Court Opinion

ID: 3066117
Source: CourtListenerOpinion
Date Created: 2015-10-14 22:58:32.113189+00
Date Added: 2024-06-11T11:49:48.693770
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

CAROL P. SACHS,                          No. 11-15458
                  Plaintiff-Appellant,
                                            D.C. No.
                  v.                     3:08-cv-01840-
                                             VRW
REPUBLIC OF AUSTRIA; OBB
HOLDING GROUP; OBB
PERSONENVERKEHR AG,                        OPINION
             Defendants-Appellees.

     Appeal from the United States District Court
       for the Northern District of California
     Vaughn R. Walker, District Judge, Presiding

           Argued and Submitted En Banc
      March 21, 2013—San Francisco, California

               Filed December 6, 2013

Before: Alex Kozinski, Chief Judge, Stephen Reinhardt,
Diarmuid F. O’Scannlain, Barry G. Silverman, Susan P.
 Graber, Kim McLane Wardlaw, Raymond C. Fisher,
   Ronald M. Gould, Marsha S. Berzon, Johnnie B.
 Rawlinson, and Andrew D. Hurwitz, Circuit Judges.

              Opinion by Judge Gould;
            Dissent by Judge O’Scannlain;
           Dissent by Chief Judge Kozinski
2               SACHS V. REPUBLIC OF AUSTRIA

                           SUMMARY*

              Foreign Sovereign Immunities Act

    Reversing the district court’s dismissal of an action for
lack of subject matter jurisdiction, the en banc court held that
a foreign-state owned common carrier engages in commercial
activity in the United States, and thus is not immune from suit
under the Foreign Sovereign Immunities Act, when it sells
tickets in the United States through a travel agent, regardless
of whether the travel agent is a direct agent or subagent of the
common carrier.

    Agreeing with the Second and D.C. Circuits, the en banc
court held that the sale of a Eurail pass to the plaintiff could
be imputed to the defendant for purposes of establishing that
it carried on commercial activity in the United States. In
addition, the sale created “substantial contact” with the
United States. The en banc court also held that the plaintiff’s
claims, which arose from a fall when she attempted to board
a train in Austria, were “based upon” the defendant’s
commercial activity in the United States because the plaintiff
showed a nexus between her claims and the sale of the Eurail
pass. The en banc court held, therefore, that the FSIA’s
commercial-activity exception applied.

    Dissenting, Judge O’Scannlain, joined by Chief Judge
Kozinski and Judge Rawlinson, wrote that the commercial-
activity exception did not apply because the sale of the Eurail

  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
              SACHS V. REPUBLIC OF AUSTRIA                     3

pass was not attributable to the defendant, and so the plaintiff
failed to allege commercial activity “by the foreign state.”

    Dissenting, Chief Judge Kozinski agreed with Judge
O’Scannlain that a foreign sovereign does not engage in
commercial activity in the United States when a subagent
over which it exercises no direct control sells tickets for
passage on a common carrier wholly owned by that
sovereign. Chief Judge Kozinski wrote that he would affirm
the district court on the ground that the plaintiff’s claim arose
from events that transpired entirely in Austria, and thus was
not “based upon” commercial activity carried on in the
United States.

                         COUNSEL

Geoffrey Becker, Becker & Becker, Lafayette, California, for
Plaintiff-Appellant.

Juan C. Basombrio, Dorsey & Whitney LLP, Irvine,
California, for Defendant-Appellee.
4             SACHS V. REPUBLIC OF AUSTRIA

                          OPINION

GOULD, Circuit Judge:

    We must decide whether a resident of the United States
has a domestic forum in which to bring a claim against a
foreign common carrier, operated by a foreign sovereign
entity, that sells tickets through a third-party agent or
subagent in the United States. Carol P. Sachs filed a
complaint against OBB Personenverkehr AG (OBB) in the
United States District Court for the Northern District of
California. Sachs sought damages for traumatic injuries that
she sustained while trying to board an OBB train in
Innsbruck, Austria.

    The district court granted OBB’s motion to dismiss for
lack of subject-matter jurisdiction, concluding that OBB, as
an instrumentality of the Republic of Austria, was immune
from suit under the Foreign Sovereign Immunities Act of
1976 (FSIA). On appeal, Sachs argues that under the first
clause of the FSIA’s commercial-activity exception, the
district court has subject-matter jurisdiction over her claims.
We agree. A foreign-state owned common carrier, such as a
railway or airline, engages in commercial activity in the
United States when it sells tickets in the United States
through a travel agent regardless of whether the travel agent
is a direct agent or subagent of the common carrier. Under
the FSIA, federal courts of the United States will have
subject-matter jurisdiction over actions against a foreign
sovereign common carrier that engages in commercial
activity of this kind as long as the plaintiff’s claims are based
upon that activity.
              SACHS V. REPUBLIC OF AUSTRIA                 5

                             I

    OBB Personenverkehr AG is a separate legal entity
wholly owned by OBB Holding Group, a joint-stock
company created by the Republic of Austria. OBB Holding
Group is wholly owned by the Austrian Federal Ministry of
Transport, Innovation, and Technology. OBB’s main
function is to operate passenger rail service within Austria.
Like many of its counterparts in other European countries,
OBB is a member of the Eurail Group, which is an
association organized under Luxemburg law. According to
OBB, Eurail Group is responsible for marketing and selling
rail passes. Eurail passes are marketed to non-European
residents, as they cannot be used by residents of Europe and
nearby countries.

    In early March 2007, Sachs purchased a four-day Eurail
pass from the Rail Pass Experts (RPE) for travel in Austria
and the Czech Republic. RPE is located in Massachusetts,
but Sachs bought the Eurail pass online through the RPE
website. Sachs’s Eurail pass listed various disclaimers,
including that “the issuing office is merely the intermediary
of the carriers in Europe and assumes no liability resulting
from the transport.” The Eurail pass also stated that it is
“non-transferable and only valid upon presentation of a
passport or a valid travel document replacing the passport.”

