second, as NJ Transit concedes, the State is not formally liable for
any of NJ Transit's debts or liabilities under New Jersey law. § 27:
25–17.
Finally, the control New Jersey exerts over NJ Transit does not
change the conclusion. Although the State exerts substantial control—
e. g., Governor's appointment and removal powers, § 27:25–4(b); cabinet
member chairing the Board, § 27:25–4(d); gubernatorial veto power,
§ 27:25–4(f ); legislative veto over some eminent domain actions, § 27:25–
13(h)—New Jersey law also states NJ Transit “shall be independent of
any supervision or control by the [transportation] department” and re-
quires it to “exercise independent judgment.” §§ 27:25–4(a), 27:25–
4.1(b)(2)(d). This level of control does not meaningfully affect NJ Tran-
sit's status with respect to the arm-of-the-State analysis given that it is
a legally separate corporation responsible for its own judgments.
Pp. 528–530.
(e) NJ Transit's and its amici's counterarguments are unavailing.
NJ Transit contends corporate status is not dispositive, but NJ Transit
is a corporation with all the hallmarks of separate legal personhood, and
the Court has not previously found a similarly structured corporation
to be an arm of the State. NJ Transit's reliance on State Highway
Comm'n of Wyo. v. Utah Constr. Co., 278 U. S. 194, is misplaced because
that case concerned whether the State was the real party in interest in
a particular contract dispute, not whether the entity was in the abstract
an arm of the State.
NJ Transit argues its description as serving “public and essential gov-
ernmental functions,” § 27:25–4(a), and its delegation of substantial pub-
lic powers demonstrate an intent by New Jersey to create it as an arm
of the State. The arm-of-the-State analysis, however, focuses not on
whether the entity serves public functions but on whether the State
chose to serve those functions through its own apparatus or through a
legally separate entity. Cities and counties serve public functions and
exercise police powers but are not arms of the State. Assessing what
qualifes as an essential governmental function can also be “unsound in
principle and unworkable in practice.” Garcia v. San Antonio Metro-
politan Transit Authority, 469 U. S. 528, 546.
NJ Transit also contends that the Court should consider its practical
fnancial relationship with the State, including the degree of state fund-
ing and the likelihood the State would pay its judgments. Neither
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513
Syllabus
Lake Country nor Hess supports this position: Lake Country's discus-
si
on of practical consequences relied on real-party-in-interest cases,
while its arm-of-the-State analysis discussed only whether the Compact
expressly provided that obligations would not bind the States. 440
U. S., at 402. Hess focused on whether the Compact or state laws re-
quired the States to bear judgments, concentrating on formal liability
rather than the entity's practical fnancial relationship with the State.
513 U. S., at 46. Hinging arm-of-the-State status to practical realities
of state funding also risks arbitrary distinctions and inconsistent treat-
ment, as illustrated by New Jersey's funding of NJ Transit's operating
budget oscillating from 15% to 46% over 35 years.
Finally, NJ Transit points to cases outside the sovereign immunity
context to argue that the Court should place more weight on the State's
control over, and practical fnancial relationship with, the entity. Those
cases, however, warned that an entity can count as part of the State for
some but not other purposes, and thus have little bearing on the arm-
of-the-State analysis.
Amici States urge the Court to adopt a rule that a State's own charac-
terization of an entity should be dispositive. This position focuses on
the label the State places on an entity, rather than on whether the State
structured the entity as legally separate. It also prioritizes one charac-
terization (“instrumentality”) over another (“body corporate”), and
there is no good reason to believe the State intended NJ Transit to be
part of the State itself by using “instrumentality” when it simultane-
ously used “body corporate,” a term traditionally understood to create
a “[s]eparate legal personality,” First Nat. City Bank v. Banco Para el
Comercio Exterior de Cuba, 462 U. S. 611, 625. The States' preferred
test does not promote predictability because it still requires courts to
decide which state-law pronouncement is dispositive. Consistency is
promoted by adhering to the long line of cases fnding state-created
corporations formally liable for their own judgments not to be arms of
the States that created them. States maintain the power to structure
themselves as they wish and are free to amend their laws if they intend
corporate entities to remain part of the State and for the State to as-
sume their liabilities. Pp. 530–536.
No. 24–1021, 332 A. 3d 776, reversed; No. 24–1113, 43 N. Y. 3d 463, 264
N. E. 3d 774, affrmed; and both cases remanded.
Sotomayor, J., delivered the opinion for a unanimous Court.
Michael L. Zuckerman, Deputy Solicitor General of New
Jersey, argued the cause for New Jersey Transit Corpora-
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514 GALETTE
v. NEW JERSEY TRANSIT CORP.
Counsel
tion et al. in both cases. With him on the briefs were Mat-
th
ew J. Platkin, Attorney General of New Jersey, Jeremy M.
Feigenbaum, Solicitor General, Jean P. Reilly and Daniel M.
Vannella, Assistant Attorneys General, Nathaniel F. Rubin,
Amy Chung, Marie Cepeda Mekosh, Brett Haroldson, Jona-
than L. Wang, Jonathan W. Allen, Bethanne Prugh, and Levi
Klinger-Christiansen, Deputy Attorneys General, Kather-
ine L. Pringle, and Scott H. Henney.
Michael B. Kimberly argued the cause for Galette and
Colt et al. in both cases. With him on the brief were Pat-
rick G. Simonaitis, Kent Z. Steinberg, and Erica K. Achep-
ohl. Brian Shoot fled a brief for respondent Jeffrey Colt
et al. in No. 24–1113. With him on the brief were Easha
Anand, Brian H. Fletcher, and Pamela S. Karlan.†
†Briefs of amici curiae urging reversal in No. 24–1021 and affrmance
in No. 24–1113 were fled for the American Association for Justice by Jef-
frey R. White and Bruce Plaxen; for the Constitutional Accountability
Center by Elizabeth B. Wydra, Brianne J. Gorod, and Brian Frazelle; for
Federal Courts Scholars by Eric F. Citron and Kathleen Foley; for the
New York State Academy of Trial Lawyers by Michael J. Hutter and
Andrea E. Bonina; for Public Citizen by Nandan M. Joshi, Allison M.
Zieve, and Scott L. Nelson; and for William Baude et al. by Stephen E.
Sachs, pro se.
