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SMITH v. NEW JERSEY TRANSIT CORP.

July 28, 1988

GEORGE P. SMITH, JR.
v.
NEW JERSEY TRANSIT CORPORATION and JAMES F. GORDON



The opinion of the court was delivered by: BRODERICK

 RAYMOND J. BRODERICK, UNITED STATES DISTRICT JUDGE.

 This action is brought by plaintiff George P. Smith, Jr., a resident of Pennsylvania, against defendants New Jersey Transit Corporation ("New Jersey Transit") and James F. Gordon, a resident of New Jersey, for personal injuries he sustained as a result of an accident involving vehicles operated by plaintiff and Mr. Gordon, an employee of New Jersey Transit. Jurisdiction is allegedly based upon diversity of citizenship pursuant to 28 U.S.C. Section 1332(a). Defendants contend that as a public agency of the state of New Jersey, defendant New Jersey Transit is immune from suit in a federal court pursuant to the eleventh amendment to the Constitution. In addition, defendants contend that because defendant Gordon is being sued in his official capacity as an "agent, servant, workman, or employee" of defendant New Jersey Transit, he, too, is immune from suit under the provisions of the eleventh amendment.

 I.

 It is well established that pursuant to the eleventh amendment, "an unconsenting State is immune from suits brought in federal courts by her own citizens as well as by citizens of another state." Employees v. Missouri Dept. of Public Health and Welfare, 411 U.S. 279, 280, 93 S. Ct. 1614, 1616, 36 L. Ed. 2d 251 (1973). When a state agency or state official is the named defendant, the eleventh amendment will bar the lawsuit if "the state is the real, substantial party in interest." Pennhurst State School & Hospital v. Halderman, 465 U.S. 89, 101, 104 S. Ct. 900, 908, 79 L. Ed. 2d 67 (1984) quoting Ford Motor Company v. Department of Treasury of Indiana, 323 U.S. 459, 464, 65 S. Ct. 347, 350, 89 L. Ed. 389 (1945). It is not necessary that the state be named as a party, only that the named party is, in actuality, the alter ego of the state. Blake v. Kline, 612 F.2d 718, 721 (3d Cir. 1979), cert. denied, 447 U.S. 921, 100 S. Ct. 3011, 65 L. Ed. 2d 1112 (1980).

 Determination of whether a state agency is the sovereign's alter ego turns upon facts widely variant from case to case. Ramada Inns, Inc. v. Rosemount Memorial Park Ass'n, 598 F.2d 1303, 1306 (3d Cir. 1979). Nevertheless, our determination of the issue must be governed by the following factors: (1) how local law defines the status and nature of the agency; (2) whether payment of the judgment, if any, would deplete the public treasury; (3) whether the agency is performing a governmental or proprietary function; (4) the degree of autonomy exercised by the agency over its own operations; (5) whether the agency's property is immune from state taxation; (6) whether the agency has been separately incorporated; (7) whether the agency has the power to sue and be sued and enter into contracts; and (8) whether the sovereign has immunized itself from responsibility for the agency's operations. See Urbano v. Board of Managers of New Jersey State Prison, 415 F.2d 247, 250-51 (3d Cir. 1969), cert. denied, 397 U.S. 948, 90 S. Ct. 967, 25 L. Ed. 2d 128 (1970); Blake v. Kline, 612 F.2d at 722-26; Gibson-Homans Co. v. New Jersey Transit Corp., 560 F. Supp. 110, 112 (D.N.J. 1982). The Third Circuit has cautioned that "in a close case . . . evidence beyond the mere statutory language is required" to determine the issue. Blake v. Kline, 612 F.2d at 726.

 II.

 New Jersey Transit was created by the New Jersey Public Transportation Act of 1979, L. 1979, c. 150, codified at N.J.S.A. Section 27:25-1 et seq., as the successor of the Computer Operating Agency of the New Jersey Department of Transportation. As a public corporation, New Jersey transit is:

 Legislature of New Jersey, Manual at 694 (1986). Those courts which have previously addressed the issue have concluded that New Jersey Transit is the alter ego of the state of New Jersey. See Cianfrani v. New Jersey Transit Bus Operations, No. 87-3707 (E.D.Pa. March 20, 1985); Gibson-Homans Co. v. New Jersey Transit Corp., 560 F. Supp. 110 (D.N.J. 1982); Walker v. Transport of New Jersey, 534 F. Supp. 719 (E.D.Pa. 1982).

 Application of the factors outlined in Urbano and Blake dictates the conclusion that New Jersey Transit is the alter ego of the state of New Jersey. We deal, in turn, with each of the aforementioned factors.

 (1) How Local Law Defines the Status and Nature of New Jersey Transit

 The question of whether an agency is the alter ego of a state and thereby immune from federal jurisdiction under the eleventh amendment is a question of federal, not state law. Harris v. Pennsylvania Turnpike Commission, 410 F.2d 1332, 1334 n.1 (3d Cir. 1969), cert. denied, 396 U.S. 1005, 90 S. Ct. 558, 24 L. Ed. 2d 497 (1970). However, state court decisions addressing the relationship of an agency to the state is an important factor in the determination of immunity. Skehan v. Board of Bloomsburg State College, 538 F.2d 53, 62 (3d Cir.) (en banc), cert. denied, 429 U.S. 979, 97 S. Ct. 490, 50 L. Ed. 2d 588 (1976).

 In Transport of New Jersey v. Matos, 202 N.J. Super. 571, 495 A.2d 503, 505 (1985), the Superior Court of New Jersey held that "the inescapable conclusion to be drawn from the legislative history and statutes of the New Jersey Public Transportation Act of 1979 is that TNJ is a public entity." In reaching this conclusion, the Superior Court cited with approval Gibson-Homans Co. v. New Jersey Transit Co., 560 F. Supp. at 112 in which the United States District Court ...


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