    In late April 2007, Sachs arrived in Innsbruck, Austria,
and presented her Eurail pass to OBB to purchase a couchette
reservation for her trip from Innsbruck to Prague. Although
Sachs would have been able to board the train to sit in an
unassigned seat with the Eurail pass that she bought from
RPE, she paid the €30.90 fee to upgrade her pass and reserve
6              SACHS V. REPUBLIC OF AUSTRIA

a couchette bed. The Eurail pass required customers to pay
separately for upgrades of this kind.

    When Sachs tried to board the train, she fell between the
tracks. Her legs were crushed by the moving train. As a
result of these injuries, both of Sachs’s legs were amputated
above the knee. Sachs alleges that OBB caused her injuries
by negligently moving the train while she attempted to board.
OBB disputes this allegation, claiming that the train was
already moving when Sachs tried to board.

    Sachs filed suit against OBB in the United States District
Court for the Northern District of California.1 Her complaint
asserts claims for negligence; strict liability for a design
defect; strict liability for failure to warn about a design
defect; breach of implied warranty of merchantability; and
breach of implied warranty of fitness. To support these
claims, Sachs alleges (a) that she purchased the Eurail pass
through OBB’s agent Eurail and the American-based
company RPE; (b) that through the Eurail pass OBB agreed
to provide railway transportation to Sachs during her April
2007 visit to Austria; and (c) that OBB, as a common carrier,
owed her a duty of “utmost care.”

    OBB filed a motion to dismiss on June 21, 2010, arguing
that it was entitled to sovereign immunity under the FSIA. In
the alternative, OBB also argued that Sachs’s complaint
should be dismissed for forum non conveniens, lack of

    1
    Sachs’s complaint also named the Republic of Austria and the OBB
Holding Group as defendants. The Republic of Austria was dismissed
from the lawsuit when Sachs did not oppose the Republic of Austria’s
motion to dismiss. OBB Holding Group was not properly served and is
not a party to this litigation.
              SACHS V. REPUBLIC OF AUSTRIA                   7

personal jurisdiction, and international comity. After a
hearing and supplemental briefing on the motion, the district
court granted OBB’s motion to dismiss for lack of subject-
matter jurisdiction on foreign-sovereign-immunity grounds.
Sachs v. Republic of Austria, No. C 08-1840 VRW, 2011 WL
816854, at *4 (N.D. Cal. Jan. 28, 2011) (unpublished). The
district court concluded that Sachs had not shown a
connection between OBB and RPE sufficient to create a
principal-agent relationship. As a result, the district court
found that RPE’s commercial activity in the United States
could not be imputed to OBB. Sachs timely appealed.

    A divided three-judge panel of this court affirmed. Sachs
v. Republic of Austria, 695 F.3d 1021, 1029 (9th Cir. 2012).
The majority of judges agreed on result but not reasoning.
Relying on our previous decision in Doe v. Holy See,
557 F.3d 1066 (9th Cir. 2009) (per curiam), the majority
opinion concluded that RPE’s sale of the Eurail pass could
not be imputed to OBB for purposes of establishing
jurisdiction under the FSIA’s commercial-activity exception.
Sachs, 695 F.3d at 1025–26. The concurrence agreed that the
district court properly dismissed the case for lack of subject-
matter jurisdiction, but it argued that Holy See was inapposite
because that case addressed a different exception under the
FSIA. Instead, the concurrence argued that Sachs’s claim
failed under Sun v. Taiwan, 201 F.3d 1105 (9th Cir. 2000),
because Sachs did not allege facts sufficient to show that her
claims were “based upon” the sale of the Eurail pass in the
United States. Sachs, 695 F.3d at 1029–30 (quoting
28 U.S.C. § 1605(a)(2)). The dissent explained that both
Holy See and Sun were distinguishable from Sachs’s case and
that the plain language of the FSIA permits jurisdiction over
OBB. Id. at 1032–33.
8             SACHS V. REPUBLIC OF AUSTRIA

    We ordered rehearing en banc to clarify whether the first
clause of the FSIA commercial-activity exception applies to
a foreign sovereign when a person purchases a ticket in the
United States from a travel agency for passage on a
commercial common carrier owned by that foreign state.

                             II

    We review de novo the district court’s determination of
immunity under the FSIA. Embassy of the Arab Republic of
Egypt v. Lasheen, 603 F.3d 1166, 1170 (9th Cir. 2010). A
defendant asserting foreign sovereign immunity “may make
either a facial or factual challenge to the district court’s
subject matter jurisdiction.” Terenkian v. Republic of Iraq,
694 F.3d 1122, 1131 (9th Cir. 2012), cert. denied, 2013 WL
1723794 (U.S. Oct. 7, 2013) (No. 12-1261). A facial
challenge argues only that the facts as alleged in the
complaint are insufficient to state a claim. Id. A factual
challenge disputes the truth of the allegations that would
otherwise be sufficient to invoke federal jurisdiction. Id.

    OBB’s challenge is factual. OBB submitted documentary
evidence and a declaration to prove OBB’s status as an
agency or instrumentality of the Austrian government and to
dispute the truth of Sachs’s allegations that RPE sold the
ticket as an authorized agent of OBB. Sachs submitted her
own declaration and evidence to support her claim of
jurisdiction under the FSIA’s commercial-activity exception.
When the district court relies on such evidence for its
decision, we generally treat the jurisdictional attack as
factual. See Holy See, 557 F.3d at 1073. For such a factual
challenge, we must determine (1) whether Sachs has carried
her burden to prove, by offering evidence, that the
commercial-activity exception to foreign sovereign
                 SACHS V. REPUBLIC OF AUSTRIA                            9

immunities applies and (2) whether OBB has carried its
burden to prove, by showing a preponderance of evidence,
that the exception is not applicable. See Terenkian, 694 F.3d
at 1131–32.

