Case of the Day: ÖBB Personenverkehr v. Sachs

The case of the day is ÖBB Personenverkehr AG v. Sachs (S. Ct. 2015). Carol Sachs, a Californian, bought a Eurail pass via the website of The Rail Pass Experts, a Massachusetts travel agent. She traveled to Innsbruck, intending to use her pass to ride the train to Prague. But as she attempted to board, she fell onto the tracks, and the moving train crushed her legs, which had to be amputated. She sued ÖBB, which operates the railway in Austria, for negligence, failure to warn, breach of implied warranty, etc., in the Northern District of California. ÖBB is owned by ÖBB Holding Group, which in turn is wholly owned by the Austrian Federal Ministry of Transport, Innovation, and Technology.

ÖBB moved to dismiss the action for want of subject matter jurisdiction, arguing that it had sovereign immunity under the FSIA. The District Court granted its motion, and a panel of the Ninth Circuit affirmed, but the full court, en banc, reversed, and ÖBB sought review in the Supreme Court.

For purposes of the case, it was agreed that ÖBB was a “foreign state” for purposes of the FSIA. The general rule under the FSIA, 28 U.S.C. § 1604, is a rule of immunity:

Subject to existing international agreements to which the United States is a party at the time of enactment of this Act a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided in sections 1605 to 1607 of this chapter.

The question in the case was whether one of the exceptions to immunity, namely the commercial activity exception in 28 U.S.C. § 1605(a)(2), applied. That exception exists in cases

in which the action is based upon a commercial activity carried on in the United States by the foreign state …

The only relevant action ÖBB arguably took in the United States was the sale of the Eurail pass through its supposed agent (the Court did not reach the issues of agency and vicarious liability). So the question was whether Sachs’s action was “based upon” that sale.

The Court, in a unanimous opinion by Chief Justice Roberts, held that it was not. The sale of the Eurail pass was, as the Ninth Circuit, held, an element of Sachs’s claim, and it was that fact that led the Ninth Circuit to conclude that the claim was “based upon” the sale. But the Court, citing Saudi Arabia v. Nelson, 507 U. S. 349, held that the true test required focusing on the “particular conduct that constitutes the gravamen” of the cause of action, that is, the “sovereign acts that actually injured” the plaintiff. All of Sachs’s claims “turn on the same tragic episode in Austria,” caused by wrongful conduct and dangerous conditions in Austria, leading to injuries suffered in Austria.

Sachs claimed that ÖBB had a duty to warn her in the United States about the dangerous conditions in the Innsbruck station. But that was not enough. The sale of the Eurail pass itself was not wrongful, and “without the existence of the unsafe boarding conditions in Innsbruck, there would have been nothing to warn Sachs about when she bought the Eurail pass.”

The Court was careful to note that the scope of its decision was limited. “Domestic conduct with respect to different types of commercial activity may play a more significant role in other suits under the first clause of § 1605(a)(2).” In other words, because the wrongful conduct, the accident, and the injury all occurred in Austria, this was a pretty easy case. Other cases may not be as easy.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

Leave a Reply

Your email address will not be published. Required fields are marked *