Sachs v. Republic of Austria

The commercial activities exception of the Foreign Sovereign Immunity Act does not apply when a foreign transportation agency sells a train pass to a United States resident because the transportation carrier has created a "substantial contact" within the United States.

While traveling in Austria, Carol Sachs purchased a four-day Eurail pass from Rail Pass Experts (“RPE”) for train travel throughout Austria and the Czech Republic. While attempting to board the train in Austria, Sachs fell between the tracks, and her legs were crushed by the train. Both of Sachs' legs had to be amputated above her knees. Sachs filed suit against OBB Personenverkehr AG (“OBB”) in the Northern District of California for compensation for her injuries, which she alleged were caused by negligent operation of the train. OBB denied Sachs' claims, stating that Sachs had attempted to board the train when it was already moving, and therefore she was responsible for her own injuries. OBB also filed a Motion to Dismiss under the Foreign Sovereign Immunity Act (“FSIA”), lack of personal jurisdiction, and international comity. The district court held that Sachs had not shown OBB and RPE to have a principal-agent relationship, and therefore OBB could not be held liable. A three-judge panel of the Ninth Circuit affirmed. The Ninth Circuit reheard the case en banc to clarify the FSIA's commercial activities exception. The panel held that the commercial-activity exception of the FSIA did not apply because when Sachs purchased the Eurail pass, OBB created a "substantial contact" with the United States, allowing it to be sued in the United States. However, the panel agreed with the Second and D.C. Circuits that this sale did not mean that OBB had engaged in commercial activity in the United States. Since Sachs was able to show that her purchase of the Eurail pass had a substantial nexus with her claim, Sachs may sue the Republic of Austria in the United States. REVERSED and REMANDED.