                                   III

    The doctrine of foreign sovereign immunity has its roots
in the common law, tracing back to the Supreme Court’s
decision in Schooner Exchange v. McFaddon, 11 U.S. 116
(1812), which extended “virtually absolute immunity to
foreign sovereigns as ‘a matter of grace and comity.’”
Samantar v. Yousuf, 560 U.S. 305, 311 (2010) (quoting
Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 486
(1983)). After Schooner Exchange, federal courts routinely
deferred to the State Department on whether to assume
jurisdiction over an action against a foreign sovereign or its
instrumentality. Republic of Austria v. Altmann, 541 U.S.
677, 689 (2004).2 In 1952, the State Department adopted a
“restrictive” theory of sovereign immunity. Samantar,
560 U.S. at 312. The restrictive theory of sovereign
immunity recognizes that sovereigns are immune “with
regard to sovereign or public acts (jure imperii) of a state, but
not with respect to private acts (jure gestionis).” Altmann,
541 U.S. at 690 (internal quotation marks omitted). This shift
was based on the philosophy that where foreign sovereigns
engage in commercial dealings there is “a much smaller risk

   2
      Under this practice, the State Department would usually file a
suggestion of immunity in the court at the request of the foreign state and
the district court would grant immunity on that basis. Peterson v. Islamic
Republic of Iran, 627 F.3d 1117, 1126 (9th Cir. 2010). In the absence of
suggestion from the State Department, the district court would determine
jurisdiction based on the established policy of the State Department. Id.
10               SACHS V. REPUBLIC OF AUSTRIA

of affronting their sovereignty.” Alfred Dunhill of London,
Inc. v. Republic of Cuba, 425 U.S. 682, 703 (1976)
(plurality).

    In 1976, Congress codified the State Department’s
restrictive theory of sovereign immunity in the FSIA, which
established a comprehensive “set of legal standards governing
claims of immunity in every civil action against a foreign
state or its political subdivisions, agencies, or
instrumentalities” and shifted the primary responsibility for
determining immunity to the federal courts. Altmann,
541 U.S. at 691 (quoting Verlinden B.V., 461 U.S. at 488).
The FSIA establishes a presumption of immunity for foreign
states but carves out specified exceptions to that grant of
immunity. Id. The FSIA exceptions are “the sole basis for
obtaining jurisdiction over a foreign state in [U.S.] courts.”
Peterson, 627 F.3d at 1122 (quoting Argentine Republic v.
Amerada Hess Shipping Corp., 488 U.S. 428, 434 (1989)).

     The exception relevant to this appeal is the first clause of
the commercial-activity provision, which provides that a
foreign state is amenable to suit where the plaintiff’s action
is “based upon a commercial activity carried on in the United
States by the foreign state.” 28 U.S.C. § 1605(a)(2).3 This
clause has two parts: (1) the foreign sovereign must have
carried on commercial activity within the United States; and
(2) the claim must be based upon that activity.

 3
  “Courts have construed this commercial activity provision to have three
independent clauses, and have used different criteria for each of the three
separate clauses to assess a claimed exception.” Terenkian, 694 F.3d at
1127. We review only the first of these clauses here, and we use the term
“commercial-activity exception” to refer only to that clause.
                 SACHS V. REPUBLIC OF AUSTRIA                           11

    As for the first part, commercial activity occurs when a
foreign state acts as a private player within the market or
exercises powers that can also be exercised by private
citizens. Terenkian, 694 F.3d at 1132. Commercial activity
can be “either a regular course of commercial conduct or a
particular commercial transaction or act.” Id. (quoting
28 U.S.C. § 1603(d)). “In determining whether an act or
activity is commercial, we must look to its nature, not its
purpose.” Siderman de Blake v. Republic of Arg., 965 F.2d
699, 708 (9th Cir. 1992). To be “‘carried on in the United
States’” there must be “substantial contact” between the
commercial act and this country. Terenkian, 694 F.3d at
1132 (quoting 28 U.S.C. § 1603(e)).

    As for the second part, “based upon” means “those
elements of a claim that, if proven, would entitle a plaintiff to
relief.” Id. (quoting Saudi Arabia v. Nelson, 507 U.S. 349,
357 (1993)). That is, the commercial activity that occurs
within the United States must be connected with the conduct
that gives rise to the plaintiff’s cause of action. Id. at
1132–33; see also Am. W. Airlines, Inc., v. GPA Grp. Ltd.,
877 F.2d 793, 796 (9th Cir. 1989).

                                    IV

    Two main issues are raised on appeal: (1) whether the sale
of the Eurail pass, as the underlying commercial activity,4 can

 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. See Schoenberg v. Exportadora de Sal, S.A. de C.V., 930 F.2d 777,
781 (9th Cir. 1991) (accepting the district court’s definition of relevant
conduct when not clearly erroneous).
12            SACHS V. REPUBLIC OF AUSTRIA

be imputed to OBB for purposes of establishing that OBB
carried on commercial activity in the United States; and, if so,
(2) whether Sachs’s claims are “based upon” that commercial
activity as required by the commercial-activity exception.
The parties agree that OBB is an agency or instrumentality of
the Republic of Austria and that it qualifies as a foreign state
for purposes of the FSIA. They also agree that the sale of a
Eurail pass constitutes a commercial activity under the FSIA.
We must first determine if there is a relationship between
OBB and RPE sufficient to impute RPE’s commercial act
within the United States to OBB. If we conclude such a
relationship exists, then we must determine if there is a nexus
between Sachs’s claims and the underlying commercial
activity sufficient to show that the claims of Sachs are “based
upon” the commercial activity.

