Galette v. New Jersey Transit Corp. - Sovereign Immunity

1 (Slip Op inion) OCTOBER TERM, 2025 Syllabus NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the t ime the opin ion is issue d. The syllabus constitutes no par t of the op inion of the Cour t but has been prepared by t he Report er of Decisions for the conve nience of the reader. See United States v. Detr oit Timber & Lumber Co., 200 U. S. 321, 337. SUPREME COURT OF THE UNI TED STATES Syllabus GALETTE v. NEW JERSEY TRAN SIT CORPORATION CERTIORARI TO THE SUPREME COURT OF PENNSYLVANIA, EASTERN DISTRICT No. 24–1021. Argued January 14, 2026—Dec ided March 4, 2026* In 1979, the New Jersey Legislatur e created the New Jers ey Transit Cor- poration (NJ Transit) as a “body corporate and politic with corporate succession” and constituted it as an “instrumentality of the State ex- ercising public and essential go vernmental functions” but “independ- ent of any supervision or control” by the New Jersey Department of Transportation. N. J. Stat. §27:25–4(a). The State gave NJ Tr ansit significant authority, including the power to make bylaws, s ue and be sued, make contracts, acquire proper ty, raise funds, own corporate en- tities, adopt regulations, and ex ercise eminent domain powers. §§27:25–5, 27:25–13. NJ Tran sit’s organic statute prov ides that “[n]o debt or liability of the corporation shall ... constitute a debt [or] liabil- ity of the State,” and that “[a]ll expen ses ... shall be payable from funds available to the c orporation.” §27:25–17. NJ Tr ansit is govern ed by a board of directors (Board). §27:25–4(b). The Governor may r e- move Board members and may v eto Board actions; the Legislature may veto some eminent domain ac tions. §§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 str uck by an NJ Transit bus i n Midtown Manhattan; a year later, C edric Galette was injured when an NJ Transit bus crashed in to a car in which he was a passenger in Phila- delphia. 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 sovereig n immunity. The New —————— *Together with No. 24–1113, New Jersey Transit Corporation et al. v. Colt et al., on certiorari t o the Court of Appeals of New York.

2 GALETTE v. NEW JERSEY TRANSIT CORP. Syllabus York Court of Appeals held that NJ Tr ansit is not an arm of New Jer - sey; the Pennsylvania Supre me Court held the opposite, concluding NJ Transit is an arm of New J ersey. This Court consolidated the cases and granted certiorari to res olve the conflict. Held: NJ Transit Corporation is n ot an arm of New Jersey and thus is not entitled to share in New Jersey’s interstate sover eign immunity. Pp. 5–23. (a) Sovereign immunity is “ ‘p erso nal ’ ” to the State and extends only to arms of the State itself, College Saving s Bank v. Florida Prepaid Postsecondary Ed. Expense Bd., 527 U. S. 666, 675, not to legally in de- pendent entities that the State creat es. Whether an entity is “an arm of the State .. . is a question of federal law” answered by considering the “provisions of state law that define the agen cy’s character. ” Re- gents of Univ. of Cal. v. Doe, 519 U. S. 425, 429, n. 5. Pp. 5–10. (1) The Court’s early cases focu sed on whether an entity was a sep- arate legal person from the State, with the corporate form serving as a key marker of separate legal personhood. A “corpor ation” was un- derstood as “an artificial per son” 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 B a n k o f U n i t e d S t a t e s v. Planters’ Bank of Ga., 9 Wheat. 904, the Court held that a state-c hartered bank was not an arm of Georgia be- cause it was a “corporation” and ju dgments would be satisfied by the corporation’s property, not the State’ s. Subseque nt cases reaffir med this holding even when the State ex erted significant control over the bank. See, e. g., Bank of Kentucky v. Wister, 2 Pet. 318, 323–324. The Court also applied the same reason ing to cities and cou nties created as municipal corporations. See Lincoln County v. Luning, 133 U. S. 529, 530–530. Pp. 6–7. (2) Beginning in the mid-20th centur y, the Court began taking a more holistic view of an entity’s re lationship with the State, but re- mained focused on whether the State st ructured the entity to be legally separate, with corporate st atus remaining central. In Moor v. County of Alameda, 411 U. S. 693, 719–721, the Court h eld that a county was not an arm of the State becau se it was created as a “body corpor ate 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 c ounty or city” than “like an arm of the State,” and con cluded a local school boar d 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 Cor- poration, 513 U. S. 30, the Court found that two bistate entities were not arms of the State where they were created a s separate legal