Briefs of amici curiae urging reversal in No. 24–1113 and affrmance in
No. 24–1021 were fled for the State of Missouri et al. by Catherine L.
Hanaway, Attorney General of Missouri, Louis J. Capozzi III, Solicitor
General, Daniel J. Feith, Kathleen M. Mueller, and Peter A. Bruland;
for the Commuter Rail Coalition by Nathaniel H. Hunt and Charles A.
Spitulnik; and for the National Governors Association by R. Trent
McCotter.
A brief of amici curiae was fled in both cases for the State of Texas
et al. by Ken Paxton, Attorney General of Texas, William R. Peterson,
Solicitor General, Brent Webster, First Assistant Attorney General, Wil-
liam F. Cole, Principal Deputy Solicitor General, and Jeffrey A. Stephens,
Assistant Solicitor General, and by the Attorneys General for their respec-
tive States as follows: Steve Marshall of Alabama, Stephen J. Cox of
Alaska, Tim Griffn of Arkansas, James Uthmeier of Florida, Christopher
M. Carr of Georgia, Raúl Labrador of Idaho, Theodore E. Rokita of Indi-
ana, Brenna Bird of Iowa, Kris W. Kobach of Kansas, Liz Murrill of Loui-

Cite
as: 607 U. S. 509 (2026)
515
Opinion of the Court
Justice Sotomayor delivered the opinion of the Court.
St
ates are generally entitled to immunity from being sued
in another State's courts without their consent. That sover-
eign immunity is personal to the State and thus extends only
to arms of the State itself, not to legally independent entities
that the State creates.
This pair of cases arises out of two accidents, one in New
York City and one in Philadelphia, in which New Jersey
Transit buses struck and injured people. Both victims sued
New Jersey Transit, a corporation created by the New Jer-
sey Legislature, in their respective home courts in New York
and Pennsylvania. The highest courts in those States di-
verged as to whether New Jersey Transit is an arm of New
Jersey. The Court granted certiorari to resolve whether
New Jersey Transit is an arm of New Jersey and thus enti-
tled to the State's sovereign immunity. It is not. Accord-
ingly, the judgment of the New York Court of Appeals is
affrmed and the judgment of the Pennsylvania Supreme
Court is reversed.
I
A
Starting in the 1960s and 1970s, New Jerseyans increas-
ingly drove to work. This shift led railroads to curtail
commuter-rail services connecting the New Jersey suburbs
to New York City and caused signifcant highway congestion.
The New Jersey Legislature responded by providing heavy
subsidies and operational assistance to the major private rail
and bus companies that served the region, but service re-
mained severely fragmented.
siana, Dana Nessel of Michigan, Keith Ellison of Minnesota, Lynn Fitch
of Mississippi, Michael T. Hilgers of Nebraska, Aaron D. Ford of Nevada,
Drew Wrigley of North Dakota, Dave Yost of Ohio, Dave Sunday of Penn-
sylvania, Marty Jackley of South Dakota, Jonathan Skrmetti of Tennes-
see, Jason Miyares of Virginia, and Keith G. Kautz of Wyoming.
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516 GALETTE
v. NEW JERSEY TRANSIT CORP.
Opinion of the Court
In search of a new solution, the Legislature in 1979 created
the
New Jersey Transit Corporation (NJ Transit). See N. J.
Public Transportation Act of 1979, N. J. Stat. § 27:25–1 et seq.
(2026). The State structured the entity as a “body corpo-
rate and politic with corporate succession.” § 27:25–4(a).
The “corporation” was “constituted as an instrumentality of
the State exercising public and essential governmental func-
tions.” Ibid. It was “allocated within the Department of
Transportation,” but “the corporation” was “independent of
any supervision or control by the department or by any body
or offcer thereof.” Ibid.
The State gave NJ Transit signifcant authority. For in-
stance, it has the power to: make its own bylaws; sue and be
sued; enter into contracts; acquire or deal in and with real
or personal property; raise funds from fares, gifts, grants, or
loans; own and control any corporate entity acquired or
formed to carry out its objectives; adopt rules and regula-
tions as necessary; and exercise eminent domain powers.
§§ 27:25–5, 27:25–13. Moreover, NJ Transit's organic statute
provides that “[n]o debt or liability of the corporation shall
be deemed or construed to create or constitute a debt, liabil-
ity, or a loan or pledge of the credit of the State.” § 27:25–
17. It also states that “[a]ll expenses incurred by the corpo-
ration . . . shall be payable from funds available to the corpo-
ration” and that “no liability or obligation shall be incurred
by the corporation beyond the extent to which moneys are
available.” Ibid.
The corporation is governed by a board of directors
(Board). § 27:25–4(b). The Board has 13 members, 11 of
whom are voting members. Ibid. The voting members
consist of three ex offcio members from the Governor's cabi-
net, six members appointed with the advice and consent of
the Senate, and two members appointed on the recommenda-
tion of the President of the Senate and Speaker of the Gen-
eral Assembly. Ibid. The Governor may remove any
Board member (eight of whom only for cause) and may veto
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517
Opinion of the Court
any action the Board takes. §§ 27:25–4(b), (f ). The Legis-
l
ature may a lso veto some emi nent domai n ac ti ons.
§ 27:25–13(h).
Once created, the Board adopted its own bylaws and hired
a President and CEO to manage day-to-day operations. It
then acquired and consolidated the assets of several major
rail and bus services operating in and around New Jersey.
In the last several decades, the Legislature has appropriated
funding for NJ Transit's operational budget each year, cover-
ing anywhere from 15% to 46% of that budget. Brief for NJ
Transit 35. NJ Transit also receives funding from the State
and the Federal Government for its capital projects.
1
NJ
Transit's revenues have fuctuated over time; in 2024, it gen-
erated $832 million in operating revenues.
2
Today, NJ Transit is the Nation's third largest provider of
bus, rail, and light rail transit, operating within a 5,300-
square-mile area that includes New Jersey, New York City,
and Philadelphia.
B
In 2017, Jeffrey Colt was crossing 40th Street in Midtown
Manhattan when an NJ Transit bus struck him and knocked
him to the ground. A year later, Cedric Galette was a pas-
senger in a car driving down Market Street in Philadelphia
when an NJ Transit bus crashed into the car. Both were
seriously injured.
