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Woman's Suit Barred: Not Based Upon Commercial Activity Carried on in USA by Foreign State


"This case concerns the scope of the commercial activity exception [of the Foreign Sovereign Immunities Act], which withdraws sovereign immunity in any case 'in which the action is based upon a commercial activity carried on in the United States by [a] foreign state.' ” Pp. 1 (citing 28 U. S. C. §1605(a)(2)).

"OBB Personenverkehr AG (OBB) operates a railway that carries nearly 235 million passengers each year on routes within Austria and to and from points beyond Austria’s frontiers…. Eurail passes allow their holders unlimited passage for a set period of time on participating Eurail Group railways. They are available only to non-Europeans, who may purchase them both directly from the Eurail Group and indirectly through a worldwide network of travel agents." Pp. 2. "Respondent Carol Sachs is a resident of California who purchased in the United States a Eurail pass for rail travel in Europe. She suffered traumatic personal injuries when she fell onto the tracks at the Innsbruck, Austria, train station while attempting to board a train operated by the Austrian state-owned railway." Pp. 1. She sued in the U.S., claiming that he suit was not barred by the Foreign Sovereign Immunities Act.

T1: She sued OBB in Federal District Court. OBB moved to dismiss, claiming that her suit was barred by the Foreign Sovereign Immunities Act and District Court held that Sachs’s suit did not fall within §1605(a)(2) exemption to the act and dismissed the suit,

T2: The en banc Ninth Circuit reversed. The court first concluded that the Eurail pass sale by the travel agent could be attributed to OBB through common law principles of agency, and then determined that Sachs’s suit was “based upon” that Eurail pass sale because the sale established a single element necessary to recover under each cause of action brought by Sachs.

T3: The Supreme Court unanimously held that Sachs’s suit falls outside the commercial activity exception and is therefore barred by sovereign immunity.

The starting point (law) is the Foreign Sovereign Immunities Act, which shields foreign states and their agencies and instrumentalities from suit in United States courts, unless a specified exception applies. The Foreign Sovereign Immunities Act “provides the sole basis for obtaining jurisdiction over a foreign state in the courts of this country.” Argentine Republic v. Amerada Hess Shipping Corp., 488 U. S. 428, 443 (1989). The Act defines “foreign state” to include a state “agency or instrumentality,” 28 U. S. C. §1603(a), and both parties agree that OBB qualifies as a “foreign state” for purposes of the Act. OBB is therefore “presumptively immune from the jurisdiction of United States courts” unless one of the Act’s express exceptions to sovereign immunity applies. Saudi Arabia v. Nelson, 507 U. S. 349, 355 (1993). "Sachs argues that her suit falls within the Act’s commercial activity exception, which provides in part that a foreign state does not enjoy immunity when 'the action is based upon a commercial activity carried on in the United States by the foreign state.' ” Pp. 3 (quoting § 1605(a)(2)).

Agreeing with OBB, the Court evaluates the "based upon" phrase and disagrees with the Ninth Circuit's reasoning and "one-element" test. Pp. 7. The Supreme Court could not "see how that mention of elements—plural—could be considered an endorsement of a one-element test, nor how the particular element the Ninth Circuit singled out for each of Sachs’s claims could be construed to entitle her to relief." Pp. 7. Explaining the precedent set forth in Nelson, supra, "[r]ather than individually analyzing each of the Nelsons’ causes of action, [the Supreme Court] zeroed in on the core of their suit: the Saudi sovereign acts that actually injured them." Pp. 7. Indeed, "the conduct constituting the gravamen of Sachs’s suit plainly occurred abroad. All of her claims turn on the same tragic episode in Austria, allegedly caused by wrongful conduct and dangerous conditions in Austria, which led to injuries suffered in Austria." Pp. 8. "Regardless of whether Sachs seeks relief under claims for negligence, strict liability for failure to warn, or breach of implied warranty, the 'essentials' of her suit for purposes of §1605(a)(2) are found in Austria." Pp. 9 (footnote omitted).

Conclusion: Sachs cases fails to fall within an exception, "OBB has sovereign immunity under the Act, and accordingly the courts of the United States lack jurisdiction over the suit." Pp. 11.

The Case is OBB PERSONENVERKEHR AG v. SACHS, 577 U.S. ____ (Dec. 1, 2015), http://www.supremecourt.gov/opinions/15pdf/13-1067_onkq.pdf

#SupremeCourt #ForeignSovereignImmunitiesAct #FSIA #OBB #SupremeCourt2015 #NinthCircuit #NotBasedUponCommercialActivity #CoryMorris

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