3 Cite as: 607 U. S. ___ (2026) Syllabus entities, judgments against the entiti es were not binding on the States, and the entities generated their own revenues and paid their own debts. Pp. 8–10. (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 sep- arateness is wh en the State created a co rporation with traditiona l cor- porate powers to sue a nd be sued, hold pro perty, make cont racts, and incur debt. A State might create a corporation precisely because of its independent legal status, allowing the State to distance itself from bur- dens the corporate entity may incur. When a State makes such a de- cision, courts should presume th e corporation enjoys all the ad- vantages and disadvan tages of separate legal status, inc luding that it is no longer part of the State itse lf. Other aspects of s tate law may also indicate legal separaten ess, such as defining the entity as a “sep- arate legal entity” or exc luding it from the definition of “State” for other purposes. The Court’s precedents also focus on whether the entity is liable for its own judgments or whether the Stat e is formally liable. One central rationale for sovereign immunity is protecting States’ “ability to make [their] own decisions ab out ‘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 financial re lati onship with the St ate, such as an expectation that the State would c ove r its judgments if needed, or the State’s history of subsidizing the entity, has less relevance. Finally, courts may consider the de gree of co ntrol the State exerts over the entity, but should do so wi th caution because “ultimate control of every state-created entity reside s 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 fo und a corporation lia ble for its own judgments to b e an arm of the State, even when the State had si gnificant control, in- cluding cases wher e the State was sole shar eholder, possessed appoint- ment and removal powers, and mana ged the entity’s affairs. See Wister, 2 Pet., at 323–324. Pp. 10–13. (c) Ev en if an entity is not an arm of the State, a par ticular suit or remedy may require dismissal due to sove reign immunity if the State is nevertheless the real party in interest. See, e.g., Hopkins v. Clem- son, 221 U. S. 636. Becau se NJ Transit never argu ed that New Jersey is the real party in interest in eith er of these cases, dismissal on this ground is not implicated here. Pp. 13–15. (d) Applying these principles, NJ Transit is not an arm of New Jer- sey. To start, New Jersey stru ctured NJ Transit as a legally separate

4 GALETTE v. NEW JERSEY TRANSIT CORP. Syllabus entity: It was created as a “body co rporate and politic with corporate succession” possess ing typical corporate powers, s uch as the power to “[s]ue and be sued,” “enter into contracts,” and “acquire . . . p roperty.” §§27:25–4(a), 27:25–5(a), (j), (r). NJ Transit’s corporate status serve s as strong evidence it is not an arm of the State. Alth ough NJ Transit’s organic statute labels i t an “instrumentality of the State,” §27:25–4(a), that term lacks the historical weig ht of the corporate form and says little about arm-of-the-S tate status. Other aspects of New Jer sey law undercut any inference from the term “instrumentality”: Th e New Jer- sey Tort Claims Act and Contractual Liabili ty Act exclude entities with sue-and-be-sued auth ority from the definition of “State.” §§59:1, 59:3, 59:13–2. Second, as NJ Tran sit conced es, the State i s not formally li able for any of NJ Transit’s debts or liabilities under New Jersey law. §27:25–17. Finally, the control New Jersey ex erts over NJ Transit does not change the conclusion. Although the State exer ts substantial control— e.g., Governor’s appointment and removal powers, §27:25–4(b); cabinet member chairing the Boar d, §27:25–4(d); gubernator ial veto power, §27:25–4(f); legislative veto over some eminent do main actions, §27:25–13(h)—New Jersey law also state s NJ Transit “shall be inde- pendent of any supervision or control by the [transportation] depa rt- ment” and requires it to “exer cise independent judg ment.” §§27:25– 4(a), 27:25–4.1(b)(2)(d). This level of control does not meaningfully af- fect NJ Transit’s status with respec t to the arm-of-the-State analysis given that it is a lega lly separate corporation respons ible for its own judgments. Pp. 15–17. (e) NJ Transit’s and its amici ’s counterarguments are unavailing. NJ Transit contends corpor ate status is not dispositive, but NJ Transit is a corporation with all the hallmar ks of separate legal personhood, and the Court has not previously found a similarly structured corpora- tion to be an arm of the Stat e. NJ Transit’ s reliance on State Highway Comm’n of Wyo. v. Utah Constr. Co., 278 U. S. 194, is misplaced be- cause that case con cerned whether th e State was the real party in in- terest in a particular contra ct dispute, not whether the e ntity was in the abstract an arm of the State. NJ Transit argues its descriptio n as serving “public and essential governmental func tions,” §27:25–4(a), and its delegation o f substantial public powers demonstrate an intent by New Jer sey 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 thro ugh its own apparatus or through a legally separate entity. Cities an d counties serve public functions and exercise police powers but are n ot ar ms of the State. Assessing what qualifies as an essential govern mental function can also be “unsound