Colt and Galette sued NJ Transit for negligence in their
respective home state courts: Colt in New York and Galette
in Pennsylvania. NJ Transit moved to dismiss both law-
suits, arguing that it is an arm of New Jersey and thus enti-
tled to New Jersey's sovereign immunity.
The New York Court of Appeals held that NJ Transit is
not an arm of New Jersey. 43 N. Y. 3d 463, 466, 264 N. E.
1
See NJ Transit Corp., New Jersey Transit Corporation Annual Finan-
cial Report (Year Ended June 30, 2024), p. 11, https://perma.cc/Z2H5-ZJ48.
2
Id., at 4.
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518 GALETTE
v. NEW JERSEY TRANSIT CORP.
Opinion of the Court
3d 774, 776 (2024). The court frst observed that the Federal
Cour
ts of Appeals have analyzed whether an entity is an
arm of the State using “an array of multifactor and multistep
tests.” Id., at 472, 264 N. E. 3d, at 780.
3
It then distilled
from those cases a three-factor inquiry: “(1) how the State
defnes 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.” Id., at 473, 264 N. E. 3d, at
781. Applying those factors, the court held that NJ Transit
is not an arm of New Jersey and that Colt's suit could thus
proceed.
The Pennsylvania Supreme Court, however, held the oppo-
site, concluding that NJ Transit is an arm of New Jersey.
332 A. 3d 776, 779 (2025). It applied its own six-factor test,
which considers: “ `(1) the legal classifcation and description
of the entity within the governmental structure of the State,
both statutorily and under its caselaw; (2) the degree of con-
trol the State exercises over the entity, both through the
power of appointment, and the power to subsequently veto
its actions; (3) the power of the entity's board to independ-
ently raise revenue on its own; (4) the degree of funding pro-
vided by the State to the entity relative to other funding
sources; (5) whether any monetary obligation incurred by the
entity is binding upon the State; and (6) whether the core
function of the entity . . . can be categorized as a function
which is normally performed by local government or State
government.' ” Id., at 785–786 (brackets omitted). Under
that test, the Pennsylvania Supreme Court concluded that
3
See, e. g., Fresenius Medical Care Cardiovascular Resources, Inc. v.
Puerto Rico and Caribbean Cardiovascular Center Corp., 322 F. 3d 56, 68
(CA1 2003); Mancuso v. New York State Thruway Auth., 86 F. 3d 289, 293
(CA2 1996); Karns v. Shanahan, 879 F. 3d 504, 513 (CA3 2018); Spring-
boards to Education, Inc. v. McAllen Independent School Dist., 62 F. 4th
174, 178–179 (CA5 2023); Kohn v. State Bar of Cal., 87 F. 4th 1021, 1027–
1030 (CA9 2023) (en banc); Puerto Rico Ports Auth. v. Federal Maritime
Comm'n, 531 F. 3d 868, 874 (CADC 2008) (Kavanaugh, J.).
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as: 607 U. S. 509 (2026)
519
Opinion of the Court
NJ Transit is an arm of New Jersey and thus dismissed Gal-
ette'
s suit.
This Court granted certiorari to resolve the confict and
consolidated the cases. 606 U. S. 959 (2025).
4
II
A State's immunity from suit is a “fundamental aspect of
the sovereignty which the States enjoyed before the ratif-
cation of the Constitution, and which they retain today.”
Alden v. Maine, 527 U. S. 706, 713 (1999). State sovereign
immunity bars private parties from suing a nonconsenting
State in that State's own courts or in the courts of another
State. See Franchise Tax Bd. of Cal. v. Hyatt, 587 U. S.
230, 249 (2019). In so doing, it prevents “the indignity of
subjecting a State to the coercive process of judicial tribu-
nals at the instance of private parties.” In re Ayers, 123
U. S. 443, 505 (1887). It also protects the State from “being
thrust . . . against its will, into the disfavored status of a
debtor, subject to the power of private citizens to levy on its
treasury.” Alden, 527 U. S., at 749.
Sovereign immunity, however, is “ `personal' ” to the State
itself. College Savings Bank v. Florida Prepaid Postsec-
ondary Ed. Expense Bd., 527 U. S. 666, 675 (1999). It does
not extend to “lesser entities,” such as “municipal corpora-
tion[s] or other governmental entit[ies]” that are not “arm[s]
of the State.” Alden, 527 U. S., at 756. Whether an entity
is “an arm of the State . . . is a question of federal law” that
“can be answered only after considering the provisions of
state law that defne the agency's character.” Regents of
Univ. of Cal. v. Doe, 519 U. S. 425, 429, n. 5 (1997). Before
addressing whether NJ Transit is an arm of New Jersey, the
4
After this Court granted certiorari, NJ Transit fled an application for
stay of Colt's pending damages trial in the Supreme Court of the State of
New York. This Court stayed the trial pending issuance of the mandate
in these cases. 606 U. S. 1051 (2025).

520 GALETTE
v. NEW JERSEY TRANSIT CORP.
Opinion of the Court
Court frst sets forth the principles that have guided the
ar
m-of-the-State inquiry in its precedents.
A
1
When examining the relationship between the State and
an entity it created, this Court's early cases focused on
whether the entity was a separate legal person from the
State. One key marker of separate legal personhood was
the corporate form. At common law, a “corporation” was
“an artifcial person, existing in contemplation of law, and
endowed with” “certain immunities, privileges, and capac-
ities in its collective character, which do not belong to the
natural persons composing it.” Trustees of Dartmouth Col-
lege v. Woodward, 4 Wheat. 518, 667 (1819). As a result of
its separate legal personhood, a corporation could “sue and
be sued by its own members” and “contract with them in the
same manner as with any strangers.” Id., at 667–668.
This Court frst applied this idea of corporate personhood
to the arm-of-the-State inquiry in Bank of United States v.
Planters' Bank of Ga., 9 Wheat. 904 (1824). It held that a
state-chartered bank was not an arm of Georgia because it
was a “corporation” and “the judgment” would “be satisfed
by the property of the corporation, not by that of the individ-
ual corporators.” Id., at 907. Chief Justice Marshall ex-
plained that the “State of Georgia, by giving to the Bank the
capacity to sue and be sued, voluntarily strips itself of its
sovereign character, so far as respects the transactions of
the Bank, and waives all the privileges of that character.”
