OBB Personenverkehr AG v. Sachs

PETITIONER: OBB Personenverkehr AG
RESPONDENT: Carol P. Sachs
LOCATION: United States District Court for the Northern District of California

DOCKET NO.: 13-1067
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 577 US (2015)
GRANTED: Jan 23, 2015
ARGUED: Oct 05, 2015
DECIDED: Dec 01, 2015

ADVOCATES:
Edwin S. Kneedler - Assistant Solictor General of the United States, for the United States
Jeffrey L. Fisher - for the respondent
Juan C. Basombrio - for the petitioner

Facts of the case

OBB Personenverkehr AG (OBB) is owned by OBB Holding Group, a joint-stock company created by the Republic of Austria to operate rail service within Austria. OBB is a member of the Eurail Group, an association organized under Luxembourg law to provide rail pass to non-European residents.

In March 2007, Carol Sachs purchased a four-day Eurail Pass from the Rail Pass Experts (RPE) website for travel in Austria and the Czech Republic. RPE is located in Massachusetts, and the pass Sachs purchased listed a series of disclaimers, including that the “issuing office is merely an intermediary of the carriers in Europe and assumes no liability resulting from the transport.” In April 2007, Sachs used her Eurail Pass in Innsbruck, Austria. While boarding the train, Sachs fell between the tracks, and her legs were crushed by the moving train; they had to be amputated above the knee. Sachs sued OBB in district court in California. OBB moved to dismiss and argued that it was entitled to immunity under the Foreign Sovereign Immunities Act of 1976 (FSIA), or alternatively, that there was a lack of personal jurisdiction. The district court dismissed the case for lack of subject-matter jurisdiction on foreign-sovereign-immunity grounds. The U.S. Court of Appeals for the Ninth Circuit originally affirmed but, upon rehearing en banc, later reversed and held that the commercial-activity exception of FSIA applied in this case because OBB was a common carrier owned by a foreign state that acted through a domestic agent to sell tickets to U.S. citizens and residents. Therefore, the district court did have subject-matter jurisdiction.

Question

(1) In determining whether an entity is an “agent” of a foreign state under the Foreign Sovereign Immunities Act of 1976, do common law principles of agency apply?

(2) Is a tort claim for personal injuries suffered in connection with travel outside of the United States “based upon” the sale of the ticket in the United States?

Media for OBB Personenverkehr AG v. Sachs

Audio Transcription for Oral Argument - October 05, 2015 in OBB Personenverkehr AG v. Sachs

Audio Transcription for Opinion Announcement - December 01, 2015 in OBB Personenverkehr AG v. Sachs

John G. Roberts, Jr.:

I have the opinion for the Court in case 13-1067, OBB Personenverkehr AG versus Sachs.

Carol Sachs, a resident of California, bought a Eurail pass over the Internet from a company in Boston.

She planned to use that Eurail pass to, among other things, ride on the Austrian state owned railway known as OBB from Innsbruck, Austria to Prague.

When she tried to board the OBB train in Innsbruck, however, Ms. Sachs fell onto the train tracks and the moving train crushed both her legs.

When she returned home to the United States, Ms. Sachs sued OBB in Federal District Court.

The question before us is whether the federal courts have the authority to hear that suit.

That question arises because OBB is owned by a sovereign nation, Austria.

Congress has provided that foreign countries and companies they own such as OBB are entitled to sovereign immunity which means that they generally cannot be sued in federal or state courts in the United States.

There are, however, several specific exceptions to that general rule.

Ms. Sachs argues that her suite falls within one of those exceptions, the commercial activity exception which applies when a lawsuit is “based upon a commercial activity carried on in United States."

Ms. Sachs argues that the sale of the Eurail pass to her by the Boston company, acting on behalf of OBB, counts as commercial activity carried on in the United States and she says that her suite is based upon that sale.

She contends, for example, that the sale of the Eurail pass gave rise to particular duties of warning and care on the part of OBB and that alone was sufficient for her suite to be based upon the sale of the Eurail pass.

The Court of Appeals below accepted this argument.

It adopted what is known as the one element test.

So long as a commercial activity provides “an element” of the claim in the suit such as giving rise to a duty of care, the suit can be said to be based upon that activity and the commercial activity exception to the bar of sovereign immunity applies.

We do not think that it is a natural reading of the phrase “based upon” and we reject the one element test.

We think that any person who was asked what Mrs. Sachs’s suit was based upon, would respond that it was based upon a tragic episode in Austria allegedly caused by wrongful conduct and conditions in Austria which led to injuries suffered in Austria.

This conclusion follows closely from a case we decided in 1993 in which we interpreted this same commercial activity exception.

In that case we explained that a suit should be considered to be based upon the wrongful conduct that makes up the core or the gravamen of the complaint.

Here, however packaged, the gravamen of Ms. Sachs's suit is what happened in Austria.

Though the sale of the Eurail pass in the United States was connected to the tragic incident in Innsbruck, there was nothing wrongful about the sale of the pass standing alone.

It therefore is not the gravamen or core of her complaint.

Ms. Sachs's suit then cannot be considered based upon the sale of the Eurail pass in the United States.

We reverse the contrary ruling of the court below.

Our decision is unanimous.