Top New York court likely to back immunity for neighboring New Jersey

ALBANY, N.Y. (CN) — Sued over a bus collision in Manhattan, the Garden State is likely to scuttle litigation against it based on a U.S. Supreme Court ruling that says states cannot be forced to defend lawsuits in other states.

The case before the New York Court of Appeals, which heard oral arguments on Tuesday, hinges on what the nation’s high court said four years ago: that states have sovereign immunity from private litigation filed against them in other states.

Its hefty implications for sovereign immunity notwithstanding, the underlying dispute is a fairly common one. In 2014, Kathleen Henry was on a New Jersey Transit bus that struck another vehicle in the Lincoln Tunnel on its way from the Port Authority Bus Terminal in Manhattan into New Jersey. Henry suffered a shoulder injury and won $800,000 in damage four years later after suing New Jersey Transit as well the bus driver in New York. New Jersey moved to set aside the verdict as excessive, but it was able to expand that appeal when the U.S. Supreme Court handed down its decision in the 2019 case Franchise Tax Board of California v. Hyatt.

The 5-4 majority in Hyatt concluded that sovereign immunity would shield California tax collectors from Gilbert Hyatt, a Nevada-based microchip inventor, who sued the state over its assessment of $13.3 million in fraud penalties against him, which he cast as the fruits of an alleged yearslong harassment campaign.

Sovereign immunity says states cannot be sued in court without their consent. It is a right upheld by the 11th Amendment in certain cases and a slew of legal precedent in others, but states previously had sovereign immunity under the theory of comity, which meant residents of one state enjoy the same legal rights as those in another state.

The Hyatt decision is one of several in recent years where the U.S. Supreme Court has shown its willingness to overrule well-established precedent — in this case, the 1979 case Nevada v. Hall. The new understanding of sovereign immunity extends its applications to interstate lawsuits, holding that one state cannot abrogate the immunity of another.

Empowered by the Hyatt decision, New Jersey is now able to claim that it never granted consent for Henry to sue it in New York.

During oral arguments Tuesday before the Court of Appeals, lawyers for New Jersey Transit said interstate sovereign immunity was a constitutional right, and that it didn’t matter that the case was already in the appellate pipeline when the state asserted the defense of sovereign immunity.

“I believe, your honor, that one can assert it on appeal because it is a fundamental constitutional right,” said attorney Lawrence McGivney, of McGivney Kluger, who represents New Jersey Transit. “The sovereign can bring [such a defense] at any time, in the same way that one could do that with subject matter jurisdiction.”

Judge Jenny Rivera asked whether sovereign immunity, which can be waived, was similar to subject matter jurisdiction, which cannot. “Why isn’t it like personal jurisdiction?” she asked.

“In this instance, the sovereign’s rights is part of the tectonic plates, if you will, of how our government runs,” McGiveney said. “In the beginning, when the states agreed to surrender certain rights, it was embedded in their belief that they were maintaining their sovereignty, and part of that is how, when, and where they would be sued.”

On questioning from Judge Rowan Wilson, who posed a hypothetical of a New Jersey Transit bus that hits and kills a pedestrian in Manhattan but could be sued only in New Jersey, McGivney doubled down and said New Jersey could prevent such a suit from being filed in New York.

“The sovereign reserves the right to do that, your honor, that is by the nature of a sovereign,” he said.

Representing the injured bus passenger, Pollack Pollack attorney Brian Issac noted that New Jersey had plenty of opportunity to raise the defense of sovereign immunity but did so only after a beneficial ruling by the U.S. Supreme Court.

“Sovereign immunity isn’t a new concept,” he said, noting the Hyatt case was appealed three times over more than a decade. “The notion that New Jersey Transit was somehow impotent in raising this claim is just simply not true.”

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