Austrian Railway Immune from Personal Injury Suit by California Tourist
When a California woman has her legs crushed by a train while vacationing in Austria, is she permitted to bring suit against the railway in the United States on grounds that she purchased her railway ticket in the U.S. prior to her trip? Or is the railway immune from suit in the U.S.? That was the issue determined by the recent case of OBB Personenverkehr AG v. Sachs. The Foreign Sovereign Immunities Act of 1976 (“FSIA”) provides that foreign states, such as Austria, are immune from the jurisdiction of United States courts unless the activity in question falls within an enumerated exception. At issue in this case is the “commercial activity” exception which applies if the action is based upon a foreign state’s commercial activity carried on in the United States.
Defendant and petitioner, OBB Personenverkehr AG (“OBB”) operates a passenger rail service within Austria and is indirectly owned by the Austrian Federal ministry of Transport, Innovation, and Technology, falling under the definition of a foreign state pursuant to the FSIA. Plaintiff and respondent, Carol Sachs, is a California resident, who purchased a Eurail pass over the Internet from a travel agent located in Massachusetts.
When attempting to board a train in Innsbruck, Austria traveling to Prague, Sachs fell to the tracks and her legs were crushed by the moving train ultimately requiring amputation. She sued OBB in the United States District Court for the Northern District of California asserting claims for negligence, strict liability for both design defect and failure to warn, and breach of implied warranties of merchantability and fitness. The district court dismissed the case for lack of subject matter jurisdiction pursuant to the FSIA, concluding that its commercial activity exception did not apply because OBB did not engage in commercial activity in the United States, and the sale of the Eurail ticket was not something that could be attributed to OBB. The court of appeals initially affirmed; however, on rehearing the court reversed the district court’s dismissal holding that the claims were based upon a commercial activity – the sale of the Eurail pass, which it imputed to OBB on an agency theory – carried on in the United States by a foreign state.
The U.S. Supreme Court did not address the issue of agency, instead focusing on whether Sachs’s claims were based upon the commercial activity in the United States (the sale of the Eurail ticket). The Court rejected the appellate court’s determination that Sachs’s claims were “based upon” the sale of the pass because it constituted “an element” of each of plaintiff’s claims, stating that such is “flatly incompatible” with existing controlling law. The Court relied on its decision in Saudi Arabia v. Nelson, holding that an action is based upon the particular conduct if it constitutes the “gravamen” of the suit, rather than a single element of a claim. Here, the Court found that the gravamen of the suit occurred abroad, at the train station in Austria. Thus, the commercial activity exception in the FSIA does not apply to confer the United States courts with jurisdiction over the suit.