Carol Sachs v. Republic of Austria

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CAROL P. SACHS, 

Plaintiff-Appellant, No. 11-15458

v. D.C. No.

REPUBLIC OF AUSTRIA; OBB  3:08-cv-01840-

HOLDING GROUP; OBB VRW

PERSONENVERKEHR AG, OPINION

Defendants-Appellees.



Appeal from the United States District Court

for the Northern District of California

Vaughn R. Walker, District Judge, Presiding

Submitted June 13, 2012*

San Francisco, California

Filed September 26, 2012

Before: Ronald M. Gould, Richard C. Tallman, and

Carlos T. Bea, Circuit Judges.

Opinion by Judge Tallman;

Concurrence by Judge Bea;

Dissent by Judge Gould

*The panel unanimously concludes this case is suitable for decision

without oral argument. See Fed. R. App. P. 34(a)(2).

11843

SACHS v. REPUBLIC OF AUSTRIA 11845

COUNSEL

Geoffrey Becker, Becker & Becker, Lafayette, California, for

appellant Carol P. Sachs.

11846 SACHS v. REPUBLIC OF AUSTRIA

Juan C. Basombrio, Dorsey & Whitney LLP, Costa Mesa,

California, for appellees OBB Personenverkehr, AG.

OPINION

TALLMAN, Circuit Judge, announcing the judgment of the

Court:

In this case we consider what acts may be attributed to a

foreign state in applying the commercial activity exception to

immunity under the Foreign Sovereign Immunities Act.

Carol Sachs sued Austrian-owned OBB Personenverkehr

after sustaining personal injuries as a result of her attempt to

board a moving train in Innsbruck. The district court ruled

that the commercial activity exception to the Foreign Sover-

eign Immunities Act did not apply and dismissed Sachs’s suit

for lack of subject matter jurisdiction. Sachs appeals the dis-

trict court’s order. We have jurisdiction under 28 U.S.C.

§ 1291 and we affirm.

I

In March 2007, Sachs purchased a Eurail pass in California

from Rail Pass Experts, a company based in Massachusetts.

A Eurail pass is a train ticket that allows passage on various

railways of the Eurail Group, an association of thirty-one

European railway transportation providers. Sachs’s pass per-

mitted travel in Austria and the Czech Republic. In April

Sachs traveled to Austria, where she intended to originate her

journey, and there purchased a sleeper upgrade to her ticket

at a local train station. A few days later, on April 27, 2007,

Sachs arrived at the Innsbruck train station and attempted to

board a moving train. She fell to the tracks through a gap in

the platform and suffered injuries that ultimately required the

amputation of both legs above the knee.

SACHS v. REPUBLIC OF AUSTRIA 11847

OBB Personenverkehr (“OBB”) is the Austrian national

railway. OBB Holding Group (“Holding Group”) owns 100%

of OBB’s stock. The Republic of Austria created Holding

Group under Austrian railway law, and the Republic’s Federal

Ministry of Transport, Innovation and Technology is the sole

shareholder of Holding Group. OBB is not required to pay

income or corporate tax and, through its parent Holding

Group, forwards all profits to the Austrian government.

The Eurail Group (“Eurail”) is an association organized

under Luxembourg law. OBB and thirty other European rail-

ways own Eurail. Eurail is a distinct legal entity and employs

its own management and employees. Eurail is tasked with,

among other things, the marketing and sale of Eurail passes.

Sachs filed a complaint in the Northern District of Califor-

nia against the Republic of Austria, Holding Group, and OBB.

She asserted claims of negligence, design defect, failure to

warn, and breach of the implied warranties of merchantability

and fitness, premising federal jurisdiction on diversity. Hold-

ing Group was not served and is not a party to this case. The

Republic of Austria and OBB moved to dismiss based on lack

of subject matter jurisdiction. Sachs did not oppose Austria’s

motion and the district court granted it. The district court at

first did not rule on OBB’s motion, instead calling for supple-

mental briefing on whether the actions of Rail Pass Experts

could be imputed to OBB. On January 28, 2011, the district

court granted OBB’s motion to dismiss after concluding that

OBB was immune from suit. This appeal followed.

II

[1] The “sole basis” by which courts in the United States

may obtain jurisdiction over foreign states is the Foreign Sov-

ereign Immunities Act (“FSIA”), 28 U.S.C. § 1602 et seq.

Argentine Republic v. Amerada Hess Shipping Corp., 488

U.S. 428, 434 (1989). Under the FSIA, foreign states are pre-

sumptively immune from suit in federal and state courts, sub-

11848 SACHS v. REPUBLIC OF AUSTRIA

ject to a number of exceptions. Embassy of the Arab Republic

of Egypt v. Lasheen, 603 F.3d 1166, 1169 (9th Cir. 2010); see

also 28 U.S.C. § 1604. These exceptions are found in 28

U.S.C. § 1605 and § 1607, Verlinden B.V. v. Cent. Bank of

Nigeria, 461 U.S. 480, 488 (1983), and “focus on actions

taken by or against a foreign sovereign.” In re Republic of

Phil., 309 F.3d 1143, 1150 (9th Cir. 2002). The exceptions

include actions in which the foreign state has waived its

immunity, 28 U.S.C. § 1605(a)(1), and actions involving the

foreign state’s successor interest in property located in the

United States, id. § 1605(a)(4). “The two most commonly

invoked exceptions to immunity, however, are those for com-

mercial acts and for tortious acts.” Wolf v. Fed. Republic of

Ger., 95 F.3d 536, 541 (7th Cir. 1996) (citing 28 U.S.C.

§§ 1605(a)(2) & (a)(5)).1

Sachs, as the party bringing suit against a foreign state,

must offer evidence that an exception to immunity applies.