5 Cite as: 607 U. S. ___ (2026) Syllabus in principle and unwork able in practice.” Garcia v. San Antonio Met- ropolitan Transit Authority, 469 U. S. 528, 546. NJ Transit also contends that the Court should consider its practical financial relationship with the St ate, including the de gree of state funding and the likelihood the State would pay its judgments. Neither Lake Country nor Hess supports this position: Lake Country ’s discus- sion of practical consequences relie d on real-party-in-interest c ases, while its arm-of-the-State analysis discussed only whether the Com- pact expressly provided that obligat ions would not bind the Sta tes. 440 U. S., at 402. Hess focused on whether the Compact or state laws required the States to bear ju dgments, concentratin g on formal liabil- ity rather than the enti ty’s practical financial r elationship with the State. 513 U. S., at 46. Hinging arm-of-the-State st atus to practical realities of state fund ing also risk s arbitra ry distinctions and in con- sistent treatment, 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 practi cal financia l relationship with, the entity. T ho s e c a s e s, h ow e v er, w a r n e d t h a t an e n t i t y c a n c o u n t a s p a rt o f t h e 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 ch ar- acterization of an entity shou ld be dispositive. This position focu ses on the label the State places on an entity, rather than on whether the State structured the entity as legally sep arate. It also prioritizes one characterization (“instrument ality”) over another (“body corporate”), and there is no good reason to be lieve the State intended NJ Transit to be part of the State itself by using “instrumentality” when it simul- taneously used “body corporate,” a term traditionally understood to create a “[s]eparate legal pe rsonality,” First Nat. City Bank v. Banco Para el Comercio Exterior de Cuba, 462 U. S. 611, 625. The States’ preferred test does not promote predic tability because it stil l requires courts to decide which state-law pronouncement is dispositive. Con- sistency is promoted by adhering to the long line of cases finding state- created corporations forma lly liable for their own judgments not to be arms of the States that created th em. States maintain the power to structure th emselves as they wish an d are free to amend their laws if they intend corporate entities to re main part of the S tate and for the State to assume their liabilities. Pp. 17– 23. No. 24–1021, 332 A. 3d 77 6, reversed; No. 24–1113, 43 N. Y. 3d 463, 26 4 N. E. 3d 774, affirmed; and both cases remanded. S OTOMAYOR, J., delivered the opinion for a unanimous Court.

_________________ _________________ 1 Cite as: 607 U. S. ____ (2026) Opinion of the Court NOTICE: This opinion is s ubject to f ormal revision before publicat ion in the United States R eports. Readers are req uested to notify the Rep orter of Decisions, S upreme Court of the United Sta tes, Washing ton, D. C. 20543, pio@supr emecourt.gov, of any t ypographica l or other f ormal errors. SUPREME COURT OF THE UNI TED STATES Nos. 24–1021 and 24– 1113 CEDRIC GALETTE, PETITIONER 24–1021 v. NEW JERSEY TRANSIT CORPORATION ON WRIT OF CERTIORARI TO THE SUPREME COURT OF PENNSYLVANIA, EASTERN DISTRICT NEW JERSEY TRANSIT CORPORATION, ET AL., PETITIONERS 24–1113 v. JEFFREY COLT, ET AL. ON WRIT OF CERTIORARI TO THE COURT OF APPEALS OF NEW YORK [March 4, 2026] J USTICE S OTOMAYOR delivered the opinion of the Court. States are generally entitled to immunity from being sued in another State’s courts without their consent. That sovereign immunity is personal to the State and thus ex- tends only to arms of the Stat e itself, not to legally inde- pendent 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 corporat ion created by the New Jer- sey Legislature, in their resp ective home courts in New York and Pennsylvania. The highest courts in those States diverged as to whether New Jersey Transit is an arm of

2 GALETTE v. NEW JERSEY TRANSIT CORP. Opinion of the Court New Jersey. The Court granted certiorari to resolve whether New Jersey Transit is an arm of New Jersey and thus entitled to the State’s sovereign immunity. It is not. Accordingly, the judgment of the New York Court of Ap- peals is affirmed and the judgment of the Pennsylvania Su- preme Court is reversed. I A Starting in the 1960s and 1970s, New Jerseyans increas- ingly drove to work. This shift led railroads t o curtail com- muter-rail services connecting the New Jersey suburbs to New York City and caused significant 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 remained severely fragmented. In search of a new solution, the Legislature in 1979 cre- ated 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 structur ed the entity as a “body corporate and politic with corporate succession.” §27:25– 4(a). The “corporation” was “constituted as an instrumen- tality of the State exercising public and essential govern- mental functions.” Ibid. It was “allocated within the De- partment of Transportation,” but “the corporation” was “independent of any supervision or control by the depart- ment or by any body or officer thereof.” Ibid. The State gave NJ Transit significant 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 con trol any corporate entity ac- quired or formed to carry out its objectives; adopt rules and regulations as necessary; and exercise eminent domain powers. §§27:25–5, 27:25–13. Moreover, NJ Transit’s

