OBB Personenverkehr AG v. Sachs

(Slip Opinion) OCTOBER TERM, 2015 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
OBB PERSONENVERKEHR AG v. SACHS
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE NINTH CIRCUIT
No. 13–1067. Argued October 5, 2015—Decided December 1, 2015
Respondent Carol Sachs, a California resident, purchased a Eurail pass
over the Internet from a Massachusetts-based travel agent. While
using that pass to board a train in Austria operated by petitioner
OBB Personenverkehr AG (OBB), the Austrian state-owned railway,
Sachs fell to the tracks and suffered traumatic personal injuries. She
sued OBB in Federal District Court. OBB moved to dismiss, claiming
that her suit was barred by the Foreign Sovereign Immunities Act,
which shields foreign states and their agencies and instrumentalities
from suit in United States courts, unless a specified exception ap-
plies. Sachs countered that her suit fell within the Act’s commercial
activity exception, which abrogates sovereign immunity for suits
“based upon a commercial activity carried on in the United States by
[a] foreign state,” 28 U.S. C. §1605(a)(2), reasoning that her suit was
“based upon” the Massachusetts-based travel agent’s sale of the
Eurail pass in the United States, and that the travel agent’s sale of
that pass could be attributed to OBB through common law principles
of agency. The District Court held that Sachs’s suit did not fall with-
in §1605(a)(2) and dismissed the suit, but the en banc Ninth Circuit
reversed. The court first concluded that the Eurail pass sale by the
travel agent could be attributed to OBB through common law princi-
ples of agency, and then determined that Sachs’s suit was “based up-
on” that Eurail pass sale because the sale established a single ele-
ment necessary to recover under each cause of action brought by
Sachs.
Held: Sachs’s suit falls outside the commercial activity exception and is
therefore barred by sovereign immunity. Pp. 5–11.
(a) Sachs’s suit is not “based upon” the sale of the Eurail pass for
purposes of §1605(a)(2). Therefore, the Court has no need to address
2 OBB PERSONENVERKEHR AG v. SACHS
Syllabus
whether the Act allows the travel agent’s sale of the Eurail pass to be
attributed to OBB through common law principles of agency. Pp. 5–
9.
(1) Although the Act does not elaborate on the phrase “based up-
on,” Saudi Arabia v. Nelson, 507 U.S. 349, provides sufficient guid-
ance to resolve this case. There, the Court held that the “based upon”
inquiry requires a court to determine the “particular conduct on
which the action is ‘based,’ ” id., at 356, and identified that conduct
by looking to “the ‘gravamen of the complaint,’ ” id., at 357. Pp. 5–6.
(2) The Ninth Circuit used a flawed approach when it found that
the “based upon” inquiry would be satisfied if the sale of the Eurail
pass provided “an element” of each of Sachs’s claims. This Court’s
approach in Nelson is flatly incompatible with such a one-element
approach, which necessarily requires a court to identify all the ele-
ments of each claim before finding that the claim falls outside
§1605(a)(2). The Nelson Court did not undertake such an exhaustive
claim-by-claim, element-by-element analysis or engage in the choice-
of-law analysis necessary to such an undertaking. See id., at 356–
358. P. 7.
(3) As opposed to adopting a one-element test, the Nelson Court
zeroed in on the core of the plaintiffs’ suit—the conduct that actually
injured the plaintiffs—to identify the conduct that the suit was
“based upon.” See id., at 358. All of Sachs’s claims turn on the same
tragic episode in Austria, allegedly caused by wrongful conduct and
dangerous conditions in Austria, which led to injuries suffered in
Austria. However Sachs frames her suit, the incident in Innsbruck,
Austria, remains at its foundation. Any other approach would allow
plaintiffs to evade the Act’s restrictions through artful pleading. See
id., at 363. Pp. 7–9.
(b) Sachs now contends that her claims are “based upon” OBB’s en-
tire railway enterprise. Because that argument was never presented
to any lower court, it is forfeited. See Taylor v. Freeland & Kronz,
503 U.S. 638, 645–646. Pp. 9–10.
737 F.3d 584, reversed.
ROBERTS, C. J., delivered the opinion for a unanimous Court.
Cite as: 577 U. S. ____ (2015) 1
Opinion of the Court
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SUPREME COURT OF THE UNITED STATES
_________________
No.13–1067
_________________
OBB PERSONENVERKEHR AG, PETITIONER v.
CAROL P. SACHS
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT
[December 1, 2015]
CHIEF JUSTICE ROBERTS delivered the opinion of the
Court.
