law

Supreme Court Rules New Jersey Transit Lacks Sovereign Immunity

John C. Lane

New Jersey Transit Corporation is a creation of the State of New Jersey. It operates bus and computer train services in New Jersey, New York, and Pennsylvania. When it is sued for personal injuries arising out of accidents, will NJ Transit have sovereign immunity as an arm of the State of New Jersey? That was the question before the Supreme Court of the United States, which held unanimously that NJ Transit is not an “arm of the State” and thus does not come under the umbrella of sovereign immunity. The case is Galette v. New Jersey Transit Corporation. But why is this issue before the Supreme Court?

That’s because the sovereign immunity of the several States is rooted in the Constitution. In a long line of Supreme Court decisions interpreting the immunity doctrine the Court has held that sovereign immunity is a right bestowed upon the States by the Constitution. It is personal to the State and is not shared by counties, municipalities, school boards, or even a bank created by the State. The issue is whether the state-created agency is so tied to the State, by control, finances, or other factors as to be considered an “arm of the State.” NJ Transit is not.

Two distinct lawsuits against NJ Transit reached the Supreme Court. Jeffrey Colt was injured when he was struck by a bus in midtown Manhattan. Cedric Galette was injured in Philadelphia when an NJ Transit bus crashed into a car in which he was a passenger. Both men sued NJ Transit in state courts in New York and Pennsylvania, respectively. NJ Transit pleaded that it is an “arm of the-state” and thus entitled to New Jersey’s sovereign immunity.

The New York Court of Appeals disagreed and ruled that Mr. Colt was free to pursue his tort action in the New York courts. The Supreme Court of Pennsylvania held the opposite, ruling that Mr. Galette’s suit was barred by New Jersey’s sovereign immunity because, it concluded, NJ Transit is an arm of the State. The constitutional issue, and the divide between New York and Pennsylvania’s highest courts brought the cases to the Supreme Court, where they were heard together. The Court undertook a thorough review of its legal precedents and the principles espoused, to analyze the relationship between the State and the New Jersey Transit Corporation.

NJ Transit is a “body corporate and politic with corporate succession.” It can sue and be sued, enter into contracts, acquire real or personal property, and make and alter bylaws. It can raise funds, establish its own operating divisions, adopt and maintain its own employee benefit programs, and even own or control any corporate entity that it acquires or forms to carry out its statutory objectives. Its organic statute labels NJ Transit as an “instrumentality of the State,” but that label lacks historical weight. Not all instrumentalities of a state may invoke sovereign immunity. Other New Jersey statutes dictate that a state entity that can sue and be sued is not “part of the State.” By law, NJ Transit is independent of any control by the State department of transportation. Moreover, the State of New Jersey is not liable for its debts.

Most important to the Court is that a state-created corporation that is formally liable for its own judgments is not an arm of the State. “NJ Transit is not an arm of New Jersey and thus is not entitled to share in New Jersey’s interstate sovereign immunity.”

New York Appellate Court Fines Attorney for Use of AI-Generated “Fake” Cases

John C. Lane

It is the first appellate case in the State. The Appellate Division, Third Department, excoriated an attorney for the misuse of generative AI in legal papers. In five filings during an appeal, the attorney included “no less than 23 fabricated cases, as well as many other blatant misrepresentations of fact and law from actual cases.” In all, he was fined $7,500 for conduct ruled inappropriate, in Deutsche Bank National Trust Co. v. LeTennier, decided on January 8, 2026.

It all started as a garden-variety real estate foreclosure action on property in upstate New York. The defendant, Jean LeTennier, originally acting as attorney pro se, was unsuccessful in the trial court, including a number of post-judgment motions. At that point the attorney stepped in to represent the defendant in the appeal. The Court notes that there are distinct legal grounds for setting aside a foreclosure, if the facts and law are followed. But the attorney relied upon generative artificial intelligence to do his legal research, and did not check to see if the case precedents generated by AI actually existed, or actually stood for the proposition assigned to them by AI. Most were non-existent.

“Hallucinated cases” may look like real cases, “but their citations lead to cases with different names, in different courts and on different topics – or even to no case at all.” The attorney using AI as an assistant has an absolute obligation to check, and read, every case he cites, whether generated by AI, or by genuine, old-fashioned legal research. That didn’t happen here, to the Court’s consternation.

According to the Court, defendant submitted at least 23 fabricated legal authorities (“AI hallucinations”) across five filings during the pendency of the appeal. The attorney acknowledged that the papers were actually his own and that by signing a paper, an attorney or party certifies that the papers and their presentation or the contentions are not frivolous. In his own defense, the attorney argued that 90% of his citations were accurate! That alone was “simply unacceptable by any measure of candor to any court.”

The Court noted that attorneys and litigants are not prohibited from using AI to assist with the preparation of court filings. But they must not rely upon the technologies if they are not trained on their dangers and without human oversight. The attorney has an obligation to fact check and cite check every document filed with a court.

Perhaps most offensive to the Court was the attorney’s attitude on oral argument. “Rather than taking remedial measures or expressing remorse, defense counsel essentially doubled down . . . on his reliance of fake legal authorities as not ‘germane’ to the appeal.”

Added to all of that, the Court found that the attorney and his client had pursued a baseless appeal. And for all of that, the attorney was fined $7,500, and his client, $2,500, both as a punishment and a deterrence to others.

Courts throughout the country are facing these problems and sanctioning attorneys. Federal district courts in New York and New Jersey have imposed monetary sanctions under Federal Rule 11 against attorneys who have cited to generative AI-produced fake cases. The New Jersey Federal District Court put it this way last September in OTG N.Y., Inc. v. Ottogi Am., Inc.:

Unfortunately, attorneys’ use of generative AI without proper oversight has become a prevalent issue for courts across the country. Examples abound where district courts have found legal briefs containing AI hallucinated case law masked as actual legal authority. In other words, AI can generate a legal proposition that appears to come from a judicial opinion and is even properly cited under The Bluebook Uniform System of Citation; but there is just one problem – it’s not real. AI made it up. And those who rely on AI blindly, do so at their own peril.

We hope these stern warnings and stiff penalties will help to stem this unacceptable practice in our courts.