3 Cite as: 607 U. S. ____ (2026) Opinion of the Court organic statute provides that “[n]o debt or liability of the corporation shall be deemed or construed to create or con- stitute a debt, liability, or a loan or pledge of the credit of the State.” §27:25–17. It also states that “[a]ll expenses incurred by the corporation ... shall be payable from funds available to the corporation” and that “no liability or obli- gation shall be incurred by the corporation beyond the ex- tent 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 con- sist of three ex officio members from the Governor’s cabinet, 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 any action the Board takes. §§27:25–4(b), (f). The Legislature may also veto some eminent domain actions. §27:25–13(h). Once created, the Board adopted its own bylaws and hired a President and CEO to manage day-to-day opera- tions. It then acquired and consolidated the assets of sev- eral 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, covering anywhere from 15% to 46% of that budget. Brief for NJ Transit 35. NJ Transit also re- ceives funding from the State and the Federal Government for its capital projects. 1 NJ Transit’s revenues have fluctu- ated over time; in 2024, it generated $832 million in oper- ating revenues. 2 —————— 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.

4 GALETTE v. NEW JERSEY TRANSIT CORP. Opinion of the Court 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 Galett e was a passenger 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 en- titled 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. 3d 774, 776 (2024). The court first observed that the Fed- eral Courts of Appeals have analyzed whether an entity is an arm of the State using “an array of multifa ctor and mul- tistep tests.” Id., at 472, 264 N. E. 3d, at 780. 3 It then d is- tilled from those cases a three -factor inquiry: “(1) how the State defines 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 —————— 3 See, e. g., Fresenius Medical Care Car diovascular Resources, Inc. v. Puerto Rico and Caribb ean 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); Springboards to Education, Inc. v. McAllen Independent Sc hool Dist., 62 F. 4th 174, 178–179 (CA5 2023); Kohn v. State Bar of Cal., 87 F. 4th 1021, 1027–1030 (CA9 20 23) (en banc); Puerto Rico Ports Auth. v. Federal Mar- itime Comm’n, 531 F. 3d 868, 874 (CADC 2008) (Kavanau gh, J.).

5 Cite as: 607 U. S. ____ (2026) Opinion of the Court NJ Transit is not an arm of New Jersey and that Colt’s suit could thus proceed. The Pennsylvania Supreme Court, however, held the op- posite, 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 classification and descrip- tion of the entity within the governmental structure of the State, both statutorily and und er its caselaw; (2) the degree of control 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 inde- pendently raise revenue on its own; (4) the degree of fund- ing provided by the State to the entity relative to other funding sources; (5) whether any monetary obligation in- curred by the entity is binding upon the State; and (6) whether the core function of the entity ... can be catego- rized as a function which is normally performed by local government or State government.’ ” Id., at 785–786 (brack- ets omitted). Under that test, the Pennsylvania Supreme Court concluded that NJ Transit is an arm of New Jersey and thus dismissed Galette’s suit. This Court granted certiorari to resolve the conflict 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 ratifi- cation of the Constitution, and which they retain today.” Alden v. Maine, 527 U. S. 706, 71 3 (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 C al. v. Hyatt, 587 U. S. 230, —————— 4 After this Court granted cert iorari, NJ Transit filed an application for stay of Colt’s pending damages tria l in the Supreme Court of the State of New York. This Court stayed th e trial pending issuance of the man- date in these cases. 606 U. S. 1051 (2025).

6 GALETTE v. NEW JERSEY TRANSIT CORP. Opinion of the Court 249 (2019). In so doing, it prevents “the indignity of sub - jecting a State to the coercive process of judicial tribunals 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 t he 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’ ” t o the State itself. College Savings Bank v. Florida Prepaid Postsecon d- ary 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 pro- visions of state law that define the agency’s character.” Re- gents 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 Court first sets forth the principles that have guided the arm-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 artificial person, existing in contemplation of law, and endowed with” “certain immunities, privileges, and capa ci- ties in its collective character, which do not belong to the natural persons composing it.” Trustees of Da rtmouth 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.