                               A

    The first clause of the commercial-activity exception
gives United States courts subject-matter jurisdiction over
any case against a foreign state or its instrumentality “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). To apply this exception to Sachs’s claims
against OBB, there must be a sufficient connection between
OBB and RPE’s sale of a Eurail pass within the United States
to support the conclusion that OBB “carried on” commercial
activity within the United States. Id. We conclude that there
is.

    The plain text of the FSIA indicates that the first clause of
the commercial-activity exception encompasses situations in
which a foreign state carries on commerce through the acts of
an independent agent in the United States. The FSIA defines
              SACHS V. REPUBLIC OF AUSTRIA                   13

“commercial activity carried on in the United States by a
foreign state” as “commercial activity carried on by such state
and having substantial contact with the United States.” Id.
§ 1603(e). This definition requires two elements to establish
that a foreign state carried on commercial activity in the
United States: (1) that the foreign state carries on commercial
activity and (2) that commercial activity has “substantial
contact” with the United States. See Nelson, 507 U.S. at 356
(establishing that jurisdiction requires a plaintiff’s action to
be “‘based upon’ some ‘commercial activity’ by [a foreign
state] that had ‘substantial contact’ with the United States”).

                               1

    The FSIA’s legislative history shows that Congress
intended the commercial-activity exception to be read broadly
to “include not only a commercial transaction performed and
executed in its entirety in the United States, but also a
commercial transaction or act having a ‘substantial contact’
with the United States.” H.R. Rep. No. 94-1487, at 17
(1976). Notably, neither the statute nor the legislative history
defines how the commercial activity within the United States
must be “carried on” but both suggest that “the ‘carried on
by’ requirement can be interpreted in light of broad agency
principles.” Mar. Int’l Nominees Establishment v. Republic
of Guinea, 693 F.2d 1094, 1105 (D.C. Cir. 1983). Under
traditional agency principles, the foreign state may engage in
commerce in the United States indirectly by acting through its
agents or subagents. See Phaneuf v. Republic of Indon.,
106 F.3d 302, 307–08 (9th Cir. 1997) (establishing that a
foreign state can conduct commercial activity through its
agents). As long as the agent or subagent acts with actual
authority, those acts can be imputed to the foreign state. Id.
14               SACHS V. REPUBLIC OF AUSTRIA

    The Second Circuit and the D.C. Circuit have both
applied this principle of imputing the acts of a subagent to a
foreign state under the first clause of the commercial-activity
exception.5      Both have applied the commercial-

 5
    The dissent of Judge O’Scannlain virtually ignores (and the dissent of
Chief Judge Kozinski entirely ignores) the two cases that are most like this
one, Kirkham v. Société Air France, 429 F.3d 288, 290, 293 (D.C. Cir.
2005), and Barkanic v. General Administration of Civil Aviation of the
Peoples Republic of China, 822 F.2d 11 (2d Cir. 1987), by arguing that
those considered decisions of the D.C. Circuit in Kirkham and the Second
Circuit in Barkanic “do not analyze when the acts of agents can be
attributed to a foreign state.” Judge O’Scannlain Dissent at 49. We agree
that the issue was not explicitly raised in those opinions, as noted in the
dissent on the three-judge panel, but we do not agree with the argument
by the dissent of Judge O’Scannlain on this en banc panel aimed at
discrediting the force of these cases for us. Further, the dissent of Judge
O’Scannlain does not acknowledge that its view, if adopted, would create
a circuit split with those decisions of the D.C. Circuit and Second Circuit.
At the time our prior three-judge panel had decided this case, the
jurisdictional argument on which the dissent of Judge O’Scannlain relies
had not even been raised by the Republic of Austria in its briefing or in its
oral argument. Because the issue is jurisdictional, we have considered the
Republic of Austria’s new contentions about agency even though they
were not previously presented. Infra note 7. Whether or not in Barkanic
the government of the People’s Republic of China conceded agency from
the sale of its ticket by a travel agent in the United States, and whether or
not in Kirkham the government of France conceded agency from the sale
of its ticket by a travel agent in the United States, is beside the point.
Because the issue is jurisdictional, these other circuits, like us, had an
independent duty to assess jurisdiction. If the sale by the travel agent was
not sufficient for jurisdictional purposes, then the district courts would
have been without jurisdiction and the circuit courts should not have
proceeded to render decision accepting that the district courts had
jurisdiction over the foreign common carriers by virtue of the commercial-
activity exception, and the sale in the United States by the travel agency.
Thus the position of the dissent of Judge O’Scannlain creates a conflict
with the two other United States Courts of Appeals that have considered
parallel cases where a travel agent in the United States sold a ticket for
                 SACHS V. REPUBLIC OF AUSTRIA                           15

activity exception where the commercial act in the United
States was that of a travel agent acting for the foreign
sovereign. In Barkanic v. General Administration of Civil
Aviation of the Peoples Republic of China (CAAC), the
Second Circuit concluded that the first clause of the
commercial-activity exception applied to the Chinese airline
CAAC based on the sale of a plane ticket in the United States
by a third-party agent. 822 F.2d 11, 13 (2d Cir. 1987).
CAAC had entered into an agreement with Pan American
World Airways whereby Pan American would act as a
general sales agent for CAAC in the United States. Id. at 12.
The tickets in question were not purchased directly through
Pan American but through Pan American’s agent, Vanslycke
& Reeside Travel, Inc. Id. Similarly, in Kirkham v. Société
Air France, the D.C. Circuit applied the commercial-activity
exception to a suit against Air France which was based on the
sale of airline tickets through a D.C. travel agency for travel
in France. 429 F.3d 288, 290, 293 (D.C. Cir. 2005). Because
Congress passed the FSIA to promote uniformity in the
treatment of foreign sovereign immunity, and because we
think that Congress intended to permit suit in the United
States against foreign sovereign common carriers that sell

