Wednesday, December 2, 2015
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Austria’s National Railway Held Immune From Suit in U.S.
By a MetNews Staff Writer
A railway owned by a foreign government is not subject to suit in the United States for injuries sustained abroad, merely because the plaintiff purchased her ticket from a U.S. travel agent, the U.S. Supreme Court ruled yesterday.
The justices unanimously overturned a Ninth U.S. Circuit Court of Appeals ruling in favor of Carol Sachs, a Northern California resident who sued the Republic of Austria and its railway in the U.S. District Court for the Northern District of California. The Ninth Circuit, in an 8-3 en banc decision, said Sachs’s claims fell under the “commercial activity” exception to the Foreign Sovereign Immunities Act.
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 one of several listed exceptions applies. One such exception allows a federal court to hear an “action…based upon a commercial activity carried on in the United States by the foreign state.”
Sachs filed her suit after a fall at the Innsbruck rail 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, alleges she 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.
The Ninth Circuit held that Sachs could sue “based upon” the sale of Eurail passes in this country by a U.S.-based company on behalf of a foreign government. But Chief Justice John Roberts, in his opinion for the high court, said the ticket sales were too disconnected from the railway operations for the exception to apply.
Roberts rejected the argument that at least some of Sachs’s claims, such as a strict liability cause of action for failure of the ticket seller to warn of the dangerous conditions at the Innsbruck station, arise directly from U.S.-based commercial activity.
“Under any theory of the case that Sachs presents…there is nothing wrongful about the sale of the Eurail pass standing alone,” the chief justice wrote. “Without the existence of the unsafe boarding conditions in Innsbruck, there would have been nothing to warn Sachs about when she bought the Eurail pass. However Sachs frames her suit, the incident in Innsbruck remains at its foundation.”
Juan Basombrio of Dorsey & Whitney’s Costa Mesa office argued the case before the Supreme Court on behalf of the defendants.
The decision, he said in a statement, “recognizes the importance of international comity; that is, the respect that nations afford to the courts of other nations with respect to matters that occur within their territory.” He predicted that it “will foster harmony between the United States and other nations at least in the commercial context” and “incentivize other nations to adopt similar rulings, which will protect American businesses from being dragged into court overseas.”
By ruling unanimously, he said, the court “has spoken with one voice in this important area of the law, which involves the foreign relations of the United States.”
Attorneys for Sachs did not respond to emailed requests for comment.
The case is OBB Personenverkehr AG v. Sachs, 13-1067.
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