7 Cite as: 607 U. S. ____ (2026) Opinion of the Court This Court first 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 satisfied by the property of the corporation, not by that of the indi- vidual corporators.” Id., at 907. Chief Justice Marshall ex - plained that the “State of Georgia, by gi ving to the Bank th e 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 reaffir med 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 significant con- trol over the bank, such as by being its sole shareholder or possessing appointment and removal power over its offic- ers. See, e. g., Bank of Kentucky v. Wister, 2 Pet. 318, 323– 324 (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 included the power to “sue and be sued,” likewise made them legal persons separate from the sovereign and thus not entitled to share in the State’s sovereign immunity. See Lincoln 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 separa te 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.

8 GALETTE v. NEW JERSEY TRANSIT CORP. Opinion of the Court Reconstruction Finance Corporation, 306 U. S. 381, 393– 394 (1939). 2 Beginning in the mid-20th century, the Court began to consider 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 structured the entity to be legally separate, and corpo- rate 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 diversity jurisdiction. Id., at 717–718 (explaining that a State is not a “citizen” for di versity purposes). The county at issue argued that its desi gnation, by the California Con- stitution, as a “ ‘legal subdivisio[n] of the State’ ” established its status as an arm of the State. Id., at 71 8–719. The Court, however, disagreed. It explained that the county was also created as a “ ‘body corporate and politic,’ ” which meant, “[m]ost notably,” that the county was given “ ‘corpo - rate powers,’ ” such as the ability to “sue and be sued,” to “deal in property,” and to make “contract[s].” Id., at 719. Financially, moreover, the county alone would be “liable f or all judgments against it” and could issue bonds without cre- ating an “obligation on the part of the State.” Id., at 719– 720. Finally, the Court observed that, given the county’s corporate 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 “sufficiently inde- pendent corporate character.” Id., at 721. Resting on the firmly established rule that municipal cor- porations and counties are not arms of the State, the Court in Mt. Healthy City Bd. of Ed. v. Do yle, 429 U. S. 274 (1977), framed the arm-of-the-State inquiry as asking whether an

9 Cite as: 607 U. S. ____ (2026) Opinion of the Court entity is “more like a county or city” than “like an arm of the State.” Id., at 280. In an swering that question for the entity at issue, a local school board, the Court examined the characteristics of the board und er state law. It observed that the board was created as a “ ‘political subdivisio[n]’ ” distinct from the “ ‘S tate,’ ” that it h ad 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 “compara- ble to a county or municipality” or rather an arm of the State in Lake Country Estates, Inc. v. Tahoe Regional Plan- ning Agency, 440 U. S. 3 91, 401 (1979). There, the entity at issue was the Tahoe Regional Planning Agency, a bistate entity created by California and Nevada alongside the Fed- eral Government 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 subdivision’ ” and that judgments against the agency were not 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 gov- ernment 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 Corpo- ration, 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

10 GALETTE v. NEW JERSEY TRANSIT CORP. Opinion of the Court 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 significant control over the Authority— they had appointment and removal power over the commis- sioners, the Governors could veto the Authority’s actions, and the States’ legislatures could determine what projects the Authority would pursue—but rejected control as a “dis- positive” factor in its overall analysis. Id., at 47–48. In the end, after considering the above facts and the underlying purposes of sovereign immunity, the Court concluded that the Authority’s status as a “dis crete entity” th at “generates its own revenues” and “pays its own debts” ultimately ren- dered 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 predominantly, examined whether the State structured the entity as a legally sepa- rate 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 t ra- ditional 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 particu- larly salient because it has “long [been] settled as a matter of American corporate law that separately incorporated or- ganizations are separate legal units with distinct legal rights and obligations.” Agency for Int’l Development v. Al- liance 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.’ ”

11 Cite as: 607 U. S. ____ (2026) Opinion of the Court 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, ra- ther than an unincorporated go vernment 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 distanc e 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, 36 U. S., at 326–327. States have also created corporations to circum- vent state constitutional debt limitations placed on state agencies. See, e. g., Sch ulz v. State, 84 N. Y. 2d 231, 243– 244, 639 N. E. 2d 1140, 1145–1146 (1994). When it comes to facilitating certain projects, such as high-risk, long-term capital investments, States may establish corporations in order to shield themselves from the responsibility and, more importantly, the liability that the corporation’s pro- jects may incur. When a State makes such a decision, courts should presume that the corporation enjoys all the advantages and disadvantages of separate legal status, in- cluding the fact that the corporate 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 define th e entity as not part of the State for other purposes. See Moor, 411 U. S., at 719 (state law defined county as a “ ‘local publ ic 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.