Id., at 907–908. Subsequent cases reaffrmed Planters'
Bank's holding, relying on the corporate status of other
state-chartered banks to deny them sovereign immunity.
That was true even when the State exerted signifcant con-
trol over the bank, such as by being its sole shareholder or
possessing appointment and removal power over its offcers.
See, e. g., Bank of Kentucky v. Wister, 2 Pet. 318, 323–324
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(1829); Briscoe v. Bank of Kentucky, 11 Pet. 257, 326–327
(1837);
Curran v. Arkansas, 15 How. 304, 309 (1853).
The Court applied the same reasoning to cities and coun-
ties that were created as municipal corporations. The Court
explained that the corporate form of such entities, which in-
cluded the power to “sue and be sued,” likewise made them
legal persons separate from the sovereign and thus not enti-
tled to share in the State's sovereign immunity. See Lin-
coln County v. Luning, 133 U. S. 529, 530–531 (1890).
Employing similar logic, the Court also held that entities
created by the Federal Government were not its “arms”
when they possessed the separate personhood of a corpora-
tion. See, e. g., Metropolitan R. Co. v. District of Columbia,
132 U. S. 1, 7–8 (1889); Sloan Shipyards Corp. v. United
States Shipping Bd. Emergency Fleet Corporation, 258 U. S.
549, 566–568 (1922); Federal Land Bank of St. Louis v.
Priddy, 295 U. S. 229, 235–237 (1935); Keifer & Keifer v. Re-
construction Finance Corporation, 306 U. S. 381, 393–394
(1939).
2
Beginning in the mid-20th century, the Court began to con-
sider additional features of an entity's relationship with the
State in the arm-of-the-State inquiry. Even so, the analysis
remained focused on discerning whether the State had struc-
tured the entity to be legally separate, and corporate status
remained central to that analysis.
For example, in Moor v. County of Alameda, 411 U. S. 693
(1973), the Court addressed whether a county was an arm of
the State, and therefore not a “citizen,” for purposes of diver-
sity jurisdiction. Id., at 717–718 (explaining that a State is
not a “citizen” for diversity purposes). The county at issue
argued that its designation, by the California Constitution,
as a “ `legal subdivisio[n] of the State' ” established its status
as an arm of the State. Id., at 718–719. The Court, how-
ever, disagreed. It explained that the county was also cre-
ated as a “ `body corporate and politic,' ” which meant,
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“[m]ost notably,” that the county was given “ `corporate pow-
ers,
' ” such as the ability to “sue and be sued,” to “deal in
property,” and to make “contract[s].” Id., at 719. Finan-
cially, moreover, the county alone would be “liable for all
judgments against it” and could issue bonds without creating
an “obligation on the part of the State.” Id., at 719–720.
Finally, the Court observed that, given the county's corpo-
rate status, the California Supreme Court had held that
counties could be sued by the State. Id., at 720–721. The
Court thus concluded that the county was not an arm of the
State because the county had a “suffciently independent cor-
porate character.” Id., at 721.
Resting on the frmly established rule that municipal cor-
porations and counties are not arms of the State, the Court
in Mt. Healthy City Bd. of Ed. v. Doyle, 429 U. S. 274 (1977),
framed the arm-of-the-State inquiry as asking whether an
entity is “more like a county or city” than “like an arm of
the State.” Id., at 280. In answering that question for the
entity at issue, a local school board, the Court examined the
characteristics of the board under state law. It observed
that the board was created as a “ `political subdivisio[n]' ” dis-
tinct from the “ `State,' ” that it had powers to issue bonds
and levy taxes, and that it received money and guidance from
the State. Ibid. Those characteristics led the Court to
conclude that the board was “more like a county or city” and
thus not entitled to immunity. Id., at 280–281.
The Court again asked whether an entity was “comparable
to a county or municipality” or rather an arm of the State
in Lake Country Estates, Inc. v. Tahoe Regional Planning
Agency, 440 U. S. 391, 401 (1979). There, the entity at issue
was the Tahoe Regional Planning Agency, a bistate entity
created by California and Nevada alongside the Federal Gov-
ernment under the Compact Clause. Id., at 394. The
Court explained that the interstate compact created the
agency as a “ `separate legal entity' ” and a “ `political subdi-
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binding on either State. Id., at 401–402. The Court also
observed
that most of the agency's governing members were
not appointed by the States; that its rulemaking authority
was not subject to any state-level veto; that the agency's
function (land-use regulation) was a traditional local govern-
ment function; and that California had previously sued it.
Ibid. The agency, the Court concluded, was therefore not
an arm of either State. Id., at 402.
Finally, in Hess v. Port Authority Trans-Hudson Corpora-
tion, 513 U. S. 30 (1994), the Court again found that a bi-
state entity created under the Compact Clause was not an
arm of the State. It explained that the Authority was de-
scribed in the compact and state laws as a “ `joint or common
agency,' ” a “ `body corporate and politic,' ” and a “ `municipal
corporate instrumentality' ” of New York and New Jersey.
Id., at 44–45. Financially, the States were not liable for the
Authority's debts or judgments; the Authority was barred
from pledging the credit of either State or from borrowing
money in any name but its own; and the entity generated its
own revenue. Id., at 46. The Court acknowledged that the
States exerted signifcant control over the Authority—they
had appointment and removal power over the commissioners,
the Governors could veto the Authority's actions, and the
States' legislatures could determine what projects the Au-
thority would pursue—but rejected control as a “dispositive”
factor in its overall analysis. Id., at 47–48. In the end,
after considering the above facts and the underlying pur-
poses of sovereign immunity, the Court concluded that the
Authority's status as a “discrete entity” that “generates its
own revenues” and “pays its own debts” ultimately rendered
it not an arm of the State. Id., at 52.
B
Although the Court's arm-of-the-State cases have ac-
counted for various considerations over time, those prece-
dents have consistently, and predomi nantly, exami ned

524 GALETTE
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whether the State structured the entity as a legally separate
entity
liable for its own judgments.