passage on a common carrier owned by a foreign government. We do not
disagree that there could be “many instances in which Americans who
wish to sue foreign sovereigns can only do so overseas,” Judge
O’Scannlain Dissent at 50, but there is no reason to think that Congress
intended that result when a foreign common carrier sells tickets targeting
Americans through agents in the United States. The dissent of Judge
O’Scannlain notes that the general rule requiring suit of foreign sovereigns
only overseas is a result Congress intended “in many instances,” id., but
the dissent of Judge O’Scannlain fails to give credence to the plain
meaning of the language Congress inserted excepting the situation when
the foreign sovereign has engaged in commercial activity in the United
States from which a claim springs.
16            SACHS V. REPUBLIC OF AUSTRIA

tickets in the United States through agents, we see no
compelling reason to create a split with our sister circuits.
See Kelton Arms Condo. Owners Ass’n. v. Homestead Ins.
Co., 346 F.3d 1190, 1192 (9th Cir. 2003) (When a law is
“best applied uniformly, . . . we decline to create a circuit
split unless there is a compelling reason to do so.”).

    Sachs’s claim is no different in substance, for purposes of
assessing sovereign immunity, from those analyzed by our
sister circuits. Like the travel agents in Kirkham and
Barkanic, RPE is a subagent of OBB through Eurail Group.
Under traditional theories of agency, RPE’s act of selling the
Eurail pass to Sachs within the United States can be imputed
to OBB as the principal. Where a common carrier authorizes
a travel intermediary to “issue tickets on its behalf and to
collect and hold customer payment, the intermediary acts as
the [carrier’s] agent.” Restatement (Third) of Agency § 3.14
cmt. c (2006). Here, Eurail Group markets and sells rail
passes for transportation on OBB’s rail lines, making Eurail
Group an agent of OBB. Eurail Group enlists subagents, like
RPE, to sell and market its passes worldwide. Eurail Group’s
use of these subagents establishes a legal relationship
between OBB (the principal) and RPE (the subagent): “As to
third parties, an action taken by a subagent carries the legal
consequences for the principal that would follow were the
action instead taken by the appointing agent.” Restatement
(Third) of Agency § 3.15 cmt. d (2006). OBB admits as
much in describing the relationship between OBB and RPE:
“you have the operator, you have a separate legal entity, then
you have a marketing arm, then you have a general agent.”

    OBB argues that even if an agency relationship exists
between it and RPE, RPE still lacked actual authority to sell
the Eurail pass. We disagree. RPE’s authority to sell the
                 SACHS V. REPUBLIC OF AUSTRIA                           17

Eurail pass derives from the original authority that OBB
granted to Eurail Group to market and sell passes for
transportation on its rail lines. Indeed, Andreas Fuchs, a
member of the Board of Management of OBB, conceded in
his declaration that this Eurail pass entitled Sachs to board the
train in Innsbruck. Moreover, RPE’s actual authority to sell
the Eurail pass can be inferred from OBB’s sale of the
couchette bed upgrade to Sachs. Sachs could purchase the
couchette upgrade only if she had a valid Eurail pass.
Otherwise, she would have been required to purchase an
entirely new ticket, not just an upgrade. If RPE had
impermissibly sold the Eurail pass to Sachs, OBB would have
had no duty to honor the pass. But it did. It cannot now
sensibly argue that the sale of that pass by RPE in the United
States was unauthorized.6 Because we conclude RPE acted
as an authorized agent of OBB, we impute RPE’s sale of the
Eurail pass in the United States to OBB. See Phaneuf,
106 F.3d at 307–08 (“[A]n agent’s deed which is based on the
actual authority of the foreign state constitutes activity ‘of the
foreign state.’”) (quoting 28 U.S.C. § 1605(a)(2)).

    Our case law is not to the contrary. In Holy See, we
considered what acts performed by the Holy See’s domestic
corporations could be attributed to the Holy See for purposes
of the non-commercial torts exception under 28 U.S.C.
§ 1605(a)(5). Holy See, 557 F.3d at 1076–78. In that
context, we found it appropriate to adopt the standard
articulated by the Supreme Court in First National City Bank
v. Banco Para el Comercio Exterior de Cuba (Bancec),

 6
   We also agree with Sachs that even if we were to conclude that the sale
was originally unauthorized, this ratification of the pass by OBB gives it
the “effect as if originally authorized.” Rayonier, Inc. v. Polson, 400 F.2d
909, 915 (9th Cir. 1968).
18            SACHS V. REPUBLIC OF AUSTRIA

462 U.S. 611 (1983). Id. Drawing on common-law corporate
principles, the Supreme Court in Bancec adopted and applied
a presumption of separate juridical status that can be
overcome only when (1) “‘a corporate entity is so extensively
controlled by its owner that a relationship of principal and
agent is created,’” or (2) “when recognizing the separate
status of a corporation ‘would work fraud or injustice.’” Holy
See, 557 F.3d at 1077–78 (quoting Bancec, 462 U.S. at 629).

    Both Bancec and Holy See are distinguishable because
they determined agency in the context of assessing
responsibility of corporate affiliates. In contrast, Sachs’s
allegations are not based on a corporate relationship between
OBB and RPE, but rather on principles of agency. Unlike
Cuba and its official bank, Bancec, or the Holy See and its
domestic corporations, OBB and RPE are “entirely distinct”
entities. See Arriba Ltd. v. Petroleos Mexicanos, 962 F.2d
528, 535 (5th Cir. 1992). “There is neither common
ownership nor any similar legal relationship between these
entities.” Id. Thus Bancec’s definition of agency for
purposes of piercing the corporate veil is inapposite—“[o]ne
cannot pierce a non-existent corporate veil.” Id. The day-to-
day control inquiry under Bancec makes no sense here where
the question is “whether a particular type of agency
relationship is sufficient under the commercial activity
exception.” Dale v. Colagiovanni, 443 F.3d 425, 429 (5th
Cir. 2006) (distinguishing Bancec from the inquiry of
whether an individual agent had authority to bind the foreign
state); see also Phaneuf, 106 F.3d at 307 n.3 (distinguishing
the “alter ego” analysis).