See Joseph v. Office of Consulate Gen. of Nigeria, 830 F.2d

1018, 1021 (9th Cir. 1987). If she does so, OBB would bear

1

The commercial activity exception withdraws immunity from a foreign

state 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 per-

formed in the United States in connection 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.

28 U.S.C. § 1605(a)(2). The tortious act exception, for its part, deprives

a foreign state of immunity in cases

not otherwise encompassed in paragraph (2) above, in which

money damages are sought against a foreign state for personal

injury or death, or damage to or loss of property, occurring in the

United States and caused by the tortious act or omission of that

foreign state or of any official or employee of that foreign state

while acting within the scope of his office or employment.

Id. § 1605(a)(5).

SACHS v. REPUBLIC OF AUSTRIA 11849

the burden of establishing by a preponderance of the evidence

that the exception does not apply. See id. We review de novo

a district court’s determination regarding sovereign immunity

under the FSIA. Corzo v. Banco Cent. de Reserva del Peru,

243 F.3d 519, 522 (9th Cir. 2001).

III

[2] The parties agree that the only exception relevant to

this appeal is the commercial activity exception, which

deprives foreign sovereigns of immunity in any case “in

which the action is based upon a commercial activity carried

on in the United States by the foreign state.” 28 U.S.C.

§ 1605(a)(2). There is no dispute that OBB, as an “agency or

instrumentality” of Austria, id. § 1603(a), constitutes a “for-

eign state” for the purposes of the FSIA.

Sachs’s argument for jurisdiction is scattershot but is prem-

ised upon the fact that the sale of the Eurail pass by Rail Pass

Experts is a commercial activity that should be imputed to

OBB. Both parties agree that the purchase of the Eurail pass

is the only commercial activity within the United States rele-

vant to this case. But OBB denies that it was commercial

activity by the state because any connection between Rail

Pass Experts and OBB is so attenuated.

A.

We previously grappled with the question of which acts

could be attributed to a foreign state under the FSIA in Doe

v. Holy See, 557 F.3d 1066 (9th Cir. 2009) (per curiam), cert.

denied, 130 S. Ct. 3497 (2010). John V. Doe, the plaintiff in

that case, brought vicarious liability claims, among others,

against the Holy See for the actions of its subordinates,

including the Archdiocese of Portland, Oregon (Archdiocese),

the Catholic Bishop of Chicago (Bishop), and the Order of the

Friar Servants (Order). Doe alleged that Father Ronan, a

member of the Order and priest in the Archdiocese, had sexu-

11850 SACHS v. REPUBLIC OF AUSTRIA

ally assaulted him when he was a teenager. Id. at 1069. The

district court held that the commercial activity exception to

immunity did not apply but that the tortious act exception did,

thus granting it jurisdiction. Id. at 1071. The Holy See coun-

tered that it retained immunity from suit because the acts of

the Archdiocese, the Bishop, and the Order could not properly

be imputed to it for jurisdiction purposes. Id. at 1076.

On appeal, we recognized that “in applying the jurisdic-

tional provisions of the FSIA, courts will routinely have to

decide whether a particular individual or corporation is an

agent of a foreign state.” Id. at 1079. We looked for guidance

in First National City Bank v. Banco para el Comercio Exte-

rior de Cuba (Bancec), 462 U.S. 611 (1983). In Bancec, the

Supreme Court considered the inverse situation from the one

we faced in Holy See—that is, when the actions of a foreign

state could be attributed to its subordinate. Id. at 620. The

Cuban government had established Bancec as an official

credit union, owned all of its stock, and supplied its capital.

Id. at 613-14. In 1960 Cuba nationalized all U.S. property in

the country, including banks. Citibank had previously issued

Bancec a letter of credit related to a sugar sale but, when Ban-

cec presented the letter for payment, Citibank paid the amount

sought less the value of its expropriated Cuban branches. Id.

at 614-15. Bancec then brought suit in federal district court

seeking to collect on the full value of the letter of credit and

Citibank counterclaimed. Id. at 615.

The Court considered whether Bancec was liable on Citi-

bank’s expropriation claim; jurisdiction was not at issue in the

case. Id. at 619-21. As we noted in Holy See, the Supreme

Court “recognized a presumption of ‘separate juridical sta-

tus’ ” for subordinates of foreign states. 557 F.3d at 1077

(quoting Bancec, 462 U.S. at 624) (brackets omitted). The

Court clarified that this presumption will be negated only (1)

“where a corporate entity is so extensively controlled by its

owner that a relationship of principal and agent is created” or

(2) where recognizing the presumption “would work fraud or

SACHS v. REPUBLIC OF AUSTRIA 11851

injustice.” Bancec, 462 U.S. at 629 (internal quotation marks

omitted). Relying on the second, equitable prong, the Court

held Bancec liable because recognizing its separate status

would permit Cuba, the true beneficiary behind the by-then-

defunct bank, to enforce the bank’s claim against Citibank

while simultaneously avoiding jurisdiction on the creditor’s

counterclaim against the Cuban government. Id. at 630-32.

We expressly adopted this analysis in Holy See and

extended it to the jurisdiction phase of the FSIA, joining the

Fifth and D.C. Circuits in so doing. 557 F.3d at 1078-79

(“Applying Bancec’s presumption—as well as the standard

for overcoming that presumption—at the outset of a suit as

well as at the merits phase makes good sense.”). Turning to

the facts of the case, we concluded that Doe’s allegations

were not sufficient under the Bancec standard to overcome

the presumption of the Holy See’s separate juridical status. Id.

at 1079. Doe did not allege the required “day-to-day, routine

involvement” by the Holy See in its subordinates’ operations

to establish the existence of a principal—agent relationship.

Id. (citing Flatow v. Islamic Republic of Iran, 308 F.3d 1065

(9th Cir. 2002)). The fact that the Holy See created those enti-

ties and even regulated them was not enough. Id. at 1079-80.