The clearest evidence that a State has created a legally
separate entity is that it created a corporation with the tradi-
tional corporate powers to sue and be sued, hold property,
make contracts, and incur debt. See Planters' Bank, 9
Wheat., at 907–908; Lincoln County, 133 U. S., at 530–531;
Hess, 513 U. S., at 44–45. The corporate form is particularly
salient because it has “long [been] settled as a matter of
American corporate law that separately incorporated organi-
zations are separate legal units with distinct legal rights and
obligations.” Agency for Int'l Development v. Alliance for
Open Society Int'l, Inc., 591 U. S. 430, 435 (2020). Indeed,
“[s]eparate legal personality has been described as `an almost
indispensable aspect of the public corporation.' ” First Nat.
City Bank v. Banco Para el Comercio Exterior de Cuba, 462
U. S. 611, 625 (1983).
In fact, a State might choose to create a corporation,
rather than an unincorporated government agency, precisely
because of its independent legal status. This move allows
the State to distance the entity from burdens that apply to
the State itself or to distance the State from the burdens
that the corporate entity may incur. For instance, States
initially created banks as corporations in part because States
themselves are not permitted to “emit Bills of Credit” under
the Constitution. Art. I, § 10; see Briscoe, 11 Pet., at 326–
327. States have also created corporations to circumvent
state constitutional debt limitations placed on state agencies.
See, e. g., Schulz v. State, 84 N. Y. 2d 231, 243–244, 639 N. E.
2d 1140, 1145–1146 (1994). When it comes to facilitating cer-
tain projects, such as high-risk, long-term capital invest-
ments, States may establish corporations in order to shield
themselves from the responsibility and, more importantly,
the l iabi l ity that the cor porati on's projects may incur.
When a State makes such a decision, courts should presume
that the corporation enjoys all the advantages and disadvan-
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tages of separate legal status, including the fact that the cor-
porate
entity is no longer part of the State itself.
The corporate form, however, is not the only structure that
signals the State has created a legally separate entity.
Other aspects of state law may indicate legal separateness
as well. Most obviously, the entity could be described as a
“ `separate legal entity.' ” Lake Country, 440 U. S., at 401.
State law also might defne the entity as not part of the State
for other purposes. See Moor, 411 U. S., at 719 (state law
defned county as a “ `local public entity' ” instead of the
“State” for purposes of suits against public entities). The
ultimate question remains whether the State structured the
entity as part of itself or as legally independent.
The Court's precedents also focus on whether the entity is
liable for its own judgments or whether the State is formally
liable, i.e., whether “any judgment” against the entity “must
be satisfed out of the state treasury.” Hess, 513 U. S., at
51; Planters' Bank, 9 Wheat., at 907; see also Regents, 519
U. S., at 430. One of the central “underlying rationales for
state sovereign immunity” is protecting States' “ability to
make [their] own decisions about `the allocation of scarce re-
sources.' ” Lewis v. Clarke, 581 U. S. 155, 167 (2017) (quot-
ing Alden, 527 U. S., at 751). If the State is formally liable
for judgments against an entity, that entity is more likely
to be an arm of the State because its liabilities necessarily
undermine the State's ability to make choices about how to
allocate the State fsc.
In contrast to formal legal liability, an entity's practical
fnancial relationship with the State, such as its expectation
that the State would cover its judgments if needed, has less
relevance. Just as a State cannot lose its sovereign immu-
nity by “requir[ing] a third party to reimburse it” (such as
by buying insurance), Regents, 519 U. S., at 431, a State can-
not imbue an entity with its immunity simply by agreeing to
“pick up the tab” (such as by choosing to indemnify the en-
tity), Lewis, 581 U. S., at 165. Similarly, a State's history of

526 GALETTE
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subsidizing an entity carries little weight. State govern-
ments
routinely fund nonprofts, private corporations, and
municipalities, but the receipt of those state funds does not
mean that those entities become part of the State itself, even
when the funding is a “signifcant amount,” Mt. Healthy, 429
U. S., at 280.
Finally, the Court's cases also suggest that courts may con-
sider the degree of control the State exerts over the entity,
but courts should do so with caution. Control is not espe-
cially probative because “ultimate control of every state-
created entity resides with the State,” even those that are
not arms of the State. Hess, 513 U. S., at 47. Cities, coun-
ties, school boards, and state-created banks have all been
recognized as legally separate entities from the States, even
though “the State may destroy or reshape any” of these enti-
ties that “it create[d].” Ibid. Further, “[g]auging actual
control . . . can be a `perilous inquiry' ” and “ `an uncertain
and unreliable exercise.' ” Ibid. (quoting Note, 92 Colum.
L. Rev. 1243, 1284 (1992)). That is because the State might
exercise control through various formal and informal levers,
from appointing and removing offcers, to directing projects
or vetoing actions, to monitoring day-to-day operations, all of
which are diffcult to weigh against one another individually,
let alone when assessing them in different combinations.
In fact, this Court has never once found a corporation that
was liable for its own judgments to be an arm of the State,
even when the State had signifcant control over the entity.
That includes cases in which the State was the sole share-
holder, possessed appointment and removal powers over the
entity's offcers, and “ `manage[d]' ” the entity's “ `affairs.' ”
Wister, 2 Pet., at 323–324 (Bank of Commonwealth of Ken-
tucky); see Briscoe, 11 Pet., at 344 (Story, J., dissenting) (de-
scribing Kentucky's appointment and removal powers over
the Bank of Commonwealth of Kentucky). It also includes a
case in which the State possessed appointment and removal
powers over the entity's offcers, veto power over its actions,
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and “determine[d] the projects [it] undert[ook].” Hess, 513
U
. S., at 44–47.
5
C
Even if an entity is not an arm of the State, the Court has
long recognized that a State's sovereign immunity may still
require dismissal of the action if the State is the real party
in interest in that particular case. Although the arm-of-the-
State and the real-party-in-interest doctrines are related,
they can provide separate bases for dismissal.