The Foreign Sovereign Immunities Act shields foreign
states and their agencies from suit in United States courts
unless the suit falls within one of the Act’s specifically
enumerated exceptions. This case concerns the scope of
the commercial activity exception, which withdraws sover-
eign immunity in any case “in which the action is based
upon a commercial activity carried on in the United States
by [a] foreign state.” 28 U.S. C. §1605(a)(2).
Respondent Carol Sachs is a resident of California
who purchased in the United States a Eurail pass for
rail travel in Europe. She suffered traumatic personal in-
juries when she fell onto the tracks at the Innsbruck,
Austria, train station while attempting to board a train
operated by the Austrian state-owned railway. She sued
the railway in Federal District Court, arguing that her
suit was not barred by sovereign immunity because it is
“based upon” the railway’s sale of the pass to her in the
United States. We disagree and conclude that her action
is instead “based upon” the railway’s conduct in Inns-
2 OBB PERSONENVERKEHR AG v. SACHS
Opinion of the Court
bruck. We therefore hold that her suit falls outside the
commercial activity exception and is barred by sovereign
immunity.
I
A
Petitioner OBB Personenverkehr AG (OBB) operates a
railway that carries nearly 235 million passengers each
year on routes within Austria and to and from points
beyond Austria’s frontiers. OBB is wholly owned by OBB
Holding Group, a joint-stock company created by the
Republic of Austria. OBB Holding Group in turn is wholly
owned by the Austrian Federal Ministry of Transport,
Innovation, and Technology. Sachs v. Republic of Austria,
737 F.3d 584, 587 (CA9 2013).
OBB—along with 29 other railways throughout Eu-
rope—is a member of the Eurail Group, an association
responsible for the marketing and management of the
Eurail pass program. Brief for International Rail
Transport Committee as Amicus Curiae 12; 737 F.3d, at
587. Eurail passes allow their holders unlimited passage
for a set period of time on participating Eurail Group
railways. They are available only to non-Europeans, who
may purchase them both directly from the Eurail Group
and indirectly through a worldwide network of travel
agents. Brief for International Rail Transport Committee
as Amicus Curiae 12–13, and n. 3; Brief for Respondent
4–5.
Carol Sachs is a resident of Berkeley, California. In
March 2007, she purchased a Eurail pass over the Inter-
net from The Rail Pass Experts, a Massachusetts-based
travel agent. The following month, Sachs arrived at the
Innsbruck train station, planning to use her Eurail pass to
ride an OBB train to Prague. As she attempted to board
the train, Sachs fell from the platform onto the tracks.
OBB’s moving train crushed her legs, both of which had to
Cite as: 577 U. S. ____ (2015) 3
Opinion of the Court
be amputated above the knee. 737 F.3d, at 587–588.
Sachs sued OBB in the United States District Court for
the Northern District of California, asserting five causes of
action: (1) negligence; (2) strict liability for design defects
in the train and platform; (3) strict liability for failure to
warn of those design defects; (4) breach of an implied
warranty of merchantability for providing a train and
platform unsafe for their intended uses; and (5) breach of
an implied warranty of fitness for providing a train and
platform unfit for their intended uses. App. 14–18. OBB
claimed sovereign immunity and moved to dismiss the suit
for lack of subject matter jurisdiction. 737 F.3d, at 588.
B
The Foreign Sovereign Immunities Act “provides the
sole basis for obtaining jurisdiction over a foreign state
in the courts of this country.” Argentine Republic v.
Amerada Hess Shipping Corp., 488 U.S. 428, 443 (1989).
The Act defines “foreign state” to include a state “agency
or instrumentality,” 28 U.S. C. §1603(a), and both parties
agree that OBB qualifies as a “foreign state” for purposes
of the Act. OBB is therefore “presumptively immune from
the jurisdiction of United States courts” unless one of the
Act’s express exceptions to sovereign immunity applies.
Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993). Sachs
argues that her suit falls within the Act’s commercial
activity exception, which provides in part that a foreign
state does not enjoy immunity when “the action is based
upon a commercial activity carried on in the United States
by the foreign state.” §1605(a)(2).1
——————
1 Section 1605(a)(2) contains three separate clauses. In full, the sec-
tion provides:
“A foreign state shall not be immune from the jurisdiction of courts of
the United States or of the States in any case . . . in which the action is
based upon a commercial activity carried on in the United States by the
foreign state; or upon an act performed in the United States in connec-
4 OBB PERSONENVERKEHR AG v. SACHS
Opinion of the Court
The District Court concluded that Sachs’s suit did not
fall within §1605(a)(2) and therefore granted OBB’s mo-
tion to dismiss. 2011 WL 816854, *1, *4 (ND Cal., Jan. 28,
2011). A divided panel of the United States Court of
Appeals for the Ninth Circuit affirmed. 695 F.3d 1021
(2012). The full court ordered rehearing en banc and, with
three judges dissenting, reversed the panel decision. 737
F.3d 584.