Nor was jurisdiction proper under the equitable prong. “Doe

ha[d] not alleged that the Holy See . . . inappropriately used

the separate status of the corporations to its own benefit, as in

Bancec, or that the Holy See created the corporations for the

purpose of evading liability for its own wrongs.” Id. at 1080.

[3] The lay of the land after Holy See is thus considerably

clearer. In determining “which of the acts alleged in the com-

plaint may legitimately be attributed to the [foreign state] for

purposes of establishing jurisdiction [under the FSIA],” we

first must recognize that a foreign state has a presumption of

separate juridical status. Id. at 1076, 1079. That presumption

is overcome only if the complaint alleges “day-to-day, routine

involvement” of the foreign state in the individual or corpora-

11852 SACHS v. REPUBLIC OF AUSTRIA

tion’s affairs, see id. at 1079, or if maintaining the presump-

tion would “work fraud or injustice,” see id. at 1078-79.

B.

Sachs’s allegations do not withstand this scrutiny. Rail Pass

Experts’ sale of the Eurail pass cannot, under Holy See, be

imputed to OBB. Like John V. Doe, Sachs “does not allege

day-to-day, routine involvement of” OBB in Eurail Group,

much less Rail Pass Experts. See id. at 1079. She alleges that

Eurail Group is owned by and represents OBB and that Rail

Pass Experts was in turn an agent for Eurail Group. But these

facts fall far short of what the Bancec standard requires. In

Flatow v. Islamic Republic of Iran, for example, we applied

the Bancec standard at the merits phase to determine whether

the actions of a bank could be imputed to Iran. 308 F.3d at

1069, 1071. Despite the fact that Iran nationalized and fully

owned the bank, as well as proposed candidates for its board

of directors, we held that these allegations were insufficient

to negate the presumption of separate juridical status. Id. at

1071-74.

[4] The best Sachs can allege is that OBB, as a part-owner

along with thirty other owners, wielded some degree of con-

trol over Eurail Group and was aware that Eurail Group used

U.S. sales agents like Rail Pass Experts. But even these facts

are not nearly enough under Holy See. Sachs has nowhere

alleged that OBB was involved in Rail Pass Experts’ routine,

day-to-day operations, see Holy See, 557 F.3d at 1079; in fact,

it is not clear that OBB was even aware that Rail Pass Experts

existed. Nor is it alleged that OBB was involved in Eurail

Group’s affairs to this high degree. Eurail Group has its own

independent management. The connection between OBB and

Rail Pass Experts is not close enough under the first prong of

the Bancec standard to overcome the presumption of separate

juridical status and impute the sale of the Eurail pass to OBB.

[5] Nor would granting immunity to OBB “work fraud or

injustice,” Bancec’s second method for overcoming the pre-

SACHS v. REPUBLIC OF AUSTRIA 11853

sumption of separate juridical status. See id. at 1077-78 (quot-

ing Bancec, 462 U.S. at 629). It is undisputed that OBB itself

engages in no commercial activity in the United States, pre-

sumably in part to retain immunity from suit in American

courts. Any injustice that results is no greater than in the

mine-run of cases—jurisdiction over a foreign state is, after

all, ordinarily not available. See Verlinden, 461 U.S. at 488.

And this case is a far cry from Bancec, where Cuba, the real

beneficiary behind a defunct bank, wanted to collect on the

bank’s claim against Citibank but deny jurisdiction on Citi-

bank’s counterclaim against the Cuban government. Bancec,

462 U.S. at 631-33; see also Flatow, 308 F.3d at 1072

(“[U]nlike in Bancec, [Bank Saderat Iran] is not attempting to

use a United States court to recover on a claim while at the

same time trying to avoid being the subject of an adversary

proceeding.”). There is no similar sleight of hand by OBB that

would trump the presumption of its separate juridical status.

See Holy See, 557 F.3d at 1079. OBB thus engaged in no

commercial activity within the United States that would strip

it of its immunity to suit.

C.

The concurrence and dissent argue that the above precedent

is not applicable to our case because in Holy See we consid-

ered the tortious act exception to immunity rather than the

commercial activity exception. This distinction was not mean-

ingful to our analysis in Holy See, nor should it be here.

Our opinion in Holy See contains expansive language

regarding its applicability to FSIA cases. After deciding that

the actions of the Archdiocese, the Order, and the Bishop

were not attributable to the Holy See, we concluded that the

plaintiff had “therefore not alleged sufficient facts to demon-

strate that any exception to sovereign immunity applies to that

cause of action.” Holy See, 557 F.3d at 1080 (emphasis

added). We also noted that “in applying the jurisdictional pro-

visions of the FSIA, courts will routinely have to decide

11854 SACHS v. REPUBLIC OF AUSTRIA

whether a particular individual or corporation is an agent of

a foreign state,” and that “Bancec provides a workable stan-

dard for deciding this question.” Id. at 1079. Nowhere did we

indicate that this holding should be cabined to the tortious act

exception and indeed such an interpretation would fly in the

face of a plain reading of this language.

The question of which acts of a corporation or an individual

may be imputed to the foreign state is preliminary to consider-

ation of individual exceptions to immunity, as we have previ-

ously recognized: “Before turning to the question of which, if

any, of the FSIA’s exceptions to immunity apply, we must

determine which of the acts alleged in the complaint may

legitimately be attributed to the Holy See for purposes of

establishing jurisdiction.” Id. at 1076. There is nothing ambig-

uous in this holding. If we had wanted to restrict our analysis

to the tortious act exception alone, we would have done so

explicitly instead of using such sweeping language.