    OBB contends that common-law principles of agency are
inapplicable under the plain language of the FSIA unless the
purported agent first meets the statutory definition of “agency
                SACHS V. REPUBLIC OF AUSTRIA                          19

or instrumentality of a foreign state” under § 1603(b).7
Section 1603(b) defines an “agency or instrumentality of a
foreign state” as any entity:

         (1) which is a separate legal person, corporate
         or otherwise, and

         (2) which is an organ of a foreign state or
         political subdivision thereof, or a majority of
         whose shares or other ownership interest is
         owned by a foreign state or political
         subdivision thereof, and

         (3) which is neither a citizen of a State or of
         the United States as defined in section 1332(c)
         and (e) of this title, nor created under the laws
         of any third country.

28 U.S.C. § 1603(b). OBB argues that this definition of
agency applies throughout the FSIA to limit who could be
considered an agent of a foreign state. Under this theory, the
court can consider common-law definitions of agency only
after the statutory definition of agency is met. OBB contends
that because RPE cannot meet the definition of agency under
§ 1603(b), RPE’s sale of the Eurail pass cannot be imputed to
OBB and no jurisdiction exists under the FSIA. We reject
this contention.

 7
   OBB did not initially brief this argument before our court. We do not
consider it waived, however, because it goes to our independent duty to
determine subject-matter jurisdiction. See Lasheen, 603 F.3d at 1171 n.3
(“[C]hallenges to subject-matter jurisdiction cannot be waived . . . .”).
Also, after oral argument we ordered supplemental briefing on this issue.
20            SACHS V. REPUBLIC OF AUSTRIA

    The plain text of the FSIA does not support OBB’s
proposed framework for determining whether RPE is an agent
of OBB. Section 1603(b) defines what type of entity can be
considered a foreign state for purposes of claiming sovereign
immunity. If an entity cannot show that it meets that
definition then it is not entitled to sovereign immunity.
Whether an entity meets the definition of an “agency or
instrumentality of a foreign state” to claim immunity is a
“completely different question” from whether the acts of an
agent can be imputed to a foreign state for the purpose of
applying the commercial-activity exception. Gates v. Victor
Fine Foods, 54 F.3d 1457, 1460 n.1 (9th Cir. 1995) (quoting
Hester Int’l Corp. v. Fed. Republic of Nigeria, 879 F.2d 170,
176 n.5 (5th Cir. 1989)).

    Common sense also tells us that an agent that carries on
commercial activity for a foreign sovereign in the United
States does not need to be an agency or instrumentality of a
foreign state under § 1603(b). Foreign sovereigns invariably
must act through agents, and if they engage in commercial
activity in the United States it will necessarily be through an
agent, whether that agent is its own employee or a separate
company in an agency or subagency relationship.

    Further, it is a well-established canon of statutory
interpretation that “when a statute covers an issue previously
governed by the common law, we interpret the statute with
the presumption that Congress intended to retain the
substance of the common law.” Samantar, 560 U.S. at 320
n.13. To abrogate common-law principles of agency, the
FSIA “must speak directly to the question addressed by the
common law.” United States v. Best Foods, 524 U.S. 51, 63
(1998) (quoting United States v. Texas, 507 U.S. 529, 534
(1993)). Because the FSIA codified our common law of
              SACHS V. REPUBLIC OF AUSTRIA                  21

sovereign immunity, Samantar, 560 U.S. at 311, we begin
with the presumption that the statute maintains common-law
principles. That Congress defined the term “agency or
instrumentality of a foreign state” does not convince us that
Congress intended to displace common-law agency principles
under the statute for purposes of assessing commercial
activity within the United States.

    OBB asks us to read this definition to apply not only to
the phrasal term “agency or instrumentality of a foreign state”
but also to the individual terms “agency” and “agent.”
OBB’s advocated reading strains the plain language of the
FSIA, renders the bulk of the phrase superfluous, and ignores
that § 1603(b) defines a singular phrasal term wherein all
words are important. Each word within the defined term does
not hold the same meaning individually that it has when
placed alongside the other terms in the defined phrase. The
three elements listed in § 1603(b) define only what
constitutes an “agency or instrumentality of a foreign state.”
See Samantar, 560 U.S. at 314 (describing this as a single
term). They do not give meaning to the word “agency” or
“agent” if used alone. If we were to adopt OBB’s preferred
reading, then § 1605A’s references to an “agent” of a foreign
state “acting within the scope of his or her . . . agency”
becomes illogical. We will not “construe the statute in a
manner that is strained and, at the same time, would render a
statutory term superfluous.” Dole Food Co. v. Patrickson,
538 U.S. 468, 476–77 (2003).

    The position that OBB advances would negate the
possibility of commercial activity by a state-owned railway
or airline within the United States through a travel agent. We
cannot believe that this is what Congress intended.
Throughout the world many foreign states own and operate
22               SACHS V. REPUBLIC OF AUSTRIA

legally independent passenger railways and airlines, which
may qualify for sovereign immunity as an “agency or
instrumentality of a foreign state” under 28 U.S.C.
§ 1603(b).8 Foreign states are also heavily involved in the
airline industry.9 Given the prevalence of these rail lines and