When a State is not named as a defendant in a lawsuit, it
may still be the real party in interest. For instance, a dam-
ages claim against a state or federal offcer in their offcial
capacity is barred by sovereign immunity because “[t]he real
party in interest is the government entity, not the named
offcial.” Lewis, 581 U. S., at 162; see Edelman v. Jordan,
415 U. S. 651, 663–665 (1974) (suit for retroactive damages
against state offcial in his offcial capacity required dismissal
because it ran against the state treasury). Similarly, a par-
ticular remedy may be barred by sovereign immunity if it
runs directly against the State. See Ayers, 123 U. S., at
502–503 (injunction to compel a State's attorney general to
perform contract required dismissal because it was “in sub-
stance, though not in form, a suit against the state”); Gover-
nor of Georgia v. Madrazo, 1 Pet. 110, 123–124 (1828) (equita-
ble relief in suit against a Governor required dismissal
because “the state itself may be considered as a party on the
5
This discussion is not intended to exhaust all considerations that may
be relevant to the arm-of-the-State analysis, and instead focuses on the
considerations most pertinent to these cases. Additional considerations
may apply, for example, in cases involving bistate entities or unincorpo-
rated entities. See Hess, 513 U. S., at 40 (describing that “[b]istate enti-
ties occupy a signifcantly different position in our federal system than do
the States themselves”); Auer v. Robbins, 519 U. S. 452, 456, n. 1 (1997)
(cursorily conducting analysis to conclude that an unincorporated Board of
Police Commissioners, Mo. Rev. Stat. §§ 84.210, 84.030 (1994), was not an
arm of Missouri).
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record”). In these instances, the case or remedy requires
dismissa
l because the State is the real party in interest, not
because the named defendant is an arm of the State.
This Court's decision in Hopkins v. Clemson, 221 U. S. 636
(1911), helps illustrate the difference between these two re-
lated paths of analysis. In Hopkins, a plaintiff sued a state
college for building an embankment on the side of a river,
which redirected the river's fow and “ruined” his down-
stream property. Id., at 641–642. He sought both damages
and an order to remove the embankment. The Court held
that the damages claim could proceed because the college
was not an arm of the State, explaining that the college was
instead a corporation that “might sue and be sued, plead and
be impleaded, in its corporate name.” Id., at 646. Never-
theless, the Court explained that, because the State owned
the title to the land on which the embankment sat, the State
might be a “necessary party.” Id., at 648–649. If so, any
order to remove the embankment would run directly against
the State and would require the State's consent to be sued.
Ibid. The Court therefore remanded for the lower court to
determine whether the State was a necessary party and to
“stri[ke]” that part of the suit if it was. Id., at 649. In
other words, the injunctive remedy would have required dis-
missal if the State were the real party in interest, but not
because the college was an arm of the State.
6
III
A
Under the principles articulated above, NJ Transit is not
an arm of New Jersey.
To start, New Jersey structured NJ Transit as a legally
separate entity. NJ Transit was created as a “body corpo-
6
NJ Transit has never argued that New Jersey is the real party in
interest in either of these two cases. These cases therefore do not impli-
cate whether dismissal is required on this ground.

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rate and politic with corporate succession.” N. J. Stat.
§
27:25–4(a). Consistent with that label, NJ Transit pos-
sesses typical corporate powers, such as the power to “[s]ue
and be sued,” “enter into contracts,” and “[p]urchase, . . . or
otherwise acquire, . . . real or personal property,” among
others. §§ 27:25–5(a), ( j), (r). It also has the power to
“[m]ake and alter bylaws,” “[s]et and collect fares,” raise
funds from “gifts, grants, or loans,” “[e]stablish” its own “op-
erating divisions,” “[a]dopt and maintain” its own “employee
beneft programs,” and even “[o]wn” and “control” any “cor-
porate entity” that it “acquired” or “formed” to carry out its
statutory objectives. §§ 27:25–5(c), (g), (m), (n), (t), (u). NJ
Transit's corporate status serves as strong evidence that it
is not an arm of the State. See, e. g., Planters' Bank, 9
Wheat., at 907–908; Hess, 513 U. S., at 44–46.
True, NJ Transit's organic statute also labels it an “instru-
mentality of the State.” § 27:25–4(a). The term “instru-
mentality,” however, lacks the historical weight the corpo-
rate form carries and says little about whether an entity is
an arm of the State. See, e. g., Regents, 519 U. S., at 429
(asking “whether a state instrumentality may invoke the
State's immunity,” making clear that not all state instrumen-
talities are immune). Moreover, other aspects of New Jer-
sey law undercut any inference that the term “instrumental-
ity” favors NJ Transit's position. The New Jersey Tort
Claims Act, for instance, excludes entities with sue-and-be-
sued authority, like NJ Transit, from its defnition of the
“State.” §§ 59:1–1, 59:1–3 (2026). The New Jersey Contrac-
tual Liability Act also specifes that entities with sue-and-
be-sued authority are not part of the State. § 59:13–2. All
told, NJ Transit is therefore structured as a legally separate
entity under state law.
Second, the State is not formally liable for any of NJ Tran-
sit's debts or liabilities. New Jersey law provides that “[n]o
debt or liability of the corporation shall be deemed or con-
strued to create or constitute a debt, liability, or a loan or

530 GALETTE
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pledge of the credit of the State.” § 27:25–17. Before this
Cour
t, NJ Transit concedes that “New Jersey is not formally
liable for NJ Transit's debts.” Brief for NJ Transit 34.
Finally, the control that New Jersey exerts over NJ Tran-
sit does not change the overall conclusion here. Undoubt-
edly, the State exerts a substantial amount of control over
NJ Transit. The Governor has appointment and removal
powers over the Board, § 27:25–4(b); a state cabinet member
(the Commissioner of Transportation) chairs the Board,
§ 27:25–4(d); the Governor may veto any of the Board's
actions, § 27:25–4(f ); and the Legislature may veto some
eminent-domain actions, § 27:25–13(h). On the other hand,
New Jersey law states that NJ Transit “shall be independent
of any supervision or control by the [transportation] depart-
ment or by any body or offcer thereof,” and requires that it
“exercise independent judgment.” §§ 27:25–4(a), 27:25–
4.1(b)(2)(d). In addition, the Governor's removal authority
for 8 of the 13 board members is limited to for-cause removal.
§ 27:25–4(b). This level of control does not meaning-
fully affect NJ Transit's status, given the fact that it is a
legally separate corporation and is responsible for its own
judgments.