Nor does any of the precedent we cited in Holy See evince

its exclusivity to the tortious act exception; if anything the

caselaw suggests the opposite. Holy See borrowed its attribu-

tion standard directly from Bancec. Id. at 1079-80. But the

Supreme Court in Bancec was not concerned with amenability

to suit—its analysis focused on what acts could be imputed to

the state for purposes of liability, which Holy See extended to

jurisdiction, id. at 1077-78—so there is no reason why its

standard would apply to one exception to immunity but not

the others.

Most tellingly, in Holy See we expressly aligned ourselves

with two other circuits that had extended this same Bancec

analysis to the jurisdiction phase and that did so under the

commercial activity exception. Id. at 1078; see also Trans-

america Leasing, Inc. v. La Republica de Venez., 200 F.3d

843, 847-48 (D.C. Cir. 2000); Arriba Ltd. v. Petroleos Mexi-

canos, 962 F.2d 528, 533-36 (5th Cir. 1992). That Holy See

involved the tortious act exception did not seem to matter

SACHS v. REPUBLIC OF AUSTRIA 11855

when we relied on these cases for support in adopting the

Bancec standard for the FSIA’s jurisdiction phase. Holy See,

557 F.3d at 1078 (“The Supreme Court in Bancec did not

have the opportunity to consider whether the actions of a cor-

poration may be attributed to the sovereign . . . for purposes

of determining whether jurisdiction over that sovereign exists.

We have not previously addressed that question either. At

least two other circuits, however, faced with such a scenario,

have applied Bancec’s substantive corporate law principles in

determining whether jurisdiction exists under the FSIA.”

(internal footnote omitted and italics removed)). By relying

on two circuits that applied Bancec in the context of the com-

mercial activity exception in a tortious act exception case,

Holy See stands for the proposition, at least implicitly, that

what immunity exception may or may not apply makes no dif-

ference to which actions of a corporation can be attributed to

the sovereign.

Out-of-circuit caselaw confirms that the Bancec standard is

applicable to the FSIA’s jurisdictional provisions regardless

of which exception is at issue. The standard is in no way

unique to tort cases. Both Transamerica Leasing, Inc. v. La

Republica de Venezuela, 200 F.3d at 847-54, and Arriba Ltd.

v. Petroleos Mexicanos, 962 F.2d at 533-36, extended Bancec

to the jurisdiction phase in cases involving the commercial

activity exception. Likewise the Northern District of Illinois,

citing our decision in Holy See, applied Bancec to this provi-

sion. In re Potash Antitrust Litig., 686 F. Supp. 2d 816, 821-

22 (N.D. Ill. 2010). Another district court decision extended

Bancec to a case involving § 1605(a)(3), the “takings” excep-

tion, an entirely different exception to immunity. Freund v.

Republic of Fr., 592 F. Supp. 2d 540, 558-59 (S.D.N.Y.

2008). The dissent provides no case, in fact, that suggests that

Bancec might apply to one of the FSIA’s jurisdictional provi-

sions but not to all. The absence of such authority is striking.

It is true, as the dissent notes, that we did not specifically

consider the commercial activity exception to immunity in

11856 SACHS v. REPUBLIC OF AUSTRIA

Holy See, 557 F.3d at 1076, but it is unclear why this fact

should make a difference in the present case. Our decision in

Holy See viewed the question of which exception to immunity

might apply as totally separate from the issue of which acts

were attributable to the foreign state. The structure of the

opinion supports this interpretation. The opinion has four sub-

headings in its “Analysis” section. The first two discuss the

standard of review and jurisdiction over the appeal. The third

is entitled “Determining Which Acts May Be Attributed to the

Holy See for Jurisdictional Purposes,” and in a fourth we

finally address the tortious act exception. If the standard for

determining which acts of a corporation were attributable to

the sovereign were unique to the tortious act exception, it

would have made sense to analyze them together. Yet in our

discussion of agency/attribution we did not once mention the

tortious act exception of § 1605(a)(5)—or any other exception

for that matter—which would be odd if we were anchoring

our analysis to the text of that statutory subsection alone.

Even if Holy See were only applicable to certain, but not

all, of the FSIA’s exceptions to immunity, the commercial

activity and tortious act exceptions are closely tethered by the

statutory text. “The tortious activity exception provides juris-

diction over tort actions not encompassed in the commercial

activity exception ‘in which money damages are sought

against a foreign state for . . . damage to or loss of property,

occurring in the United States and caused by the tortious act

or omission of that foreign state.’ ” Joseph, 830 F.2d at 1025

(quoting § 1605(a)(5)) (alteration in original).

There is nothing in our opinion in Holy See to suggest that

we meant to restrict its applicability to the tortious act excep-

tion. Even assuming the decision is not directly controlling,

given the opinion’s language, precedent, and structure there is

no intelligible reason why we should not apply it in a closely

analogous case. The concurrence and dissent do not even

attempt to explain by what limiting factor Bancec would

SACHS v. REPUBLIC OF AUSTRIA 11857

apply to the tortious act exception and not the commercial

activity exception.

D.

Even were we to accept the suggestion that Holy See is not

controlling on this case, we reject Sachs’s and the dissent’s

contention that Barkanic v. General Administration of Civil

Aviation of the Peoples Republic of China, 822 F.2d 11 (2d

Cir. 1987), and Kirkham v. Société Air France, 429 F.3d 288

(D.C. Cir. 2005), elucidate our task. In each of these cases the

court held that the commercial activity exception applied and

that the foreign state was not immune from suit. But agency

was undisputed in both Kirkham and Barkanic and thus nei-

ther squarely tackles the issue before us here: whether the acts

of a separate entity may be attributed to the sovereign.

In Barkanic, the decedents purchased tickets for an internal

Chinese flight on CAAC, the Chinese state airline, from a

U.S. travel agency, which the court stated was “an agent for

Pan American.” 822 F.2d at 12. CAAC and Pan Am entered

into a bilateral general sales agency agreement whereby

CAAC would act as general sales agent for Pan Am in China

and Pan Am would act as general sales agent for CAAC in the

United States. Id. CAAC maintained offices and employees in

New York and operated some flights out of U.S. cities. Id.

