OBB Personenverkehr AG v. Sachs

• Decision Date: 01 December 2015
• Docket Number: No. 13–1067.,13–1067.
• Citation: 577 U.S. 27,193 L.Ed.2d 269,136 S.Ct. 390
• Parties: OBB PERSONENVERKEHR AG, Petitioner v. Carol P. SACHS.
• Court: U.S. Supreme Court

577 U.S. 27

136 S.Ct. 390

193 L.Ed.2d 269

OBB PERSONENVERKEHR AG, Petitioner

v.Carol P. SACHS.

No. 13–1067.

Supreme Court of the United States

Argued Oct. 5, 2015.

Decided Dec. 1, 2015.

Juan C. Basombrio, Costa Mesa, CA, for Petitioner.

Jeffrey L. Fisher, Stanford, CA, for Respondent.

Edwin S. Kneedler for the United States as amicus curiae, by special leave of the Court.

Juan C. Basombrio, Counsel of Record, Dorsey & Whitney LLP, Costa Mesa, CA, Steven J. Wells, Timothy J. Droske, Dorsey & Whitney LLP, Minneapolis, MN, for Petitioner.

Jeffrey L. Fisher, Brian Wolfman, Stanford Law School, Supreme Court Litigation Clinic, Stanford, CA, Geoffrey Becker, Counsel of Record, Becker & Becker, P.C., Lafayette, CA, for Respondent.

Chief Justice ROBERTS delivered the opinion of the Court.

The Foreign Sovereign Immunities Act shields foreign states and their agencies from suit in United States courts unless the suit falls within one of the Act's specifically enumerated exceptions. This case concerns the scope of the commercial activity exception, 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." 28 U.S.C. § 1605(a)(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. She sued the railway in Federal District Court, arguing that her suit was not barred by sovereign immunity because it is "based upon" the railway's sale of the pass to her in the United States. We disagree and conclude that her action is instead "based upon" the railway's conduct in Innsbruck. We therefore hold that her suit falls outside the commercial activity exception and is barred by sovereign immunity.

I

A

Petitioner 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. OBB is wholly owned by OBB Holding Group, a joint-stock company created by the Republic of Austria. OBB Holding Group in turn is wholly owned by the Austrian Federal Ministry of Transport, Innovation, and Technology. Sachs v. Republic of Austria, 737 F.3d 584, 587 (C.A.9 2013).

OBB—along with 29 other railways throughout Europe—is a member of the Eurail Group, an association responsible for the marketing and management of the Eurail pass program. Brief for International Rail Transport Committee as Amicus Curiae 12; 737 F.3d, at 587. 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. Brief for International Rail Transport Committee as Amicus Curiae 12–13, and n. 3; Brief for Respondent 4–5.

Carol Sachs is a resident of Berkeley, California. In March 2007, she purchased a Eurail pass over the Internet from The Rail Pass Experts, a Massachusetts-based travel agent. The following month, Sachs arrived at the Innsbruck train station, planning to use her Eurail pass to ride an OBB train to Prague. As she attempted to board the train, Sachs fell from the platform onto the tracks. OBB's moving train crushed her legs, both of which had to be amputated above the knee

. 737 F.3d, at 587–588.

Sachs sued OBB in the United States District Court for the Northern District of California, asserting five causes of action: (1) negligence; (2) strict liability for design defects in the train and platform; (3) strict liability for failure to warn of those design defects; (4) breach of an implied warranty of merchantability for providing a train and platform unsafe for their intended uses; and (5) breach of an implied warranty of fitness for providing a train and platform unfit for their intended uses. App. 14–18. OBB claimed sovereign immunity and moved to dismiss the suit for lack of subject matter jurisdiction. 737 F.3d, at 588.

B

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, 109 S.Ct. 683, 102 L.Ed.2d 818 (1989). The Act defines "foreign state" to include a state "agency or instru mentality,"" 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, 113 S.Ct. 1471, 123 L.Ed.2d 47 (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." § 1605(a)(2).¹

The District Court concluded that Sachs's suit did not fall within § 1605(a)(2) and therefore granted OBB's motion to dismiss. 2011 WL 816854, *1, *4 (N.D.Cal., Jan. 28, 2011). A divided panel of the United States Court of Appeals for the Ninth Circuit affirmed. 695 F.3d 1021 (2012). The full court ordered rehearing en banc and, with three judges dissenting, reversed the panel decision. 737 F.3d 584.

