ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY (NEWARK), D.C. Civ. Nos. 86-3060, 86-0799, 86-0802, 86-3413, 86-4829. 87-1534, 87-4688, 87-4689, 87-2266, 84-4244, 87-1322, 87-1535, 86-0584 ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY (TRENTON), D.C. Civ. Nos. 86-3901, 84-4214
These consolidated appeals require us to resolve the important question of whether the eleventh amendment precludes the plaintiff-appellants from instituting actions in federal court under the Federal Employees' Liability Act (FELA) action against the defendant-appellee, New Jersey Transit Rail Operations, Inc. (NJTRO). By opinion, the United States District Court for the District of New Jersey granted defendant's motion to dismiss plaintiff's complaint for lack of subject matter jurisdiction. Fitchik appeals and we affirm.
On December 30, 1985, the plaintiff, Joseph P. Fitchik, a NJTRO conductor, was seriously injured when his train struck a track guard. Fitchik thereafter filed a complaint against defendant pursuant to the FELA, 45 U.S.C. § 51 et seq., seeking compensatory damages. Based upon Fed. R. Civ. P. 12(h)(3), and upon the Supreme Court's recent decision in Welch v. State Department of Highways and Public Transportation, 55 U.S.L.W. 5046 (1987), the district court dismissed plaintiff's complaint, holding that the FELA failed to manifest the unmistakable statutory language necessary to abrogate the states' immunity from suit in federal court. In conformity with established eleventh amendment jurisprudence, the district court additionally held that New Jersey was the real and substantial party in interest.
Relying principally upon our decisions in Urbano v. Board of Managers, 415 F.2d 247 (3d Cir. 1969), cert. denied, 397 U.S. 948 (1970), and in Kovats v. Rutgers, The State University, 822 F.2d 1303 (3d Cir. 1987), plaintiff contends that NJTRO is not the alter ego of New Jersey.*fn1 Fitchik correctly observes that our consideration of whether the FELA abrogates eleventh amendment immunity is premised upon a determination that NJTRO is an arm of the state.*fn2 Our review of defendant's entitlement to eleventh amendment immunity is plenary. Skehan v. State Sys. of Higher Educ., 815 F.2d 244, 246 (3d Cir. 1987).
The eleventh amendment provides:
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. Despite the amendment's language, the Supreme Court has consistently interpreted it to immunize an unconsenting state "from suits brought in federal court by her own citizens as well as by citizens of another state." Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89, 100 (1984) (quoting Employees v. Missouri Dep't of Pub. Health and Welfare, 411 U.S. 279, 280 (1973)).
A suit may be barred by the eleventh amendment even though a state is not named a party to the action. Edelman v. Jordan, 415 U.S. 651, 663 (1974). The Court has attempted on several occasions to determine just when a suit against an entity is actually a suit against the state itself. In Pennhurst, for example, the Court asserted that the state is the real party in interest when "the judgment sought would expend itself on the public treasury or domain, or interfere with the public administration," or if the effect of the judgment would be 'to restrain the Government from acting or to compel it to act.'" 465 U.S. at 101 n.11 (quoting Dugan v. Rank, 372 U.S. 609, 620 (1963)). This court, however, has formulated a more specific and more comprehensive test to determine whether eleventh amendment immunity extends to an entity:
[L]ocal law and decisions defining the status and nature of the agency involved in its relations to the sovereign are facts to be considered, but only one of a number that are of significance. Among the other factors, no one of which is conclusive, perhaps the most important is whether, in the event plaintiff prevails, the payment of the judgment will have to be made out of the state treasury; significant here also is whether the agency has the funds or the power to satisfy the judgment. Other relevant factors are whether the agency is performing a governmental or proprietary function; whether it has been separately incorporated; the degree of autonomy over its operations; whether it has the power to sue and be sued and to enter into contracts; whether its property is immune from state taxation; and whether the sovereign has immunized itself from responsibility for the agency's operations.
Urbano, 415 F.2d at 250-51.