The decedents’ flight crashed, killing them, and their estates

sued the airline. Id. The opinion focused on whether there was

a sufficient nexus between the crash and CAAC’s commercial

activity within the United States, but the court never explicitly

analyzed what qualified as “commercial activity carried on in

the United States by the foreign state.” 28 U.S.C.

§ 1605(a)(2); see Barkanic, 822 F.2d at 13.

Kirkham involved a woman who injured her foot at Orly

Airport in Paris, allegedly due to the negligence of an Air

France employee. 429 F.3d at 290. The plaintiff purchased her

tickets from a U.S. travel agency; her trip included a flight on

11858 SACHS v. REPUBLIC OF AUSTRIA

United Airlines from Washington, D.C., to Paris and, four

days later, a flight to Corsica on Air France. Id. The injury

occurred at the airport prior to her second flight. Id. Again the

court focused solely on whether the claim was based upon her

ticket purchase without considering commercial activity, id. at

291-92, in this case because “Air France concede[d] the ticket

sale constituted a commercial activity in the United States.”

Id. at 293.

The dissent interprets these cases to mean “that where a

foreign common carrier, operated by a sovereign entity, pur-

posefully sells tickets for use of the carrier’s services overseas

through a domestic sales agent, the ticket sale is commercial

activity which may be imputed to the foreign common carri-

er.” But this conclusion assumes the answer to the question

we are tasked with answering: whether Rail Pass Experts is an

agent of OBB at all. Agency was undisputed in Barkanic, 822

F.2d at 12, and Kirkham, 429 F.3d at 293, whereas here it is

hotly contested. It is not enough to simply note that attributing

the ticket sale to the airline went “without dispute between the

parties and without suggestion from either the Second Circuit

or the D.C. Circuit that to do so was inconsistent with the

FSIA’s commercial activity exception.” We do not know why

agency was undisputed and we should not speculate. But we

cannot allow counsel’s strategic decision to forego contesting

agency in Kirkham and Barkanic to foreclose OBB’s ability

to do so here.

IV

[6] It is the judgment of this Court that the district court

correctly dismissed this case for lack of subject matter juris-

diction.

AFFIRMED.

SACHS v. REPUBLIC OF AUSTRIA 11859

BEA, Circuit Judge, concurring in the judgment:

I concur in the majority’s holding that the district court cor-

rectly dismissed this case for lack of subject matter jurisdic-

tion. I write separately, however, because I agree with Judge

Gould that the definition of agency in Doe v. Holy See, 557

F.3d 1066 (9th Cir. 2009) — a case concerning the tortious

act exception to the Foreign Sovereign Immunities Act

(FSIA) — need not be extended to the question of agency in

cases concerning the commercial activity exception. This

court’s decision in Sun v. Taiwan, 201 F.3d 1105 (9th Cir.

2000) permits us to decide the case more narrowly, while

assuming arguendo that an agency relationship exists between

Rail Pass Experts (Experts), Eurail, and OBB Personen-

verkehr (OBB) which serves to impute the acts and omissions

of Experts to OBB. I would affirm the district court on the

basis that Sachs fails to allege facts sufficient to give rise to

jurisdiction under Sun.

The FSIA provides immunity to foreign states in any action

“in which the action is based upon a commercial activity car-

ried on in the United States by the foreign state; or upon an

act performed in the United States in connection with a com-

mercial 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. 28 U.S.C.

§ 1605(a)(2). Sachs bases her claim of subject matter jurisdic-

tion exclusively on the first clause of the commercial activity

exception, so the relevant question in this appeal is whether

her action “is based upon a commercial activity carried on in

the United States by the foreign state.”

In Sun, the Suns brought a wrongful death action against

the Taiwanese government, a foreign sovereign, after their

son drowned at a Taiwanese beach with claimed tricky tides,

while on a trip sponsored by the Taiwanese government and

advertised in the United States. 201 F.3d at 1106-07. This

11860 SACHS v. REPUBLIC OF AUSTRIA

court held that the FSIA barred the Suns’ tort claim because

the claim was not “based on” the marketing and ticket sales

for the tour, the commercial activity carried on by Taiwan in

the United States. Id. at 1109. The court held that the com-

mercial activity exception does not apply if (1) the claim

alleges negligence that occurred entirely in a foreign country,

or (2) the claim alleges failure to warn and not negligent mis-

representation. Id. at 1109-10 & n.2. To allege a negligent

misrepresentation claim that could confer jurisdiction, the

plaintiff must show a nexus between failure to warn and com-

mercial activity that occurred in the United States, id. at 1110,

for example, by alleging failure to warn on a ticket sold in the

United States or in a United States advertisement. Neither was

alleged in Sun, until the Suns changed their theory of the case

in their appellate brief. Id. The Sun panel noted this change,

and it remanded the case to the district court for consideration

of the Suns’ amended negligent misrepresentation claim

based on commercial activity which took place in the United

States. Id.

Sachs does not allege facts sufficient to give rise to juris-

diction under Sun. Sachs’s first set of claims — that OBB Per-

sonenverkehr (OBB) negligently moved the train, provided an

unsafe place to board the rail car, failed to supervise boarding,

negligently failed to stop the train, and breached various war-

ranties — are all allegations of negligence that, for aught that

appears, occurred entirely in Austria. Although Sachs does

not state where these duties were violated, the only plausible

reading of her complaint is that such acts and omissions took

place in Austria. See Ashcroft v. Iqbal, 556 U.S. 662, 679

(2009) (reviewing courts must draw on common sense to

determine whether a claim for relief is “plausible”).

