What are the facts?
Carol Sachs, a California resident, purchased a Eurail pass over the Internet from a Massachusetts-based ticket seller that the parties treated as an agent for OBB Personenverkehr AG (OBB), Austria's state-owned railway and thus an instrumentality of a foreign state under 28 U.S.C. § 1603. While attempting to board an OBB train in Innsbruck, Austria, Sachs fell between the platform and the train and suffered catastrophic injuries that led to the amputation of both legs. She sued OBB in the Northern District of California, alleging state-law negligence and strict-liability claims, as well as failure-to-warn and warranty theories. OBB moved to dismiss for lack of subject-matter jurisdiction under the FSIA, arguing that no exception to immunity applied. The district court dismissed. A Ninth Circuit panel reversed, and the en banc Ninth Circuit held that the FSIA's commercial-activity exception, 28 U.S.C. § 1605(a)(2), permitted suit because Sachs's claims were "based upon" OBB's U.S. commercial activity—namely, the ticket sale through a U.S. agent. The Supreme Court granted certiorari and reversed.
What is the legal issue?
Whether a personal-injury action against a foreign, state-owned railway is "based upon" commercial activity carried on in the United States within the meaning of the FSIA's commercial-activity exception, 28 U.S.C. § 1605(a)(2), when the plaintiff purchased a rail pass in the United States but the injury-causing conduct occurred abroad.
What rule applies?
Under the FSIA, foreign states and their instrumentalities are presumptively immune from suit in U.S. courts unless a statutory exception applies. 28 U.S.C. §§ 1604, 1605. The commercial-activity exception withdraws immunity in any case "in which the action is based upon a commercial activity carried on in the United States by the foreign state" or certain acts in or outside the United States connected to commercial activity that have specified effects. § 1605(a)(2). An action is "based upon" the particular conduct that constitutes the gravamen of the suit—i.e., those core acts that actually give rise to the cause of action and would entitle the plaintiff to relief—not merely any U.S. contact that is a background fact or but-for cause. See Saudi Arabia v. Nelson, 507 U.S. 349 (1993).
What did the court hold?
No. Sachs's suit is not "based upon" OBB's U.S. commercial activity (the sale of the rail pass). The gravamen of the action is OBB's alleged tortious conduct in Austria, where the injury occurred. Therefore, the commercial-activity exception does not apply, and OBB retains sovereign immunity. The Supreme Court reversed the Ninth Circuit.
What is the reasoning?
The Court began with the FSIA's baseline rule of immunity and the plaintiff's burden to show that an exception applies. It focused on the first clause of § 1605(a)(2) and the phrase "based upon," drawing on Saudi Arabia v. Nelson to hold that courts must identify the particular conduct that constitutes the suit's gravamen—the core, injury-causing acts that would entitle the plaintiff to relief under her theory. Applying that approach, the Court held that each of Sachs's claims—negligence, strict liability, and failure to warn—arose from wrongful conduct in Austria: the design and maintenance of the train and platform, the acts of OBB personnel during boarding, and any failure to provide adequate warnings at the site of the accident. While the ticket sale in the United States was a factual predicate for Sachs's travel, it was not the conduct on which the action was based. A "one-element" or "but-for" view would impermissibly broaden the exception by allowing any U.S. transaction antecedent to an injury abroad to confer jurisdiction. The Court rejected the Ninth Circuit's emphasis on the U.S. ticket sale as sufficient U.S. commercial activity, explaining that the relevant focus is not on any domestic contact but on the conduct forming the basis for liability. It cautioned that tethering jurisdiction to ancillary U.S. sales would undermine the FSIA's structure and comity concerns by inviting suits over foreign accidents in U.S. courts whenever tickets are sold here. The Court also declined to resolve whether the U.S. seller was OBB's agent for FSIA purposes, assuming without deciding that it was; even so, the suit was not "based upon" that U.S. activity. Nor did other clauses of § 1605(a)(2) provide jurisdiction, as Sachs did not allege an act performed in the United States by OBB connected to its foreign commercial activity, and the injury abroad did not create the requisite "direct effect" in the United States. The judgment was unanimous, with a concurrence emphasizing that some suits may genuinely be based on U.S. sales-related conduct (e.g., a contract claim about a domestic misrepresentation), but this was not such a case.
Why is this case significant?
Sachs cements a gravamen-focused analysis for the FSIA's commercial-activity exception, reinforcing that foreign sovereigns are not exposed to U.S. tort suits for injuries abroad simply because a related ticket or product was sold domestically. It reaffirms Nelson's approach and curbs expansive theories that tether jurisdiction to peripheral U.S. transactions. For law students, the case is central to mastering FSIA structure, statutory interpretation of "based upon," and the line between subject-matter jurisdiction and the merits in transnational tort and contract litigation. It also flags strategic pleading issues: plaintiffs must connect their claims to the specific U.S. conduct that constitutes the actionable wrong, not merely to antecedent or "but-for" sales activity.
What does it mean for an action to be "based upon" commercial activity under the FSIA after Sachs?
Courts must identify the suit's gravamen—the particular conduct that actually gives rise to the cause of action and would entitle the plaintiff to relief. Ancillary or antecedent U.S. contacts (like a ticket sale) do not suffice if the wrongful conduct and injury occur abroad. The focus is on the core actionable conduct, not any but-for cause.
Would the result differ if the plaintiff brought a pure contract claim about the ticket sale itself?
Potentially, yes. If the claim's gravamen were a misrepresentation, breach of warranty, or failure to refund occurring in the United States in connection with the sale, then the action could be "based upon" U.S. commercial activity under § 1605(a)(2). Sachs teaches that outcomes turn on what conduct actually forms the basis for liability.
Did the Supreme Court decide whether the U.S. ticket seller was OBB's agent?
No. The Court assumed without deciding that the U.S. seller's conduct could be attributed to OBB. Even on that assumption, the suit was not "based upon" the U.S. sale, because the gravamen was the alleged negligence and other tortious conduct in Austria.
How does Sachs relate to Saudi Arabia v. Nelson?
Sachs applies and clarifies Nelson's interpretation of "based upon" by emphasizing the gravamen inquiry. Both cases reject a broad, element-or-but-for approach and hold that FSIA jurisdiction depends on the conduct that actually grounds the claim.
Does Sachs address personal jurisdiction or only subject-matter jurisdiction?
Sachs concerns FSIA subject-matter jurisdiction, which is a threshold question. Under 28 U.S.C. § 1330(b), personal jurisdiction follows when an FSIA exception applies and service is proper. Because no exception applied in Sachs, the court lacked subject-matter jurisdiction and did not reach personal jurisdiction.