12 GALETTE v. NEW JERSEY TRANSIT CORP. Opinion of the Court The Court’s precedents also focus on whether the entity is liable for its own judgments or whether the State is for- mally liable, i. e., whether “any judgment” against the entity “must be satisfied out of the state treasury.” Hess, 513 U. S., at 51; Planters’ Bank, 9 Wheat., at 907, see also Re- gents, 519 U. S., at 430. One of the central “underlying ra- tionales for state sovereign im munity” is protecting States ’ “ability to make [their] own decisions about ‘the allocation of scarce resources.’ ” Lewis v. Clarke, 581 U. S. 155, 167 (2017) (quoting Alden, 527 U. S., at 751). If the State is for- mally 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 fisc. In contrast to formal legal liability, an entity’s practical financial relationship with the State, such as its expecta- tion that the State would cover its judgments if needed, has less relevance. Just as a State cannot lose its sovereign im- munity by “requir[ing] a third party to reimburse it” (such as by buying insurance), Regents, 519 U. S., at 431, a State cannot imbue an entity with its immunity simply by agree- ing to “pick up the tab” (such as by choosing to indemnify the entity), Lewis, 581 U. S., at 165. Similarly, a State’s history of subsidizing an entity carries little weight. State governments routinely fund nonprofits, private corpora- tions, 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 “significant amount,” Mt. Healthy, 429 U. S., at 280. Finally, the Court’s cases also suggest that courts may consider the degree of control the State exerts over the en- tity, but courts should do so with caution. Control is not especially 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, counties, school boards, and state-created banks have all

13 Cite as: 607 U. S. ____ (2026) Opinion of the Court been recognized as legally sepa rate entities from the States, even though “the State may destroy or reshape any” of these entities that “it create[d].” Ibid. Further, “[g]auging actual control ... can be a ‘perilous inquiry’ ” and “ ‘an uncerta in and unreliable exercise.’ ” Ibid. (quoting Note, 92 Colum. L. Rev. 1243, 1284 (1992)). That is because the State migh t exercise control through vari ous formal and informal lev- ers, from appointing and removi ng officers, to directing pro- jects or vetoing actions, to monitoring day-to-day opera - tions, all of which are difficult 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 significant control over the entity. That includes cases in which the State was the sole shareholder, possessed appointment and removal powers over the entity’s officers, and “ ‘manage[d]’ ” the entity’s “ ‘af- fairs.’ ” Wister, 2 Pet., at 323–324 (Bank of Commonwealth of Kentucky); see Briscoe, 36 U. S., at 344 (Story, J., dis- senting) (describing Kentucky ’s appointment and removal powers over the Bank of Commonwealth of Kentucky). I t also includes a case in which the State possessed appoint- ment and removal powers over the entity’s officers, veto power over its actions, and “d etermine[d] the projects [it] undert[ook].” Hess, 513 U. S., at 44–47. 5 —————— 5 This discussion is not intended to exhaust a ll considerations that may be relevant to the arm-of-the-State analysi s, and instead focuses on th e considerations most pertinent to thes e case s. Additional considerations may apply, for example, in case s invo lving bistate entities or unincorpo- rated entities. See Hess, 513 U. S., at 40 (desc ribing that “[b]is tate enti- ties occupy a s ignificantly different position in our federal system than do the States themselves”); Auer v. Robbins, 519 U. S. 452, 456, n. 1 (1997) (cursorily cond ucting analysis to conclude that an unincorporated Board of Police Commissioners, M o. Rev. Stat. §§84.210, 84.030 (1994), was not an arm of Missouri).

14 GALETTE v. NEW JERSEY TRANSIT CORP. Opinion of the Court 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-in terest 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 damages claim against a state or federal officer in their o f- ficial capacity is barred by sovereign immunity because “[t]he real party in interest is the government entity, not the named official.” Lewis, 581 U. S., at 162; see Edelman v. Jordan, 415 U. S. 6 51, 663–665 (1974) (suit for retroac- tive damages against state official in his official capacity required dismissal because it ran against the state trea s- ury). Similarly, a particular remedy may be ba rred by sov- ereign 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 be- cause it was “in substance, though not in form, a suit against the state”); Governor of Georgia v. Madrazo, 1 Pet. 110, 123–124 (1828) (equitable relief in suit against a Gov- ernor required dismissal because “the state itself may be considered as a party on the record”). In these instances, the case or remedy requires dismissal because the State is the real party in interest, no t 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 related paths of analysis. In Hopkins, a plaintiff sued a state college for building an embankment on the side of a river, which redirected the ri ver’s flow and “ruined” his downstream 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

15 Cite as: 607 U. S. ____ (2026) Opinion of the Court 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. Nevertheless, 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 di- rectly against the State and would require the State’s con- sent to be sued. Ibid. The Court therefore remanded for the lower court to determine whether the State was a nec- essary party and to “stri[ke]” that part of the suit if it wa s. Id., at 649. In other words, the injunctive remedy would have required dismissal 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 articula ted above, NJ Transit is not an arm of New Jersey. To start, New Jersey structu red NJ Transit as a legally separate entity. NJ Transit was created as a “body corpo- 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 benefit programs,” and even “[o]wn” and “control” any “cor- porate entity” that it “acquired” or “formed” to carry out its —————— 6 NJ Transit has never argued that New Jersey is the real party in in- terest in either of these two cases. These cases therefore d o not implicate whether dismissal is required on this ground.