B
NJ Transit's and its amici's counterarguments are unavail-
ing. To start, NJ Transit contends that formal corporate
status, which ordinarily includes a sue-and-be-sued power, is
not dispositive in the arm-of-the-State analysis. True: As
described above, the “corporation” label itself is not disposi-
tive. See supra, at 523–525. NJ Transit, however, is a cor-
poration that has all the hallmarks of separate legal person-
hood, such as the power to sue and be sued, make contracts,
and hold property in its own name, which all indicate that it
is not an arm of the State and does not share in its immunity
from suit. This Court has not previously found a similarly
structured corporation to be an arm of the State.
NJ Transit also contends that this Court's precedents have
placed little weight on the formal aspects of corporate sepa-
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rateness, such as sue-and-be-sued clauses, citing State High-
w
ay Comm'n of Wyo. v. Utah Constr. Co., 278 U. S. 194
(1929), for support. First, that case does not help its posi-
tion. There, the Court held that a suit against the State
Highway Commission of Wyoming had to be dismissed (for
lack of diversity jurisdiction) because the contract at issue
was between a construction company and the “State [of Wyo-
ming], acting through the highway commission,” and thus
the “real part[y] in interest” was the State itself. Id., at
199–200. Given that the suit, “in effect, [wa]s against the
State and must be so treated,” it was “unnecessary for [the
Court] to consider” other formal aspects of legal separate-
ness like the Highway Commission's “grant of power to sue
or be sued.” Id., at 199. The important fact was not that
the commission was, in the abstract, an arm of the State; it
was rather that this particular “suit” was against the State
as the “real part[y] in interest.” Id., at 199–200. Second,
and more importantly, many of this Court's cases throughout
history have emphasized that the corporate form, which typi-
cally includes the power to sue and be sued, weighs strongly
against arm-of-the-State status. See supra, at 520–523.
7
7
NJ Transit also relies on several cases that did not squarely confront
the arm-of-the-State inquiry. Two cases addressed whether, and to what
extent, a “sue and be sued” clause waives sovereign immunity. See
Thacker v. TVA, 587 U. S. 218, 221 (2019); College Savings Bank v. Florida
Prepaid Postsecondary Ed. Expense Bd., 527 U. S. 666, 676 (1999). Nei-
ther case addressed the relevance of the clause with respect to the arm-
of-the-State inquiry, however, because the Court assumed in both cases
that the entities at issue were entitled to sovereign immunity to begin
with. Thacker, 587 U. S., at 221; College Savings Bank, 527 U. S., at 671,
676. Another two cases held that a plaintiff State could sue another State
for actions taken by a state-created corporate agency at the defendant
State's direction. See Missouri v. Illinois, 180 U. S. 208, 242 (1901); New
York v. New Jersey, 256 U. S. 296, 302 (1921). Those cases did not address
whether the corporate entities were arms of the State (such that every
suit against them should be considered a suit against the State itself ), but
rather held that the State was the proper defendant in those particular
cases because the State directed the agency to conduct the activities over
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Next, NJ Transit argues that New Jersey demonstrated
its
intent to create NJ Transit as an arm of the State by
describing it as serving “public and essential governmental
functions,” § 27:25–4(a), and delegating to it “substantial ple-
nary public powers,” such as the power to operate a police
force, exercise eminent domain power, and promulgate regu-
lations, Brief for NJ Transit 22. The arm-of-the-State anal-
ysis, however, focuses not on whether the entity serves pub-
lic functions, but rather on whether the State has chosen to
serve those public functions through its own apparatus or
through that of a legally separate entity. That is why the
Court has long recognized that cities and counties are not
arms of the State despite serving public functions and exer-
cising police powers. See Lincoln County, 133 U. S., at 530–
531 (municipal corporations); Mt. Healthy, 429 U. S., at 281
(school board). It is also why a “charitable organization may
undertake rescue or other good work which, in its absence,
we would expect the State to shoulder[, b]ut none would con-
clude . . . that in times of food or famine the American Red
Cross, to the extent it works for the public, acquires the
States' . . . immunity” as a result. Hess, 513 U. S., at 51.
Moreover, assessing what qualifes as an essential govern-
mental function can be “unsound in principle and unwork-
able in practice.” Garcia v. San Antonio Metropolitan
Transit Authority, 469 U. S. 528, 546 (1985). It has the
tendency to produce “inconsistent results” and hamper
States' abilities to experiment by forcing them to “pay an
added price when they meet the changing needs of their citi-
zenry by taking up functions that an earlier day and a differ-
ent society left in private hands.” Id., at 546–547. Here,
for example, transportation services and infrastructure are
“not readily classifed as typically state or unquestionably
local” given that “States and municipalities alike own and
operate bridges, tunnels, ferries, marine terminals, airports,
bus terminals, industrial parks, [and] also commuter rail-
roads.” Hess, 513 U. S., at 45. What is more, as shown by

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the history of NJ Transit itself, these services and functions
used
to be fulflled primarily by private railroad and bus
companies. See supra, at 517 (describing NJ Transit's ac-
quisition of major private rail and bus companies). Instead
of deciding whether the operation of commuter rail and buses
is a governmental function, the arm-of-the-State analysis
concentrates on the fact that New Jersey chose to pursue
those functions through the creation of a legally separate
corporation.
NJ Transit also contends that the Court should consider
not only formal liability, but also the practical reality of its
fnancial relationship with the State. According to NJ Tran-
sit, this includes whether and to what degree the State funds
the entity and whether the State is likely to voluntarily pay
the entity's judgments. Brief for NJ Transit 34–37. In
support of this position, NJ Transit relies on Lake Country
and Hess. Neither case bears the weight NJ Transit places
on it.
It is true, as Lake Country explained, that this Court has
allowed entities to invoke sovereign immunity “in order to
protect the state treasury from liability that would have had
essentially the same practical consequences as a judgment
against the State itself.” 440 U. S., at 401. That statement,
however, relied on cases concerning whether a State was the
real party in interest in a particular lawsuit. Ibid., and n. 18
(citing Edelman, 415 U. S. 651; and Ford Motor Co. v. De-
partment of Treasury of Ind., 323 U. S. 459 (1945)). As dis-
cussed above, that is a separate question from whether an
entity is the arm of the State. See supra, at 527–528. On
that question, Lake Country's arm-of-the-State analysis dis-
cussed only whether the Compact “expressly provide[d] that
obligations of [the entity] shall not be binding on either
State.” 440 U. S., at 402 (emphasis deleted).