 8
   For instance, Canada, India, Israel, Korea, and Thailand each provides
passenger services through state-owned railways. See Via Rail Canada,
Inc., http://www.viarail.ca/en/about-via-rail (last visited November 15,
2013); Indian Railways, http://www.indian railways.gov.in/# (last visited
November 15, 2013); Israel Railways, http://www.rail.co.il/EN/About/
Pages/about.aspx (last visited November 15, 2013); Korail Korean
Railroad, http://www.korail.com/en/ (last visited November 15, 2013);
State Railway of Thailand, http://www.railway.co.th/home/srt/about/his
tory.asp?lenguage=Eng (last visited November 15, 2013).
 9
    According to an unofficial 2008 compilation by the United Nations’s
International Civil Aviation Organization the following airlines, and many
others, are 51 to 100 percent government owned: Aeroflot Russian
Airlines, Air Botswana, Air Burundi, Air China, Air India, Air Jamaica,
Air Madagascar, Air Malawi, Air Tanzania, Air Zimbabwe, Bahamasair,
Belavia Belarusian Airlines, Bulgaria Air, Cameroon Airlines, Cayman
Airways, Croatia Airlines, CSA Czech Airlines, Cubana de Aviación,
Druk Air (Royal Bhutan Airlines), Egyptair, Emirates Airlines, Eritrean
Airlines, Ethiopian Airlines, Finnair, Garuda Indonesia, Ghana
International Airlines, Lao Airlines, Libyan Arab Airlines, LOT Polish
Airlines, Malaysia Airlines, Myanma Airways (Myanmar), Orbi Georgian
Airways, Pakistan International Airlines, Polynesian Airlines (Samoa),
Royal Nepal Airlines, Rwanda Air Express, Saudi Arabian Airlines,
Singapore Airlines, South African Airways, TAP Portugal, and Vietnam
Airlines. List of Government-owned and Privatized Airlines (unofficial
preliminary compilation), Int’l Civil Aviation Org., (July 4, 2008),
available at http://www.icao.int/sustainability/Documents/PrivatizedAir
lines.pdf.
                 SACHS V. REPUBLIC OF AUSTRIA                           23

airlines worldwide,10 we believe that Congress contemplated
that the sale of tickets by travel agents within the United
States for passage on foreign-sovereign owned common
carriers would constitute “commercial activity carried on in
the United States by the foreign state.” 28 U.S.C.
§ 1605(a)(2).

    Adopting the OBB position would mean that scores of
state-owned railroads and airlines worldwide could sell their
tickets for foreign travel through travel agents in the United
States and then claim sovereign immunity thereafter because
the travel agents selling their tickets do not meet the
definition of a state instrumentality under § 1603(b). Such

 10
     We observe the existence of these foreign-state owned railways and
airlines as legislative, rather than adjudicative, facts because of their
relevance to our “legal reasoning” and interpretation of the “lawmaking
process.” Fed. R. Evid. 201(a), advisory note to 1972 amendments; see
also Kenneth Culp Davis, Judicial Notice, 55 Colum. L. Rev. 945, 952
(1955) (explaining that a court may “resort to legislative facts, whether or
not those facts have been developed on the record”). Even if we were to
view the existence of state-owned railroads and airlines as adjudicative
facts, it would still be correct to recognize their existence as a matter of
judicial notice. We may take judicial notice of an adjudicative fact “that
is not subject to reasonable dispute” because it is either “generally known
within the trial court’s territorial jurisdiction” or “can be accurately and
readily determined from sources whose accuracy cannot reasonably be
questioned.” Fed. R. Evid. 201(b). There might be dispute about whether
any particular airline or railroad is state owned. Ownership may have
changed; government carriers may have been privatized. There might also
be a problem of where to draw the line on percentage of ownership
required for the presumption of immunity. But whatever the detail as to
particular carriers, it cannot reasonably be disputed that there are many
national airlines and railroads worldwide that may market and sell tickets
through agents or subagents in the United States. The existence of a state-
owned carrier can be shown by reference to government websites and
papers of the governments and reviewing agencies.
24              SACHS V. REPUBLIC OF AUSTRIA

immunity would extend not only to torts but to contract
liability stemming from the actions of their common law
agents in the United States. That result would mean that
American citizens who buy tickets through authorized
domestic agents on airlines or railroads owned by foreign
governmental entities could find their reservations not
honored and their payments retained. The only recourse
against the contract-breaching carrier would be to sue abroad,
even though the contract was entered into in the United
States. There is no reason to think Congress intended such a
chaotic result.

    We likewise find no support for OBB’s suggested
interpretation in the FSIA’s legislative history. OBB
contends that the legislative history confirms its interpretation
because it says that the term “foreign state” applies
consistently throughout the FSIA. According to OBB,
because the term “foreign state” has a consistent definition
throughout the statute,11 “the definition of an ‘agency’ in
Subsection 1603(b) limits who is an agent for purposes of
Section 1605(a)(2).” We do not see the connection. That
Congress intended the terms defined in § 1603 to apply
consistently throughout the FSIA does not mean that
Congress intended for those defined terms to displace
principles of common law. Indeed, the Supreme Court has
looked to common-law corporate principles to determine the
proper interpretation of § 1603(b). See Dole Food Co.,
538 U.S. at 474 (relying on a “basic tenet of American
corporate law” to hold that “only direct ownership of a
majority of shares by the foreign state satisfies the statutory
requirement” under § 1603(b)); see also Samantar, 560 U.S.

  11
     Section 1608 employs a different definition of “foreign state.” See
28 U.S.C. § 1603(a).
                 SACHS V. REPUBLIC OF AUSTRIA                           25

at 320 (examining “relevant common law and international
practice” to interpret the FSIA).12

    Moreover, none of the cases relied on by OBB applied
this strained reading of the FSIA. The main case on which
OBB relies is the Supreme Court’s decision in Samantar,
which held that individual officials are not included within
the meaning of “agency or instrumentality of a foreign state.”
560 U.S. at 316. OBB points to a passage in the opinion that
states that § 1603(b) “specifically delimits what counts as an
‘agency or instrumentality.’” Id. at 314 (quoting 28 U.S.C.
§ 1603(b)). That is true, but Samantar makes this statement
while interpreting what or who constitutes a foreign state
under the meaning of § 1603(b). Id. at 314–16. That is the
opposite question from the one we are presented with here.
The other cases cited by OBB are equally unavailing and
either do not address the issue or support a statutory

  12
     In addition to asking us first to adopt what we think is a strained
reading of the statute, OBB asks us next to preserve the Bancec
presumption of separate juridical status to be applied after we determine
agency under § 1603(b). That is, OBB argues that the definition of
“agency” under § 1603(b) did not fully abrogate common-law principles
of agency but preserved the common law as a second requirement for
establishing agency. Under that analysis, we would first determine
whether an entity met the elements enumerated in § 1603(b) and, if so, we
would determine whether that entity met Bancec’s standard for
overcoming the presumption of separate juridical status.