16 GALETTE v. NEW JERSEY TRANSIT CORP. Opinion of the Court 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 “in- strumentality of the State.” §27:25–4(a). The term “instru- mentality,” however, lacks the historical weight the corpo- rate form does and says little about whether an entity is an arm of the State. See, e. g., Regents, 519 U. S., at 429 (ask- ing “whether a state instrumentality may invoke the State’s immunity,” making clear that not all state instrumentali- ties are immune). Moreover, other aspects of New Jersey law undercut any inference that the term “instrumentality” 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 definition of the “State.” §§59:1–1, 59:1–3 (2026). The New Jersey Contractual Lia- bility Act also specifies 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 Transit’s debts or liabilities. New Jersey law provides that “[n]o debt or liability of the corporation shall be deemed or construed to create or constitute a debt, liability, or a loan or pledge of the credit of the State.” §27:25–17. Before this Court, NJ Transit concedes that “New Jersey is not for- mally liable for NJ Transit’s de bts.” Brief for NJ Transit 34. Finally, the control that New Jersey exerts over NJ Transit does not change the ov erall conclusion here. Un- doubtedly, the State exerts a substantial amount of control over NJ Transit. The Governor has appointment and re- moval 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

17 Cite as: 607 U. S. ____ (2026) Opinion of the Court 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 in- dependent of any supervision or control by the [transporta- tion] department or by any body or officer thereof,” and re- quires that it “exercise inde pendent judgment.” §§27:25– 4(a), 27:25–4.1(b)(2)(d). In addition, the Governor’s re- moval authority for 8 of the 13 board members is limited to for-cause removal. §27:25–4(b). This level of control does not meaningfully 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 una- vailing. To start, NJ Transit contends that formal corpo- rate 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 dispositive. See supra, at 10–11. NJ Transit, however, is a corporation that has all the hallmarks of separate legal personhood, such as the power to sue and be sued, make contracts, and hold property in its own name, which all in- dicate 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 separateness, such as sue- and-be-sued clauses, citing State Highway 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

18 GALETTE v. NEW JERSEY TRANSIT CORP. Opinion of the Court Wyoming], 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 sepa- rateness 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 emp hasized that the corporate form, which typically includes the power to sue and be sued, weighs strongly against arm-of-the-State status. See su- pra, at 6–10. 7 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 plenary public powers,” such as the power to operate a —————— 7 NJ Transit also relies on several cases that did n ot squarely confront the arm-of-the-State inquiry. Two ca ses addr essed whether, and to w hat extent, a “sue and be sued” clause waives sover eign immunity. See Thacker v. TVA, 587 U. S. 218, 221 (2019); College Savings Bank v. Flor- ida Prepaid Postsecondary Ed. Expense B d., 527 U. S. 666, 676 (1999). Neither case addressed t he relevance of the clause with respect to the arm-of-the-State inquiry, however, because the Court assumed in bot h cases that the entities at issue wer e 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 h eld that a plaintiff State c ould sue an- other State for actions taken by a state-created corpor ate 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 ever y suit against them shou ld be considered a suit again st 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 whic h the plaintiffs sued.

19 Cite as: 607 U. S. ____ (2026) Opinion of the Court police force, exercise eminent domain power, and promul- gate regulations, Brief for NJ Transit 22. The arm-of-the- State analysis, however, focuses not on whether the entity serves public functions, but rather on whether the State has chosen to serve those public functions through its own ap- paratus or through that of a legally separate entity. That is why the Court has long reco gnized that cities and coun- ties are not arms of the State despite serving public func- tions and exercising 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 shoul- der[, b]ut none would conclude ... that in times of flood 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 qualifies as an essential gov- ernmental function can be “unsound in principle and un - workable in practice.” Garcia v. San Antonio Metropolitan Transit Authority, 469 U. S. 528, 546 (1985). It has the ten- dency 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 citizenry by taking up functions that an earlier day and a different society left in private hands.” Id., at 546–547. Here, for example, transportation services and infrastructure are “not readily classified as typically state or unquestionably local” given that “States and municipalities alike own and operate bridges, tunnels, ferries, marine terminals, air- ports, bus terminals, industrial parks, [and] also commuter railroads.” Hess, 513 U. S., at 45. What is more, as shown by the history of NJ Transit it self, these services and func- tions used to be fulfilled primarily by private railroad and bus companies. See supra, at 3 (describing NJ Transit’s ac- quisition of major private rail and bus companies). Instead

