In an 8-3 ruling, the Ninth Circuit Court of Appeals en banc has determined that a lower court erred in dismissing personal-injury claims filed against a foreign-state common carrier that sold tickets in the United States through a subagent. Sachs v. Republic of Austria, No. 11-15458 (9th Cir., decided December 6, 2013).
According to the court majority, because the case fit within the commercial-activity exception to the Foreign Sovereign Immunities Act (FSIA) and the claims were “based upon” the defendant’s commercial activity in the United States, the U.S. courts have subject-matter jurisdiction over the matter. The litigation involved an injury that a California resident sustained in Austria while boarding a train owned by OBB Personenverkehr AG, which is wholly owned by Austria. To board the train, the plaintiff used a Eurail pass she had purchased online through the Website of a Massachusetts-based company that sold such passes on behalf of the Eurail Group of which OBB was a member.
The majority concluded that the first clause of FSIA’s commercial-activity exception “encompasses situations in which a foreign state carries on commerce through the acts of an independent agent in the United States.” The dissenting judges disagreed, finding this interpretation too broad and would have affirmed the lower court’s dismissal on this basis. The majority found that the Massachusetts’ company’s (RPE’s) authority to sell Eurail passes derived “from the original authority that OBB granted to Eurail Group to market and sell passes for transportation on its rail lines.… If RPE had impermissibly sold the Eurail pass to Sachs, OBB would have had no duty to honor the pass. But it did.” The majority also found that because the sale of the Eurail pass in the United States formed the basis of an element of the plaintiff’s claims for negligence, strict liability and breach of implied warranty the claims were based on the defendant’s commercial activity in the United States. While three dissenting jurists further opined that the ticket sale would have given rise to the common carrier’s duty to the plaintiff under her negligence theory, they disagreed that the sale was a necessary element of the other claims. Chief Judge Alex Kozinski, writing his own dissent, said that the claim arose from events that transpired entirely in Austria and thus the suit was not “based upon” commercial activity carried on in the United States.