Immune or Not?
Why Government Entities Can No Longer Rely Solely on Sovereign Immunity Defenses for Litigation
A recent U.S. Supreme Court decision could have significant implications for public and quasi-public entities in New Jersey. In Galette v. New Jersey Transit Corporation (607 U.S. —- (2026)), decided on March 4, 2026, the Court made clear that certain government-related entities may no longer be able to rely as confidently on sovereign immunity as a defense in litigation.
For municipal leaders, this decision is an important reminder that an entity’s public purpose alone may not be enough to shield it from suit. Courts are now looking more closely at how an entity is legally structured, whether it operates independently from the State, and who is ultimately responsible for its debts and judgments.
In practical terms, the ruling creates greater legal exposure for some public authorities, agencies, and quasi-public corporations that have historically assumed they were protected because they performed governmental functions. If an entity is set up as a separate corporation and is financially independent from the State, that structure may weigh heavily against a claim of sovereign immunity.
The Supreme Court’s decision in Galette narrows the availability of sovereign immunity defenses for certain public and quasi-public entities. Even when those entities perform traditional governmental functions, the defense is significantly weakened if they are corporately structured, financially independent, and separately liable for their own debts and judgments. The Court’s reasoning makes clear that an entity’s governmental character, by itself, is no longer enough to establish arm-of-the-state status. Instead, courts will closely examine the entity’s formal legal structure and financial relationship to the State.
For municipalities, this decision largely reinforces an existing principle: local governments and municipal corporations are generally not considered arms of the State and therefore cannot invoke state sovereign immunity. That remains true even where the State appoints board members or provides significant funding.
The greater impact, however, falls on quasi-public entities. Galette signals that operating under a corporate form while maintaining independent liability may be functionally dispositive against the protections of sovereign immunity. As a result, not only transportation entities such as NJ Transit, but potentially housing authorities, redevelopment authorities, and utility authorities that operate outside the State treasury, may face increased difficulty asserting sovereign immunity as a defense.
Under Galette, sovereign immunity does not extend to New Jersey entities that are structured as legally separate corporations and are independently liable from the State, even when those entities perform traditional governmental functions or receive substantial state funding or subsidies. That means many quasi-public entities that operate outside the protection of the State treasury now face greater litigation exposure, particularly in courts outside of New Jersey.
Because this decision is still new, courts may apply it inconsistently in the short term, and its practical impact may vary depending on the type of entity involved and the specific legal claims at issue. Even so, the message is clear: public and quasi-public entities can no longer assume that sovereign immunity will provide the same level of protection it once did.
At Jalloh & Jalloh, we are committed to maintaining a strong understanding of current law and how it affects government operations. If you have questions about how this decision may apply to your municipality, authority, or other public entity, or if you are considering the legal implications of forming a new entity structure, it is advisable to consult legal counsel, even if only for an initial conversation.
Author: Abdul J. Roberts, Esq.