20 GALETTE v. NEW JERSEY TRANSIT CORP. Opinion of the Court 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 sep- arate corporation. NJ Transit also contends that the Court should consider not only formal liability, but also the practical reality of its financial relationship with the State. According to NJ Transit, this includes whether and to what degree the State funds the entity and whether the State is likely to voluntar- ily pay the entity’s judgments. Brief for NJ Transit 34–37. In support of this position, NJ Transit relies on Lake Coun- try 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 so vereign immunity “in order to protect the state treasury from liability that would have had essentially the same practical consequences as a judg- ment 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. Department of Treas ury of Ind., 323 U. S. 459 (1945)). As discussed above, that is a separate question from whether an entity is the arm of the State. See supra, at 14–15. On that question, Lake Country ’s arm-of-the- State analysis discussed only whether the Compact “ex- pressly provide[d] that obligatio ns 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 askin g whether the “State [was] in fact obligated to bear” the en- tity’s judgments “both legally and practically,” and men- tioned 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

21 Cite as: 607 U. S. ____ (2026) Opinion of the Court either State” required them to do so, and the Court ulti- mately concluded that the States’ lack of “legal liability for Port Authority debts” and form al “responsib[ility] for the payment of judgments” cut against arm-of-the-State status. Id., at 46. Hess ’s concentration on formal liability, rather than an overall evaluation of the entity’s financial relation- ship with the State, is confirmed by this Court’s other prec- edents as well. See, e. g., Planters’ Bank, 9 Wheat., at 907 (“judgment[s]” against state-created bank would “be satis- fied by the property of the corporation, not by that of the individual corporators”); 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 practi- cal realities of state funding also risks arbitrary distinc- tions and inconsistent treatment of the same entity. These cases illustrate the problem: In the last 35 years, New Jer- sey’s funding of NJ Transit’s annual operating budget has oscillated anywhere 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 “financially integr ated with the State and finan- cially dependent on it.” Id., at 34. The more apt question instead is whether the State wo uld be formally obligated to pay the entity’s judgments. See, e. g., Pla nters’ Bank, 9 Wheat., at 907; Moor, 411 U. S., at 719. More generally, NJ Transit advocates for an arm-of-the- State inquiry that places more weight on the State’s control —————— 8 Hess also discussed two Circuit cases involving “transit facilities that place[d] heavy fiscal tolls on their founding States.” 513 U. S., at 49–50. In those cases, even th ough the entities’ originating statutes did not make the States liable for their judg ments, the States operated the re- spective entities under distinctive federal statutory obligations not pre- sent 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).

22 GALETTE v. NEW JERSEY TRANSIT CORP. Opinion of the Court over, and practical financial relationship wit h, 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 Passenger Corporation, 513 U. S. 374 (1995) (First Amend- ment); Osborn v. Bank of United States, 9 Wheat. 738 (1824) (intergovernmental 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 (hold- ing that Amtrak is “part of the Government for purposes of the First Amendment” but lacks the Government’s “sover- eign immunity”); see also Priddy, 295 U. S., at 235 (“Im- munity of corporate government agencies from suit and ju- dicial process ... is less readily implied than immunity from taxation”). Accordingly, 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 cur- rent use of multifactor balancing tests in the lower courts has created significant uncertainty. To address this prob- lem, they urge this Court to adopt a rule that a State’s own characterization 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 12. Another problem is that th e 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 word “body corporate,” a term traditionally understood to create a “[s]eparate legal personality.” First Nat. City

23 Cite as: 607 U. S. ____ (2026) Opinion of the Court Bank, 462 U. S., at 625; see Moor, 693 U. S., at 719–720 (holding that designation as “ ‘body corporate’ ” showed lack of arm-of-the-State status even though state law deemed counties “ ‘subdivisions of the State’ ”). The States’ pre- ferred 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. In- stead, what promotes consistency is adhering to a long line of cases in which this Court has found state-created corpo- rations 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 corpo- rate entities intending that they would remain part of the State and that the State would formally assume their lia- bilities, 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 Jers ey’s interstate sovereign im- munity. The judgment of the New York Court of Appeals is affirmed, 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.