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

NOTICE: This opinion is subject to formal revision before publication in the

preliminary print of the United States Reports. Readers are requested to

notify the Reporter of Decisions, Supreme Court of the United States, Wash-

ington, D. C. 20543, of any typographical or other formal errors, in order

that corrections may be made before the preliminary print goes to press.

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.