Metropolitan News-Enterprise


Monday, January 28, 2013


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Ninth Circuit to Rule En Banc in Suit Against Austria’s National Railway, Which Panel Held Immune




The Ninth U.S. Circuit Court of Appeals will decide en banc whether the commercial-activity exception to the Foreign Sovereign Immunities Act allows suit in the United States for injuries sustained as a result of the alleged negligence of a foreign country’s national railway, the court said Friday.

In a brief order, Chief Judge Alex Kozinski said a majority of the court’s unrecused active judges had voted in favor of review by a panel of 11 judges in Sachs v. Republic of Austria, 11-15458.

A three-judge panel ruled 2-1 in favor of the defendants on Sept. 26 of last year, holding that the exception did not apply because the U.S.-based commercial activity alleged by the plaintiff—the sale of Eurail passes in this country by a U.S.-based company—is not conducted by a foreign government.

The FSIA prohibits courts in this country from exercising jurisdiction over a foreign government, or over an entity that is majority-owned or controlled by a foreign government, unless an exception applies.  One such exception allows permits a federal court to hear an “action…based upon a commercial activity carried on in the United States by the foreign state.”

The court will rehear the case of Carol Sachs, who sued the Republic of Austria and its national railway company after a fall at the Innsbruck station in 2007 resulted in injuries requiring amputation of both of her legs above the knees.

Sachs, who purchased an Austria-and-Czech Republic Eurail Pass in California, fell through a gap in the platform as she was running to catch a moving train.

The seller of the pass was Rail Pass Experts, a Massachusetts-based agent for Eurail Group, which is owned by the 31 railway companies that participate in Eurail. Eurail passes allow unlimited travel on some or all 31 of the railways for a specified period of time, depending on the type of pass purchased.

Austria’s national railway, OBB Personenverkehr AG, is wholly owned by a holding company that was established by Austrian law. The government is the sole owner of the holding company, and receives all of the railway’s profits.

U.S. District Judge Vaughn R. Walker of the Northern District of California, since retired, asked for briefing on whether the actions of Rail Pass Experts could be imputed to the railway for purposes of the commercial-activity exception, then ruled that OBB was immune under FSIA.

Judge Richard Tallman, writing for the Ninth Circuit, said Walker was correct.

The relationship between Sachs as passenger and OBB as transportation provider is too attenuated from the relationship between Rail Pass Experts as agent and Eurail Group as principal, Tallman reasoned, for the sale of a Eurail pass in the United States to constitute commercial activity by OBB.

The judge noted that OBB is merely one of many owners of Eurail Group, and does not itself conduct commercial activity in the United States, “presumably in part to retain immunity from suit in American courts.” He cited Doe v. Holy See, 557 F.3d 1066 (9th Cir. 2009), for the proposition that the immunity of the foreign sovereign can only be pierced if the activities that form the basis of the lawsuit—in that case molestation by a priest—can be fairly attributed to the sovereign.

Tallman acknowledged that Holy See dealt with the act’s “tortious activity” exception, rather than the exception relied on by Sachs, but said the operative principles were the same.

Judge Carlos Bea concurred separately. He disagreed with Tallman as to the applicability of Holy See to a commercial-activity case, but said the ruling could be affirmed on the narrower ground that there was no nexus between the alleged negligence of OBB that caused injury in Austria, and the sale of the Eurail pass.

Judge Ronald Gould dissented, arguing:

“I believe that, for purposes of sovereign immunity, a sensible interpretation of the FSIA permits a domestic forum in which Sachs may assert her negligence or other claims against OBB, that our Ninth Circuit precedent does not prevent this, and that we should follow the general approach of other federal circuits that have decided in similar cases that ticket sales by an agent in the United States invoked the commercial activity exception to sovereign immunity in cases involving common carriers.”


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