Adding to its legacy of foreign affairs cases, the Supreme Court decided the case OBB Personenverkehr AG v. Sachs, which focused on the Foreign Sovereign Immunities Act (FSIA), a 1976 law, which created limits on suing foreign sovereign nations (or their subdivisions) in U.S. courts. FSIA’s commercial activity exception is the subject of the case. Essentially, the question in this case is whether buying a ticket in America for travel in a foreign country should be considered commercial activity in the United States, for which the foreign travel agency would be liable.
Carol Sachs, a woman from California, bought a Eurail pass at home on the Internet on a site called The Rail Pass Experts (RPE), based out of Massachusetts. That website served as an agent of a foreign travel agency, which itself is a travel agent for Eurail, which maintains and operates a number of rail lines across Europe. Her pass allowed her to sit anywhere on the train not already occupied by another passenger. When she was in Austria, Sachs bought a “couchette” – an upgraded seat that turns into a bed – for a train traveling from Innsbruck, Austria, to Prague, Czech Republic. Sachs fell while boarding and severely injured herself. Both of her legs were amputated and Sachs sued OBB Personenverkehr AG, the rail line under Eurail Group she was using, in federal court. The district court ruled against her claim, but the Ninth Circuit revered the decision after Sachs appealed. OBB asked the Supreme Court to weigh in.
OBB Personenverkehr AG v. Sachs asks whether Sachs is able to sue the Austrian government, or if this instance falls under the various immunities granted to foreign sovereignties. In other words, since FSIA limits Americans’ ability to sue other nations in federal courts, can Sachs sue Austria for the loss of her legs from a train accident on the Austrian government-owned railroads? Complicating the case, how does FSIA interact with third parties, like RPE, who functioned on behalf of the Austrian government? In her case at the district court, Sachs argued that the commercial exception under FSIA applies in this case. That exception states that FSIA does not apply to lawsuits originating from a commercial activity that happen in the United States by the foreign state. Sachs argues that, through RPE, OBB operated commercially in the United States. OBB argues that RPE is not legally tied to OBB and the two are not connected at all.
The FSIA defines a “foreign state” more strictly, not including agents that don’t solely act on a foreign state’s behalf, like RPE. OBB contends that the FSIA is comprehensive, meaning the Court should not look for other, more expansive and inclusive definitions of “foreign state” under the law. And since RPE is neither an organ nor a part of OBB, the Court should ignore the commercial exception.
Sachs argues that Congress’s intent behind the law was to treat foreign states engaged in commercial activities—such as Austria through Eurorail—like companies. Sachs also argues that the definition of “foreign state” wouldn’t matter in this case because that definition was included for entities to be considered equivalent to foreign actors and receive immunity – in this case, it would be if RPE were trying to claim immunity. Sachs contends that this case’s question is about whether the Austrian government conducted business in the United States. She argues the Court should use the same method it would use to determine if a company is working on behalf of another company. That’s only Sachs’s first question she must win—the second is focused on the “based upon” clause; ultimately, whether her claim is “based upon” commercial activity that occurred in the United States. This depends on what the Court defines as commercial activity (and of course whether that happened in the U.S.)
In oral arguments, justices expressed their doubts that RPE could be considered a part of OBB, as far as the “based upon” question goes – if the lawsuit must be based upon activities that happened in the United States, that means that RPE’s sale to Sachs, the only part of the case that happened in the U.S., must be determined to be an integral part of OBB’s business for Sachs to win. But because RPE is a completely separate entity to which OBB isn’t connected at all, Sachs was not likely going to win that argument. Justice Kagan led a line of critical questioning of OBB, asking why foreign governments involved in commerce shouldn’t be treated like private corporations. OBB argued for looking solely at the text of FSIA, which makes a clear geographical delineation defining activities that happen in the United States.
Sachs’s main problem in argumentation was that her injury occurred in Austria. The only connection to the United States is that she bought her ticket in this country, and Sachs argued that OBB’s promise to maintain operational safety was in their ticket sale, but that wasn’t enough for the justices. Justice Breyer, whose recent book The Court and the World argued partially for the increasing need to look at international laws and foreign governments for guidance, made clear that countries expect to be sued in the country where the event happened. Since Sachs had her terrible accident in Austria, she ought to sue in Austria. And while Sachs’s lawyer argued that the case has the potential to impact numerous potential cases in the future in which a person is injured “based upon” commercial activities that happen in America, but Justice Ginsburg answered that the Court could simply rule that purchasing a ticket does not constitute “commercial activity” in this case.
On December 1, 2015, the Court issued its opinion. Chief Justice Roberts wrote the unanimous opinion, which ruled in favor of OBB and against Sachs, denying her the ability to sue OBB for the loss of her legs. The opinion denied Sachs’s argument that the damages were “based upon” a commercial activity that happened in the United States – her purchase of tickets from RPE. The Court decided that the essence of the actions that Sachs is suing over occurred abroad, in Austria, so OBB and the Austrian government were not liable in American courts, according to the Foreign Sovereign Immunities Act. They denied her claim that the failure to alert her to the dangers of rail travel on her American-sold ticket constituted wrongful action. This decision allowed the Court to avoid the second question of the case, whether RPE’s sale could be attributed to OBB and the Austrian government. This is an important question left open. In the age of the Internet, the Court will likely see more and more cases involving the interaction between domestic vendors and foreign products, testing a critical question of liability in an increasingly global world.