Sachs’s remaining claim is based on OBB’s alleged failure

to warn about the gap between the platform and the rail cars.

This claim is stated broadly enough to constitute a claim of

negligent misrepresentation, but the requisite nexus to an

alleged act or omission in the Untied States is lacking. The

SACHS v. REPUBLIC OF AUSTRIA 11861

court in Sun expressly distinguished a failure to warn claim

from a negligent misrepresentation claim, defining the latter

as an affirmative duty to disclose “known information con-

cerning prospective dangers.” 201 F.3d at 1110 n.2. Sachs’

complaint does not allege OBB negligently misrepresented its

services by breaching a duty to disclose knowledge of the

dangerous train platform conditions in the United States at the

point of sale of train tickets. Instead, she alleges that there

was commercial activity in the United States—OBB’s adver-

tising and sale of Eurail passes, both directly and through its

agents Eurail and Rail Pass Experts—and then separately

alleges that she should have been warned about the gap in the

platform. To qualify as a negligent misrepresentation claim

sufficient to confer jurisdiction under the FSIA under Sun,

Sachs’s complaint would have to allege that OBB should have

disclosed, on the ticket delivered in the United States, in their

advertisements broadcast in the United States, or in some

other manner in the United States, of the known dangers of

the gap. The facts as pleaded are insufficient to invoke juris-

diction under the FSIA.

I would deny Sachs leave to amend her complaint. As

noted above, the Sun court remanded that case to allow the

district court to review whether the Suns’ new claim of negli-

gent misrepresentation was based on commercial activity in

the United States because the Suns “changed their theory of

the case in their appellate briefs” from failure to warn in Tai-

wan, to negligent misrepresentation in the United States. 201

F.3d at 1110. Specifically, the Suns alleged they should have

been warned in the advertising done by the Taiwanese gov-

ernment in the United States of the known danger of the

treacherous tides at the Taiwanese beach. Id. Sachs, con-

versely, neither changes her theory of the case in her briefs on

file to allege negligent misrepresentation in the United States

of the dangerous train platform conditions in Austria, under

11862 SACHS v. REPUBLIC OF AUSTRIA

Sun, nor requests leave to amend for this purpose, despite

prior amendment, and multiple briefs filed in district court.1

GOULD, Circuit Judge, dissenting:

The majority decides that the sovereign immunity of OBB

Personenverkehr (“OBB”), a national railway of Austria,

defeats at the starting gate a domestic forum for a negligence

claim by a United States citizen who bought a Eurail pass in

the United States. Sachs, in California, bought a Eurail pass

from Rail Pass Experts, a Massachusetts-based sub-agent of

the Eurail Group. The Eurail Group markets and sells rail

passes worldwide, including within the United States. OBB is

a part-owner of the Eurail Group, and the OBB trains carry

Eurail customers in Austria. The Eurail pass permitted Sachs

to board an OBB train and to sit in an unoccupied seat. Sachs

was seriously injured while trying to board an OBB train in

Austria. I believe that, for purposes of sovereign immunity, a

sensible interpretation of the FSIA permits a domestic forum

in which Sachs may assert her negligence or other claims

against OBB, that our Ninth Circuit precedent does not pre-

vent this, and that we should follow the general approach of

other federal circuits that have decided in similar cases that

ticket sales by an agent in the United States invoked the com-

mercial activity exception to sovereign immunity in cases

involving common carriers.

1

Sachs did request leave to amend to plead facts that would show that

the actions of Rail Pass Experts should be imputed to OBB. Had she

requested leave to amend to allege that her claim is based on acts or omis-

sions in the United States, this would be a much harder case. However,

local rules require that a request for leave to amend must be accompanied

by the proposed pleading, and Sachs proposed no amendment that would

allege her claim is based on acts or omissions in the United States. N.D.

Cal. R. 10-1.

SACHS v. REPUBLIC OF AUSTRIA 11863

I do not believe that Doe v. Holy See, 557 F.3d 1066 (9th

Cir. 2009) controls the outcome of this appeal. In Holy See,

the district court concluded that the FSIA’s commercial activ-

ity exception to sovereign immunity did not apply to the Holy

See’s activity, and the district court dismissed Doe’s fraud

claims alleged under that exception. Id. at 1071. Instead, the

district court concluded that the Holy See’s activity fit within

the FSIA’s tortious activity exception to sovereign immunity,

and the district court denied the Holy See’s motion to dismiss

all of Doe’s remaining claims alleged under the tortious activ-

ity exception. Id.; see 28 U.S.C. § 1605(a)(2) (commercial

activity exception), (a)(5) (tortious activity exception).

The Holy See appealed that decision, and Doe cross-

appealed the district court’s order dismissing his fraud claim

alleged under the commercial activity exception. Holy See,

557 F.3d at 1071. We declined, however, to consider Doe’s

commercial activity-based appeal. Id. at 1074-75. We con-

cluded that we did not have jurisdiction because Doe’s appeal,

unlike the Holy See’s appeal, did not fall within the collateral

order exception to the final judgment rule, and “the tort

causes of action [that were relevant to the Holy See’s appeal

were] not inextricably intertwined with Doe’s other claims.”

Id. at 1075. We said:

In other words, here we would be asked to take up

the appeal from that grant and reverse the district

court’s determination; we would have to reach out

and engage in a lengthy disquisition on the commer-

cial activity exception to FSIA, which we neither

must nor should do. Thus, we will not consider

issues regarding the district court’s grant of immu-

nity under the commercial exception to the FSIA.

Id. at 1076 (emphasis added).