The en banc majority first observed that, “based on the
agreement of the parties,” “the only relevant commercial
activity within the United States was [Sachs’s] March
2007 purchase of a Eurail pass from the Rail Pass Ex-
perts,” a Massachusetts company. Id., at 591, n. 4 (inter-
nal quotation marks omitted). The court concluded that
The Rail Pass Experts had acted as OBB’s agent and,
using common law principles of agency, attributed that
Eurail pass sale to OBB. Id., at 591–598.
The court next asked whether Sachs’s claims were
“based upon” the sale of the Eurail pass within the mean-
ing of §1605(a)(2). The “based upon” determination, the
court explained, requires that the commercial activity
within the United States be “connected with the conduct
that gives rise to the plaintiff’s cause of action.” Id., at
590. But, the court continued, “it is not necessary that the
entire claim be based upon the commercial activity of
OBB.” Id., at 599. Rather, in the court’s view, Sachs
would satisfy the “based upon” requirement for a particu-
lar claim “if an element of [that] claim consists in conduct
that occurred in commercial activity carried on in the
United States.” Ibid. (internal quotation marks omitted).
——————
tion with a commercial activity of the foreign state elsewhere; or upon
an act outside the territory of the United States in connection with a
commercial activity of the foreign state elsewhere and that act causes a
direct effect in the United States.”
As Sachs relies only on the first clause to establish jurisdiction over
her suit, we limit our inquiry to that clause.
Cite as: 577 U. S. ____ (2015) 5
Opinion of the Court
Applying California law, see id., at 600, n. 14, the court
analyzed Sachs’s causes of action individually and con-
cluded that the sale of the Eurail pass established a neces-
sary element of each of her claims. Turning first to the
negligence claim, the court found that Sachs was required
to show that OBB owed her a duty of care as a passenger
as one element of that claim. The court concluded that
such a duty arose from the sale of the Eurail pass. Id., at
600–602. Turning next to the other claims, the court
determined that the existence of a “transaction between a
seller and a consumer” was a necessary element of Sachs’s
strict liability and breach of implied warranty claims. Id.,
at 602. The sale of the Eurail pass, the court noted, pro-
vided proof of such a transaction. Ibid. Having found that
“the sale of the Eurail pass in the United States forms an
essential element of each of Sachs’s claims,” the court
concluded that each claim was “based upon a commercial
activity carried on in the United States” by OBB. Ibid.
We granted certiorari. 574 U. S. ___ (2015).
II
OBB contends that the sale of the Eurail pass is not
attributable to the railway, reasoning that the Foreign
Sovereign Immunities Act does not allow attribution
through principles found in the common law of agency.
OBB also argues that even if such attribution were al-
lowed under the Act, Sachs’s suit is not “based upon” the
sale of the Eurail pass for purposes of §1605(a)(2). We
agree with OBB on the second point and therefore do not
reach the first.
A
The Act itself does not elaborate on the phrase “based
upon.” Our decision in Saudi Arabia v. Nelson, 507 U.S.
349, however, provides sufficient guidance to resolve this
case. In Nelson, a husband and wife brought suit against
6 OBB PERSONENVERKEHR AG v. SACHS
Opinion of the Court
Saudi Arabia and its state-owned hospital, seeking dam-
ages for intentional and negligent torts stemming from the
husband’s allegedly wrongful arrest, imprisonment, and
torture by Saudi police while he was employed at a hospi-
tal in Saudi Arabia. Id., at 351, 353–354. The Saudi
defendants claimed sovereign immunity under the Act,
arguing, inter alia, that §1605(a)(2) was inapplicable
because the suit was “based upon” sovereign acts—the
exercise of Saudi police authority—and not upon commer-
cial activity. See Brief for Petitioners in Saudi Arabia v.