Turning to Hess, that case framed the inquiry as asking
whether the “State [was] in fact obligated to bear” the enti-
ty's judgments “both legally and practically,” and mentioned
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534 GALETTE
v. NEW JERSEY TRANSIT CORP.
Opinion of the Court
that the entity had generated its own revenue for years.
513
U. S., at 45–46, 51. In answering that inquiry, the Court
focused on whether “the compact or the laws of either State”
required them to do so, and the Court ultimately concluded
that the States' lack of “legal liability for Port Authority
debts” and formal “responsib[ility] for the payment of judg-
ments” cut against arm-of-the-State status. Id., at 46.
Hess's concentration on formal liability, rather than an over-
all evaluation of the entity's fnancial relationship with the
State, is confrmed by this Court's other precedents as well.
See, e. g., Planters' Bank, 9 Wheat., at 907 (“judgment[s]”
against state-created bank would “be satisfed by the prop-
erty of the corporation, not by that of the individual corpora-
tors”); Moor, 411 U. S., at 719 (the “county alone” would be
“liable for all judgments”).
8
Hinging an entity's arm-of-the-State status to the practical
realities of state funding also risks arbitrary distinctions and
inconsistent treatment of the same entity. These cases illus-
trate the problem: In the last 35 years, New Jersey's funding
of NJ Transit's annual operating budget has oscillated any-
where from 15% to 46% of the budget. Brief for NJ Transit
35. Although NJ Transit maintains that it is and has always
been an arm of New Jersey, it offers no meaningful way to
decide how much funding is enough to prove it is “fnancially
integrated with the State and fnancially dependent on it.”
Id., at 34. The more apt question instead is whether the
State would be formally obligated to pay the entity's judg-
ments. See, e. g., Planters' Bank, 9 Wheat., at 907; Moor,
411 U. S., at 719.
8
Hess also discussed two Circuit cases involving “transit facilities that
place[d] heavy fscal tolls on their founding States.” 513 U. S., at 49–50.
In those cases, even though the entities' originating statutes did not make
the States liable for their judgments, the States operated the respective
entities under distinctive federal statutory obligations not present here.
See Alaska Cargo Transp., Inc. v. Alaska R. Corp., 5 F. 3d 378, 381 (CA9
1993); Morris v. WMATA, 781 F. 2d 218, 225–227 (CADC 1986).

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Cite
as: 607 U. S. 509 (2026)
535
Opinion of the Court
More generally, NJ Transit advocates for an arm-of-the-
St
ate inquiry that places more weight on the State's control
over, and practical fnancial relationship with, the entity.
For support, NJ Transit points to a series of cases outside
the sovereign immunity context. See Biden v. Nebraska,
600 U. S. 477 (2023) (standing); Arkansas v. Texas, 346 U. S.
368 (1953) (standing); Lebron v. National Railroad Passen-
ger Corporation, 513 U. S. 374 (1995) (First Amendment);
Osborn v. Bank of United States, 9 Wheat. 738 (1824) (inter-
governmental tax immunity). As those very cases warned,
however, an entity “can count as part of the State for some
but not `other purposes.' ” Nebraska, 600 U. S., at 494, n. 3;
see Lebron, 513 U. S., at 392, 400 (holding that Amtrak is
“part of the Government for purposes of the First Amend-
ment” but lacks the Government's “sovereign immunity”);
see also Priddy, 295 U. S., at 235 (“Immunity of corporate
government agencies from suit and judicial process . . . is
less readily implied than immunity from taxation”). Accord-
ingly, the analysis in those cases has little bearing on the
arm-of-the-State analysis here.
Finally, 23 States contend as amici curiae that the current
use of multifactor balancing tests in the lower courts has
created signifcant uncertainty. To address this problem,
they urge this Court to adopt a rule that a State's own char-
acterization of an entity, such as New Jersey's labeling of NJ
Transit as an “instrumentality of the State,” should be
dispositive.
One problem with the States' position is that it focuses on
the label a State places on an entity, rather than assessing
whether the State structured the entity as legally separate.
See supra, at 525. Another problem is that the States' posi-
tion prioritizes one of New Jersey's characterizations, the
term “instrumentality,” over another, “body corporate.”
There is no good reason to believe that the State intended
for NJ Transit to be part of the State itself by using the
word “instrumentality,” when it simultaneously used the

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v. NEW JERSEY TRANSIT CORP.
Opinion of the Court
word “body corporate,” a term traditionally understood to
create
a “[s]eparate legal personality.” First Nat. City
Bank, 462 U. S., at 625; see Moor, 693 U. S., at 719–720 (hold-
ing that designation as “ `body corporate' ” showed lack of
arm-of-the-State status even though state law deemed coun-
ties “ `subdivisions of the State' ”). The States' preferred
test that any label a State chooses is dispositive therefore
does not promote predictability in the treatment of state-
created entities because it still requires courts to decide
which state-law pronouncement is dispositive. Instead,
what promotes consistency is adhering to a long line of cases
in which this Court has found state-created corporations that
are formally liable for their own judgments not to be arms
of the States that created them.
Of course, all States maintain the power to “structure
themselves as they wish.” Berger v. North Carolina State
Conference of the NAACP, 597 U. S. 179, 183 (2022). To the
extent New Jersey, and other States, created such corporate
entities intending that they would remain part of the State
and that the State would formally assume their liabilities,
the States are always free to amend their laws.
IV
NJ Transit is not an arm of New Jersey and thus is not
entitled to share in New Jersey's interstate sovereign immu-
nity. The judgment of the New York Court of Appeals is
affrmed, the judgment of the Pennsylvania Supreme Court
is reversed, and the cases are remanded for further proceed-
ings not inconsistent with this opinion.
It is so ordered.

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Reporter’s Note
The attached opinion has been revised to refect the usual publication
and citation style of the United States Reports. The revised pagination
makes available the offcial United States Reports citation in advance of
publication. The syllabus has been prepared by the Reporter of Decisions
for the convenience of the reader and constitutes no part of the opinion of
the Court. A list of counsel who argued or fled briefs in this case, and
who were members of the bar of this Court at the time this case was
argued, has been inserted following the syllabus. Other revisions may
include adjustments to formatting, captions, citation form, and any errant
punctuation. The following additional edits were made:
p. 529, line 19: “does” is changed to “carries”