We went on to extend the presumption in favor of separate

juridical status at the liability phase, identified by the

11864 SACHS v. REPUBLIC OF AUSTRIA

Supreme Court in First National City Bank v. Banco Para El

Comercio Exterior de Cuba, 462 U.S. 611 (1983) (“Bancec”),

to the jurisdiction phase of the FSIA inquiry. Holy See, 557

F.3d at 1079. We did this even though in an earlier case we

explained that “[t]he enumerated exceptions to the FSIA pro-

vide the exclusive source of subject matter jurisdiction over

civil actions brought against foreign states” and that

“[q]uestions of liability are addressed by Bancec, which

examines the circumstances under which a foreign entity can

be held substantively liable for the foreign government’s

judgment debt.” Flatow v. Islamic Republic of Iran, 308 F.3d

1065 (9th Cir. 2002) (emphasis added).1

Because we did not expressly consider the commercial

activity exception in Holy See, it is not controlling. Because

both Bancec and Flatow deal with separate juridical status for

the purposes of liability, neither mandates the majority’s

approach to resolving this appeal. I would, instead, follow the

decisions of the Second Circuit in Barkanic v. General

Admininstration of Civil Aviation of People’s Republic of

China, 822 F.2d 11 (2d Cir. 1987) and of the D.C. Circuit in

Kirkham v. Société Air France, 429 F.3d 288 (D.C. Cir.

2005). The courts in Barkanic and Kirkham expressly consid-

ered the commercial activity exception to sovereign immunity

under the FSIA in the context of the sale of foreign common

1

Flatow also does not preclude a ruling in favor of Sachs because our

inquiry there, like the Court’s in Bancec, centered on the question of lia-

bility, and not jurisdiction, as permitted under the commercial activity

exception to sovereign immunity under the FSIA. See id. at 1069 (“The

distinction between liability and jurisdiction is crucial to our resolution of

this case.”). We declined to permit the appellant to levy against real prop-

erty owned by Bank Saderat Iran (“BSI”), a nationalized bank, in order to

satisfy a default judgment against the Republic of Iran. Id. at 1066. Rely-

ing on Bancec, we concluded that Flatow did not allege facts sufficient to

overcome Bancec’s presumption of separate juridical status at the liability

phase. Id. at 1074. In short, under the presumption of separate juridical

status for the purposes of liability, BSI could not be held liable for the

Republic of Iran’s obligation to Flatow.

SACHS v. REPUBLIC OF AUSTRIA 11865

carrier tickets in the United States by travel agents. Although

there are some distinctions of fact in those cases,2 I read them

to mean in substance that where a foreign common carrier,

operated by a sovereign entity, purposefully sells tickets for

use of the carrier’s services overseas through a domestic sales

agent, the ticket sale is commercial activity which may be

imputed to the foreign common carrier and is sufficient to

invoke the commercial activity exception to sovereign immu-

nity under § 1605(a)(2) of the FSIA.

Barkanic and Kirkham are consistent with the plain lan-

guage of the FSIA, which does not require the limitation to

jurisdiction under the commercial activity exception relied on

by the majority. Section 1605(a)(2) provides:

A foreign state shall not be immune from the juris-

diction 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 connection with a commercial activ-

ity of the foreign state elsewhere; or upon an act out-

2

In Kirkham, Kirkham bought an airline ticket from a travel agent in

Washington, D.C. for travel on Air France in Europe. Kirkham, 429 F.3d

at 290. Kirkham was injured in a Paris airport while changing planes, and

she sued Air France, whose majority shareholder is the Republic of

France. Id. In Barkanic, Barkanic bought a ticket to fly on CAAC, an

agent of the People’s Republic of China, from a Pan Am-affiliated travel

agent in Washington, D.C. Barkanic, 822 F.2d at 12. Pan Am and CAAC

had previously entered into an agency agreement in which Pan Am was

authorized to appoint travel agents to sell seats on CAAC flights. Id. Bar-

kanic was killed when his CAAC flight crashed in China, and his survi-

vors filed a wrongful death suit against CAAC. Id.

In neither case was the issue of whether the commercial activity (i.e.,

the sale of the airline ticket in the U.S. by a travel agent) could be imputed

to the sovereign raised. Instead the sale of the ticket was attributed to both

foreign carriers without dispute between the parties and without sugges-

tion from either the Second Circuit or the D.C. Circuit that to do so was

inconsistent with the FSIA’s commercial activity exception.

11866 SACHS v. REPUBLIC OF AUSTRIA

side the territory of the United States in connection

with a commercial activity of the foreign state else-

where and that act causes a direct effect in the

United States.

28 U.S.C. § 1605(a)(2) (emphasis added). “Commercial activ-

ity” is defined as “either a regular course of commercial con-

duct or a particular commercial transaction or act,” id. at

§ 1603(d), and a “commercial activity carried on in the United

States by a foreign state” is defined as “commercial activity

carried on by such state and having substantial contact with

the United States.” Id. at § 1603(e). The legislative history

notes that Congress intended the commercial activity excep-

tion to apply to “a broad spectrum of endeavor, from an indi-

vidual commercial transaction or act to a regular course of

commercial conduct.” H.R. Rep. 94-1487 at 6614-15.

Here OBB is a member and part owner of Eurail which tar-

gets U.S. consumers, selling thousands of passes each year for

use on railways, including on OBB, throughout Europe upon

one purchase of a pass. That Eurail does this through sub-

agents like Rail Pass Experts3 in the United States does not

change that OBB, through Eurail, regularly engages in the

type of commercial activity in the United States that Congress

intended to defeat sovereign immunity under the FSIA.

Indeed, a primary purpose of the Eurail entity is to market and

sell in the United States and around the world Eurail passes

good only for passage on OBB and other European railways.

Stated another way, OBB knew that the Eurail entity, in

which it was part owner, would be marketing passes to people

like Sachs in the United States. It knew or should be charged

3

Before the district court, OBB argued that Rail Pass Experts is not an

authorized agent of OBB. OBB acknowledges, however, that OBB is a

member of the Eurail Group and that “Rail Pass Experts may be, presum-

ably, a subagent of a general sales agent accredited by The Eurail group

and, therefore, able to sell Eurail passes (likely at higher rates than those

available from Eurail directly).”