Nelson, O. T. 1992, No. 91–552, pp. 12–14. The Nelsons
countered that their suit was “based upon” the defendants’
commercial activities in “recruit[ing] Scott Nelson for work
at the hospital, sign[ing] an employment contract with
him, and subsequently employ[ing] him.” 507 U.S., at
358. We rejected the Nelsons’ arguments.
The Act’s “based upon” inquiry, we reasoned, first re-
quires a court to “identify[ ] the particular conduct on
which the [plaintiff’s] action is ‘based.’ ” Id., at 356. Con-
sidering dictionary definitions and lower court decisions,
we explained that a court should identify that “particular
conduct” by looking to the “basis” or “foundation” for a
claim, id., at 357 (citing dictionary definitions), “those
elements . . . that, if proven, would entitle a plaintiff to
relief,” ibid., and “the ‘gravamen of the complaint,’ ” ibid.
(quoting Callejo v. Bancomer, S. A., 764 F.2d 1101, 1109
(CA5 1985)). Under that analysis, we found that the
commercial activities, while they “led to the conduct that
eventually injured the Nelsons,” were not the particular
conduct upon which their suit was based. The suit was
instead based upon the Saudi sovereign acts that actually
injured them. 507 U.S., at 358. The Nelsons’ suit there-
fore did not fit within §1605(a)(2). Id., at 361–362.
B
The Ninth Circuit held that Sachs’s claims were “based
Cite as: 577 U. S. ____ (2015) 7
Opinion of the Court
upon” the sale of the Eurail pass because the sale of the
pass provided “an element” of each of her claims. 737
F.3d, at 599. Under Nelson, however, the mere fact that
the sale of the Eurail pass would establish a single ele-
ment of a claim is insufficient to demonstrate that the
claim is “based upon” that sale for purposes of §1605(a)(2).
The Ninth Circuit apparently derived its one-element
test from an overreading of one part of one sentence in
Nelson, in which we observed that “the phrase [‘based
upon’] is read most naturally to mean those elements of a
claim that, if proven, would entitle a plaintiff to relief
under his theory of the case.” 507 U.S., at 357. We do not
see how that mention of elements—plural—could be con-
sidered an endorsement of a one-element test, nor how the
particular element the Ninth Circuit singled out for each
of Sachs’s claims could be construed to entitle her to relief.
Be that as it may, our analysis in Nelson is flatly incom-
patible with a one-element approach. A one-element test
necessarily requires a court to identify all the elements
of each claim in a complaint before that court may re-
ject those claims for falling outside §1605(a)(2). But we
did not undertake such an exhaustive claim-by-claim,
element-by-element analysis of the Nelsons’ 16 causes of
action, nor did we engage in the choice-of-law analysis
that would have been a necessary prelude to such an
undertaking. Compare id., at 356–358, with 737 F.3d, at
600, n. 14 (noting disagreement over whether state or
federal common law principles govern suits under the
Foreign Sovereign Immunities Act).
Nelson instead teaches that an action is “based upon”
the “particular conduct” that constitutes the “gravamen” of
the suit. Rather than individually analyzing each of the
Nelsons’ causes of action, we zeroed in on the core of their
suit: the Saudi sovereign acts that actually injured them.
As the Court explained:
8 OBB PERSONENVERKEHR AG v. SACHS
Opinion of the Court
“Even taking each of the Nelsons’ allegations about
Scott Nelson’s recruitment and employment as true,
those facts alone entitle the Nelsons to nothing under
their theory of the case. The Nelsons have . . . alleged
. . . personal injuries caused by [the defendants’] in-
tentional wrongs and by [the defendants’] negligent
failure to warn Scott Nelson that they might commit
those wrongs. Those torts, and not the arguably
commercial activities that preceded their commission,
form the basis for the Nelsons’ suit.” 507 U.S., at
358.
Under this analysis, the conduct constituting the gra-
vamen of Sachs’s suit plainly occurred abroad. All of her
claims turn on the same tragic episode in Austria, alleg-
edly caused by wrongful conduct and dangerous conditions
in Austria, which led to injuries suffered in Austria.
Sachs maintains that some of those claims are not lim-
ited to negligent conduct or unsafe conditions in Austria,
but rather involve at least some wrongful action in the
United States. Her strict liability claim for failure to
warn, for example, alleges that OBB should have alerted
her to the dangerous conditions at the Innsbruck train
station when OBB sold the Eurail pass to her in the United
States. Under any theory of the case that Sachs pre-
sents, however, there is nothing wrongful about the sale of
the Eurail pass standing alone. 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.
As we explained in Nelson, any other approach would
allow plaintiffs to evade the Act’s restrictions through
artful pleading. For example, any plaintiff “could recast
virtually any claim of intentional tort . . . as a claim of
failure to warn, simply by charging the defendant with an
Cite as: 577 U. S. ____ (2015) 9
Opinion of the Court
obligation to announce its own tortious propensity before
indulging it.” Id., at 363. To allow such “recast[ing]” of a
complaint, we reasoned, would “give jurisdictional signifi-
cance to [a] feint of language,” thereby “effectively
thwart[ing] the Act’s manifest purpose.” Ibid.