The en banc majority first observed that, "based on the agreement of the parties," "the only relevant commercial activity within the United States was [Sachs's] March 2007 purchase of a Eurail pass from the Rail Pass Experts," a Massachusetts company. Id., at 591, n. 4 (internal quotation marks omitted). The court concluded that The Rail Pass Experts had acted as OBB's agent and, using common law principles of agency, attributed that Eurail pass sale to OBB. Id., at 591–598.

The court next asked whether Sachs's claims were "based upon" the sale of the Eurail pass within the meaning of § 1605(a)(2). The "based upon" determination, the court explained, requires that the commercial activity within the United States be "connected with the conduct that gives rise to the plaintiff's cause of action." Id ., at 590. But, the court continued, "it is not necessary that the entire claim be based upon the commercial activity of OBB." Id., at 599. Rather, in the court's view, Sachs would satisfy the "based upon" requirement for a particular claim "if an element of [that] claim consists in conduct that occurred in commercial activity carried on in the United States." Ibid. (internal quotation marks omitted).

Applying California law, see id., at 600, n. 14, the court analyzed Sachs's causes of action individually and concluded that the sale of the Eurail pass established a necessary element of each of her claims. Turning first to the negligence claim, the court found that Sachs was required to show that OBB owed her a duty of care as a passenger as one element of that claim. The court concluded that such a duty arose from the sale of the Eurail pass. Id., at 600–602. Turning next to the other claims, the court determined that the existence of a "transaction between a seller and a consumer" was a necessary element of Sachs's strict liability and breach of implied warranty claims. Id., at 602. The sale of the Eurail pass, the court noted, provided proof of such a transaction. Ibid. Having found that "the sale of the Eurail pass in the United States forms an essential element of each of Sachs's claims," the court concluded that each claim was "based upon a commercial activity carried on in the United States" by OBB. Ibid.

We granted certiorari. 574 U.S. ––––, 135 S.Ct. 1172, 190 L.Ed.2d 929 (2015).

II

OBB contends that the sale of the Eurail pass is not attributable to the railway, reasoning that the Foreign Sovereign Immunities Act does not allow attribution through principles found in the common law of agency. OBB also argues that even if such attribution were allowed under the Act, Sachs's suit is not "based upon" the sale of the Eurail pass for purposes of § 1605(a)(2). We agree with OBB on the second point and therefore do not reach the first.

A

The Act itself does not elaborate on the phrase "based upon." Our decision in Saudi Arabia v. Nelson, 507 U.S. 349, 113 S.Ct. 1471, 123 L.Ed.2d 47 (1993), however, provides sufficient guidance to resolve this case. In Nelson, a husband and wife brought suit against Saudi Arabia and its state-owned hospital, seeking damages for intentional and negligent torts stemming from the husband's allegedly wrongful arrest, imprisonment, and torture by Saudi police while he was employed at a hospital in Saudi Arabia. Id., at 351, 353–354, 113 S.Ct. 1471. The Saudi defendants claimed sovereign immunity under the Act, arguing, inter alia, that § 1605(a)(2) was inapplicable because the suit was "based upon" sovereign acts—the exercise of Saudi police authority—and not upon commercial activity. See Brief for Petitioners in Saudi Arabia v. Nelson, O.T. 1992, No. 91–552, pp. 12–14. The Nelsons countered that their suit was "based upon" the defendants' commercial activities in "recruit[ing] Scott Nelson for work at the hospital, sign[ing] an employment contract with him, and subsequently employ[ing] him." 507 U.S., at 358, 113 S.Ct. 1471. We rejected the Nelsons' arguments.

The Act's "based upon" inquiry, we reasoned, first requires a court to "identify[ ] the particular conduct on which the [plaintiff's] action is ‘based.’ " Id., at 356, 113 S.Ct. 1471. Considering dictionary definitions and lower court decisions, we explained that a court should identify that "particular conduct" by looking to the "basis" or "foundation" for a claim, id., at 357, 113 S.Ct. 1471 (citing dictionary definitions), "those elements ... that, if proven, would...