The U.S. Supreme Court is called to decide whether a U.S. citizen can sue a foreign government before a U.S. Court for allegedly tortious conduct that occurred outside the U.S., or whether the foreign administration is instead entitled to immunity under a 1976 law that bars most lawsuits against foreign countries. Sachs v. Republic of Austria, 737 F.3d 584 (9th Cir. 2013), cert. granted sub nom, OBB Personenverkehr AG v. Sachs, 135 S.Ct. 1172 (2015).
Background
A California woman (Carol Sachs) bought from her home in California a train pass from a website operated by a Massachusetts company to travel between Austria and the Czech Republic on a passenger train owned by the Austrian government. While in Austria, on that train, she lost both of her legs in a railroad accident. Sachs is now seeking to sue the foreign government operating the train (OBB) before a U.S. court.
In 2013, the Northern District of California granted Defendant OBB’s motion to dismiss for lack of subject-matter jurisdiction. The court dismissed Sachs’s lawsuit on the basis of the Foreign Sovereign Immunities Act (FSIA), a 1976 law which generally prohibits lawsuits against foreign countries. Sachs pointed out an exception to the FSIA that would allow lawsuits against foreign government if “based upon a commercial activity carried on in the United States by the foreign state”. However, the District Court agreed with the railroad and deemed that the commercial activity exception did not apply.
[t]he mere fact that OBB has authorized the Eurail Group to sell and distribute rail passes for travel over its railways, and that such a pass was sold by a third party travel agent to plaintiff is simply insufficient to establish the day-to-day involvement or ‘principal-agent’ relationship necessary to defeat the presumption of separate juridical status.
The Court found the connection between the Austrian Government and the Massachusetts company that sold the ticket was simply too attenuated to establish subject matter jurisdiction upon OBB.
The Ninth Circuit affirmed the District Court’s decision but on rehearing en banc reversed the decision. It held that the Massachusetts company selling the ticket was carrying out commercial acts in the US, they could be imputed to OBB. “[A] foreign state owned common carrier, such as a railway or airline, engages in commercial activity in the United States when it sells tickets in the United States through a travel agent regardless of whether the travel agent is a direct agent or subagent of the common carrier.” App. at 4.
On January 23, 2015, the Supreme Court granted certiorari. The Supreme Court will clarify: (1) whether a state-owned company like OBB can be sued in US courts for the actions of a third party like the Massachusetts company selling tickets via internet; and (2) whether Sachs claims are “based upon” commercial activity in the United States in order to define which conduct should be regarded as “commercial activity” for this purposes. (See Sachs v. Republic of Austria, No. C 08-1840 VRW, 2011 WL 816854, (N.D. Cal. Jan. 28, 2011), aff’d, 695 F.3d 1021 (9th Cir. 2012), rev’d en banc, 737 F.3d 584 (9th Cir. 2013), cert. granted sub nom, OBB Personenverkehr AG v. Sachs, 135 S.Ct. 1172 (2015).
The Supreme Court hearing
On October 5, 2015, the Justices did not contest that buying a train pass in the US amounted to some form of commercial activity. However, the question became whether entering credit card information through the website was “substantial enough” to fall under the FSIA.
Trying to clarity this point, the Chief Justice asked some interesting questions.
[L]et’s say you have a flight from New York to Vienna. And in New York, someone negligently sets or whatever they do with the landing gear, okay? So then the plane takes off. And then in Vienna, because of the negligence in New York, it’s a rough landing, somebody gets a concussion…Can you bring that in the United States?
According to OBB’s counsel, in the example the hurt passenger could sue the airline in the US because the foreign airline came here and “conducted a commercial activity in the United States”, unlike in the present case in which “neither the injury occurred in the US, nor did the conduct causing it.” Sachs’s counsel noted that “there are plenty of cases that support the proposition that when a company markets and sells a product in a jurisdiction, that creates specific jurisdiction”.
However, a Justice noted: “There is one contact with the United States. A pass is bought from a travel agent in Massachusetts, a pass covering 30-odd railroads. That’s all that happened in the United States. All of the relevant conduct, the tortious conduct occurred abroad.”
Transcripts of the hearing held on October 5, 2015, are available at http://www.supremecourt.gov/oral_arguments/argument_transcripts/13-1067_5426.pdf
More information on OBB Personenverkehr AG v. Sachs is available at
http://www.scotusblog.com/case-files/cases/obb-personenverkehr-ag-v-sachs/
More material is available at http://bclawreview.org/files/2015/05/07_lichtman.pdf
For more information, Francesca Giannoni-Crystal