Before applying Urbano to the present action, we observe that NJTRO is a wholly owned subsidiary of New Jersey Transit Corporation (NJT). Brotherhood of Locomotive Engineers v. New Jersey Transit Rail Operations, Inc., 608 F.Supp. 1216, 1217 (S.D.N.Y. 1985). Therefore, any eleventh amendment immunity conferred upon NJTRO would be derivative of that possessed by NJT. See Kovats, 822 F.2d at 1306. Finally, the issue of NJT's immunity from suit has been the subject of a multitude of reported and unreported decisions. To our knowledge, every district court that has considered the question has held that NJT is the alter ego of New Jersey.*fn3
The apparent clarity of the nine factor Urbano standard may sometimes be compromised by its actual application to a specific statutory entity. For example, a single statutory power or limitation may implicate more than one factor. We therefore consider the relevant factors in the sequence which best illuminates NJT's complex enabling statute.
1. Incorporation and Function
NJT was created by the New Jersey Public Transportation Act of 1979 ("the Act") as the successor to the Commuter Operating Agency of the New Jersey Department of Transportation. N.J.S.A. § 27:25-1, et seq. (West Supp. 1988). NJT's operating property, plant, and equipment were acquired by New Jersey State and subsequently transferred to the corporation at cost. See Reply Brief App. at 73. Section 27:25-4(a) of the Act asserts that NJT was created within New Jersey's executive branch as "a body corporate and politic with corporate succession." The section additionally declares that "the corporation is hereby constituted as an instrumentality of the state exercising public and essential government functions . . . ." Id.
Based upon N.J.S.A. § 27:25-4(a), it appears that NJT's performance of essential government functions supports its status as New Jersey's alter ego. However, in light of the Supreme Court's decision in Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528 (1985), we believe that the governmental function criterion is no longer a reliable means for deciding whether an entity is entitled to eleventh amendment protection. Garcia explicitly rejected the governmental-proprietary distinction as a basis for determining whether states must comply with federal legislation enacted pursuant to the commerce clause. Id. at 541-47. We fail to comprehend how a dichotomy that is unhelpful for commerce clause purposes can somehow become illuminating when applied to the eleventh amendment. Although we cannot disturb the New Jersey legislature's declaration of NJT's corporate purpose, we nonetheless conclude that whether an entity performs a traditionally proprietary, or governmental function is of little significance for the eleventh amendment.*fn4
In deciding whether NJT is separately incorporated, we note that the legislature imbued it with somewhat conflicting characteristics; it is at once "a body corporate and politic" and an "instrumentality of the state." N.J.S.A. § 27:25-4(a). Therefore, the separate incorporation factor mediates neither in favors, nor thwarts NJT's alter ego status.
N.J.S.A. § 27:25-5(a) grants NJT the power to sue and be sued; however, claims against the corporation are governed by the New Jersey Tort Claims Act, N.J.S.A. § 59:1-1 et seq. (West 1982 & Supp. 1988), and by the New Jersey Contractual Liability Act, N.J.S.A. § 59:13-1 et seq. (West 1982) see also N.J.S.A. § 27:25-19. Although the power to sue and be sued generally implies an entity's independence from a state, NJT is subjected to the foregoing statutes which apply exclusively to claims against public entities.
Several statutory provisions accord NJT the ability to enter into contracts. See N.J.S.A. §§ 27:25-5(r), 25-5(v) and 25-6. The corporation may buy land, N.J.S.A. § 27:25-13, and may purchase capital stock, equipment and personal property. N.J.S.A. §§ 27:25-5(u), 25-10 and 25-5(j).*fn5 All property owned by the corporation or by any of its wholly owned subsidiaries is deemed state property. N.J.S.A. § 27:25-16. NJT has additionally been given the power of eminent domain. N.J.S.A. § 27:25-13(a)-(c). See Gibson, 560 F.Supp. at 113. Finally, N.J.S.A. § 27:25-16 exempts NJT from all state taxation including, but not limited to, sales taxes, real property taxes or assessments, corporate franchise taxes, and income taxes.*fn6
In sum, NJT's power to enter into contracts suggests its independence from New Jersey. On the other hand, the entity's exemption from state taxation and its power of eminent domain support its alter ego status. Finally, the impact of NJT's ability to sue and be sued is attenuated by its subjection to the Tort Claims and Contractual Liability Acts.
3. Funding and insulation from Responsibility
Our precedents have uniformly asserted that among the most important factors in the eleventh amendment inquiry is whether a judgment against an entity will have a financial impact upon the state treasury. See Blake v. Kline, 612 F.2d 718, 723 (3d Cir. 1979) cert. denied, 447 U.S. 921 (1980). In this respect, the question of whether the state is the real party in interest generally depends upon whether "the action is in essence one ...