SACHS v. REPUBLIC OF AUSTRIA 11867

with constructive knowledge that Eurail would use sub-agents

like Rail Pass Experts to sell tickets to people like Sachs

within the United States. See Phaneuf v. Republic of Indone-

sia, 106 F.3d 302, 307-08 (9th Cir. 1997) (“Because a foreign

state acts through its agents, an agent’s deed which is based

on the actual authority of the foreign state constitutes activity

‘of the foreign state’ [for the purpose of the commercial activ-

ity exception].”). OBB has empowered its agent, the Eurail

Group, to sell passes good for travel on OBB trains, including

through sub-agents like Rail Pass Experts within the United

States. See id. Moreover, when a U.S. citizen buys a Eurail

pass in the United States for passage on OBB and other rail-

ways from an agent in the United States, and then is injured

through allegedly improper activity of the foreign railway car-

rier, like OBB in Europe, such a person should be able to have

a forum for suit within the United States so far as sovereign

immunity is concerned.

I also believe that Sachs’ action is sufficiently “based

upon” OBB’s commercial activity as is required by the FSIA.

28 U.S.C. § 1605(a)(2). In Saudi Arabia v. Nelson, 507 U.S.

349 (1993), the Supreme Court explained that within the con-

text of the FSIA, “the phrase [‘based upon’] is read most natu-

rally to mean those elements of a claim that, if proven, would

entitle a plaintiff to relief under his theory of the case.” Id. at

357. Indeed, “[t]he only reasonable reading of [‘based upon’]

calls for something more than a mere connection with, or rela-

tion to, commercial activity.” Id. at 358.

Here, Sachs’ first claim for relief is based on negligence.

She alleges that OBB, as a “common carrier for hire,”

breached its duty of care when Sachs was injured boarding the

OBB train in Innsbruck, Austria. This duty arose from the sale

of the ticket for passage on OBB trains, the commercial activ-

ity identified by Sachs. See Restatement (Third) of Torts

§ 40(b) (2012) (“Special relationships giving rise to the duty

[of reasonable care] . . . include a common carrier with its

passengers.”). Thus, the commercial activity, on which Sachs

11868 SACHS v. REPUBLIC OF AUSTRIA

argues that the commercial activity exception to sovereign

immunity should apply here is a necessary element (i.e.,

establishment of the duty of reasonable care) that, if proven,

would entitle Sachs to relief on a least some part of her action

against OBB. See Nelson, 507 U.S. at 358 n.4 (“We do not

mean to suggest that the first clause of § 1605(a)(2) necessar-

ily requires that each and every element of a claim be com-

mercial activity by a foreign state.”).

A judgment in favor of Sachs is also consistent with our

decision in Sun v. Taiwan, 201 F.3d 1105 (9th Cir. 2000). In

that case, we considered whether the appellants could bring a

wrongful death action against Taiwan under the commercial

activity exception to sovereign immunity under the FSIA after

their son drowned on a Taiwanese beach during a cultural tour

of that country. Before the district court, appellants only

alleged “a negligent failure to warn and failure to exercise

reasonable supervision.” Id. at 1109. We clarified that the

phrase “based upon . . . requires a nexus between the action

and the commercial activity.” Id. We then reasoned that

although Taiwan’s operation of the tour was commercial

activity within the meaning of the FSIA, id. at 1108-09, only

“administrative promotion and application management took

place in the United States.” Id. at 1110. Specifically, we said

that the basis for the Suns’ claims of negligent supervision

and failure to warn claims lay in the sovereign’s alleged con-

duct in Taiwan, on the Taiwanese beach, and had no nexus

with the admitted commercial activity in the United States;

namely the promotion and sales of tickets for the tour. Id.

Because “[t]he only conduct relevant to the action was failure

to take reasonable care in allowing the students to swim and

failure to supervise them,” all of which took place in Taiwan,

we concluded that the Suns were unable to show a nexus

between the action and the commercial activity within the

United States.4 Id.

4

The Suns then changed their theory of liability on appeal, arguing that

under California law, “Taiwan was under an affirmative duty to exercise

SACHS v. REPUBLIC OF AUSTRIA 11869

Here, by contrast, Sachs’ negligence action alleges that

OBB breached its common-carrier duty of reasonable care in

the operation of its trains, causing her physical harm. As

stated above, this duty originates in the commercial activity

that Sachs alleges, namely OBB’s sale of the train ticket,

through its participation in Eurail, which occurred in the

United States. I would conclude that there is a sufficient

nexus between Sachs’ action and the commercial activity.

Accord Barkanic, 822 F.2d at 13 (concluding that “there is a

sufficient nexus between the airplane crash and [the sale of

the airline ticket] carried on by [the sovereign] in this coun-

try”).

Because I believe (1) that the Eurail Group, through ticket

sales by its sub-agent Rail Pass Experts, engaged in commer-

cial activity within the United States, and that this activity is

fairly attributed to OBB as part-owner of Eurail, carrying its

customers in Austria, and (2) that there is a sufficient nexus

between that commercial activity and Sachs’ action because

the ticket sale gave rise to the common carrier duty of reason-

able care allegedly breached, I would hold that Sachs has

alleged facts sufficient to satisfy the commercial activity

exception to sovereign immunity under the FSIA. I respect-

fully dissent.

reasonable care by disclosing known information concerning prospective

dangers on the tour and by not misleading prospective participants,” while

promoting the tour in the United States. Id. We then remanded the case to

the district court “to review the Suns’ claim first in order to determine

whether, as currently cast, it is based on commercial activity that took

place in the United States.” Id.