The Supreme Court of the United States granted the Austrian government owned railway’s petition for a writ of certiorari on Friday, January 23, 2014. Petitioner OBB Personenverkehr AG (OBB) brought this petition after the Court of Appeals for the Ninth Circuit, in a divided en banc decision, held that OBB could be sued in U.S. court for injuries Respondent Carol P. Sachs, a California woman who purchased a Eurail pass from a Massachusetts travel agency, incurred when boarding a train in Austria.
Foreign states are generally immune from suit in the United States pursuant to the Foreign Sovereign Immunities Act, but that Act provides a limited “commercial activity” exception, whereby a foreign state can be sued when the claims are “based upon a commercial activity carried on in the United States by the foreign state.” 28 U.S.C. §1605(a)(2).
The en banc majority of the Ninth Circuit reversed the District Court and issued a decision contrary to the Ninth Circuit’s original panel majority, holding that a foreign-state owned common carrier, like OBB, “engages in commercial activity in the United States,” for purposes of this exception, “when it sells tickets in the United States through a travel agent regardless of whether the travel agent is a direct agent or subagent of the common carrier,” and that Sach’s tort claims were “based upon” that ticket sale. The two dissents characterized the majority’s holding as “inconsistent with the text of the statute” and in “conflict with Supreme Court precedent.”
The Supreme Court, in agreeing to hear the case, will be reviewing the Ninth Circuit’s interpretation of the commercial activity exception, specifically when an entity is an “agent” of a foreign state, and when a claim is considered to be “based upon” commercial activity in the United States.
OBB’s lead counsel of record, Juan C. Basombrio, a partner with the law firm of Dorsey & Whitney, said: “We are gratified that the Supreme Court has decided to review the Ninth Circuit's unprecedented decision that a foreign state-operated railway can be hauled into U.S. court anytime a travel ticket is sold by a domestic travel agent. This case will address important issues regarding the Foreign Sovereign Immunity Act’s commercial activity provisions that have world-wide implications.”
The Supreme Court will hear argument on this case in the 2015 Term.
In addition to Mr. Basombrio, the team from Dorsey includes partner Steve Wells and associate Tim Droske.