A century ago, in a letter to then-Professor Frankfurter,
Justice Holmes wrote that the “essentials” of a personal
injury narrative will be found at the “point of contact”—
“the place where the boy got his fingers pinched.” Letter
(Dec. 19, 1915), in Holmes and Frankfurter: Their Corre-
spondence, 1912–1934, p. 40 (R. Mennel & C. Compston
eds. 1996). At least in this case, that insight holds true.
Regardless of whether Sachs seeks relief under claims for
negligence, strict liability for failure to warn, or breach of
implied warranty, the “essentials” of her suit for purposes
of §1605(a)(2) are found in Austria.2
III
Sachs raises a new argument in this Court in an at-
tempt to fit her claims within §1605(a)(2). In addition to
arguing that her claims are “based upon” the sale of the
Eurail pass, she now contends that her suit is “based
upon” “OBB’s overall commercial railway enterprise.”
Brief for Respondent 24; see also Tr. of Oral Arg. 38.
“[C]ommercial activity carried on in the United States
by the foreign state,” as used in §1605(a)(2), is defined to
mean “commercial activity carried on by such state and
having substantial contact with the United States.”
§1603(e). Sachs’s new theory is that OBB’s entire railway
——————
2 We cautioned in Nelson that the reach of our decision was limited,
see Saudi Arabia v. Nelson, 507 U.S. 349, 358, n. 4 (1993), and similar
caution is warranted here. Domestic conduct with respect to different
types of commercial activity may play a more significant role in other
suits under the first clause of §1605(a)(2). In addition, we consider here
only a case in which the gravamen of each claim is found in the same
place.
10 OBB PERSONENVERKEHR AG v. SACHS
Opinion of the Court
enterprise constitutes the “commercial activity” that has
the requisite “substantial contact with the United States,”
because OBB reaches out to American customers by mar-
keting and selling Eurail passes in the United States.
That argument was never presented to any lower court
and is therefore forfeited. Sachs argued in the courts
below only that her claims were “based upon” the sale of
the Eurail pass, and the lower courts resolved the case on
that understanding. See, e.g., 737 F.3d, at 591, n. 4 (“The
district court concluded, based on the agreement of the
parties, that ‘the only relevant commercial activity within
the United States was plaintiff’s March 2007 purchase of a
Eurail Pass from the Rail Pass Experts.’ We consider only
the relevant conduct as defined by the district court.”).3
Indeed, when we granted certiorari, the relevant question
presented for our review was whether Sachs’s claims were
“based upon” the “sale of the ticket in the United States.”
Pet. for Cert. i; accord, Brief for Respondent i. We have
answered that question in the negative. Absent unusual
circumstances—none of which is present here—we will not
entertain arguments not made below. Taylor v. Freeland
& Kronz, 503 U.S. 638, 645–646 (1992).
We therefore conclude that Sachs has failed to demon-
——————
3 See also Points and Authorities in Opposition to OBB Personen-
verkehr AG’s Motion to Dismiss in No. 08–01840 (ND Cal.), p. 8 (“The
claims herein are based on the purchase of the Eurail pass.”); Appel-
lant’s Opening Brief in No. 11–15458 (CA9), p. 10 (“[T]he claims are
‘based upon’ the purchase of the ticket which occurred in the United
States.”); Appellant’s Reply Brief in No. 11–15458 (CA9), p. 8 (“[H]er
claim was based on the purchase/sale of the ticket.”). The District
Court decided the case on that understanding of Sachs’s argument. See
2011 WL 816854, *2 (ND Cal., Jan. 28, 2011); see also 2010 WL
4916394, *1 (ND Cal., Nov. 22, 2010). As did the Ninth Circuit panel,
see 695 F.3d 1021, 1024 (2012), and, as noted, the Ninth Circuit en
banc. When OBB petitioned this Court for writ of certiorari, Sachs’s
brief in opposition repeated her earlier arguments. See Brief in Oppo-
sition 2; see also this Court’s Rule 15.2.
Cite as: 577 U. S. ____ (2015) 11
Opinion of the Court
strate that her suit falls within the commercial activity
exception in §1605(a)(2). OBB has sovereign immunity
under the Act, and accordingly the courts of the United
States lack jurisdiction over the suit.
The judgment of the United States Court of Appeals for
the Ninth Circuit is reversed.
It is so ordered.