Full U.S. Court of Appeals for the Ninth Circuit Rules That Sale of Eurail Pass by U.S. Travel Agent Allows Railroad Operated by Government of Austria To Be Sued in U.S. Courts For Passenger’s Accident in Austria

The World in U.S. Courts: Winter 2014 - Foreign Sovereign Immunities Act (FSIA)

Sachs v. Republic of Austria, U.S. Court of Appeals for the Ninth Circuit (en banc), Dec. 6, 2013

The en banc United States Court of Appeals for the Ninth Circuit holds that, because the plaintiff’s rail ticket had been bought by plaintiff Sachs from a U.S. travel agent, the Republic of Austria may be sued in U.S. courts over a fall suffered by Sachs upon entering a train in Austria. Sachs had bought a Eurail pass from a U.S. travel agent identified as an "intermediary" between purchasers and non-U.S. rail lines, which here included the national rail line of Austria. She suffered a serious injury while boarding a moving train, and sued the Republic of Austria in federal court in California under various theories of negligence, strict liability, and breach of warranty. In assessing whether the court had jurisdiction, the court looked to the Foreign Sovereign immunities Act (FSIA). Under that statute, non-U.S. governments are presumptively immune from suit in U.S. courts, but jurisdiction may exist under one of the FSIA’s exceptions. The "commercial activity" exception permits suits based upon "commercial activity carried on by [a non-U.S.] state and having substantial contact" with the U.S.

The court first concluded that principles of agency law were applicable in determining whether Austria could be deemed responsible for the actions of the U.S. travel agent. Citing the commercial relationship between the travel agent and the government, including the travel agency’s issuance of tickets and the holding of customers’ payments, the court concluded that the travel agent could be deemed a "sub-agent" of the Government of Austria, and that the travel agent’s actions could thus be attributable to the Government of Austria. Next, the court concluded that Sachs’ claim was "based upon" commercial activity in the United States, ruling that the exception would be available so long as the commercial activity established an "essential fact" that she would have to prove to win her case. Here, that essential fact was the issuance of a ticket that allowed Sachs to try to board the train, and the attendant creation of a duty of care between the railroad and Sachs, its passenger.

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