     This analytical framework is untenable. We know of no principle of
statutory construction, and OBB cites to none, that supports reading a
statute to create a hierarchical system that first requires application of a
statutory definition and then allows consideration of the common-law
definition for the same term. It seems that OBB would like to construct
a gantlet through which no claimant could run, a barrier no claimant could
surmount. The plain language of the FSIA does not support such a
framework, as explained above.
26               SACHS V. REPUBLIC OF AUSTRIA

construction contrary to that proposed by OBB. See, e.g.,
Gates, 54 F.3d at 1460 n.1 (distinguishing the analysis for
determining whether a defendant is an agent or
instrumentality of a foreign state from the analysis for
determining whether to impute the acts of an agency to the
government). OBB has not convinced us that its reading of
the FSIA is proper.13 We conclude that RPE’s sale of the
Eurail pass in the United States can be imputed to OBB.

 13
    The dissent of Judge O’Scannlain cites the “Presumption of Consistent
Usage” canon, which stands for the proposition that a “word or phrase is
presumed to bear the same meaning throughout a text; a material variation
in terms suggests a variation in meaning.” ANTONIN SCALIA & BRYAN A.
GARNER, READING LAW: THE INTERPRETATION OF LEGAL TEXTS 170
(2012). In the statute, there are different phrasings of “agency or
instrumentality of a foreign state”, 28 U.S.C. § 1603(b), and “agent of that
foreign state . . . acting within the scope of his or her . . . agency,” id. §
1605A(c), and the commercial-activity exception, id. § 1605(a)(2), which
does not include the word “agency.” We do not have text from one part
of the statute interpreted differently from the same text in another part of
the statute. While not applying correctly the maxim of consistent usage,
the dissent of Judge O’Scannlain also ignores other statutory construction
principles pointing in the direction that an “agent” for purposes of
satisfying the commercial-activity exception is not the same as an “agency
or instrumentality of a foreign state” for purposes of invoking sovereign
immunity. Some of these other principles are: the surplusage canon
(“every word and every provision is to be given effect”), the harmonious
reading canon (“the provisions of a text should be interpreted in a way that
renders them compatible, not contradictory”), the associated words canon
(“associated words bear on one another’s meaning (noscitur a sociis)”),
and the prior construction canon (“If a statute uses words or phrases that
have already received authoritative construction by the jurisdiction’s court
of last resort . . . they are to be understood according to that
construction”). See SCALIA & GARNER, 174, 181, 195, 322. All of these
canons suggest that “agency or instrumentality of a foreign state” must be
interpreted as an entire phrase, and that the definitions within § 1603(b)
do not supplant or implicate the common law definition of agency which
can be taken into account in assessing § 1605(a)(2).
              SACHS V. REPUBLIC OF AUSTRIA                    27

                               2

    Although imputing the sale of the pass by RPE to OBB is
essential to showing that the “commercial activity was carried
on in the United States,” we must still determine if that sale
creates “substantial contact” with the United States. 28 U.S.C.
§ 1603(e). We conclude that it does.

    “Substantial contact” is not clearly defined in the FSIA or
by our circuit or our sister circuits. See Shapiro v. Republic
of Bol., 930 F.2d 1013, 1019 (2d Cir. 1991). It is generally
agreed that it sets a higher standard for contact than the
minimum contacts standard for due process. See id.; Mar.
Int’l Nominees Establishment, 693 F.2d at 1109 (explaining
that the substantial contact requirement makes “clear that the
immunity determination under the first clause diverges from
the ‘minimum contacts’ due process inquiry”). Under this
standard, we have concluded that merely executing contracts
for the sale of crude oil in the United States, by itself, is not
a substantial contact. Terenkian, 694 F.3d at 1137. In
Terenkian, we found relevant that no activity related to the
formation of the contracts other than that their execution
occurred within the United States. Id. at 1126, 1137. In a
different context, we have concluded that there was
substantial contact where a foreign state, through its agent in
the United States, advertised to and solicited customers in the
United States, causing numerous Americans to stay in the
foreign state’s hotel. Siderman de Blake, 965 F.2d at 709.
Although in some situations the formation of a contract
within the United States may not be sufficient to establish
substantial contact, in other situations the advertisement to
and solicitation of customers in the United States is enough.
The context of the commercial activity helps to determine
whether the substantial-contact requirement is met.
28            SACHS V. REPUBLIC OF AUSTRIA

     In the common-carrier context, we also look to factors
such as the marketing, selling, and arranging of foreign travel
in the United States to determine whether substantial contact
exists. See Schoenberg, 930 F.2d at 781–82 (concluding that
substantial contact exists where the trip was arranged and
started in California); see also Santos v. Compagnie
Nationale Air Fr., 934 F.2d 890, 894 (7th Cir. 1991)
(cataloguing cases); Sugarman v. Aeromexico, Inc., 626 F.2d
270, 272–73 (3d Cir. 1980). Where a ticket for travel on a
foreign common carrier is bought and paid for in the United
States, we conclude that the substantial contact requirement
is satisfied. See Barkanic, 822 F.2d at 14. The sale and
marketing of Eurail passes within the United States is
sufficient to meet the substantial-contact element and to show
that OBB carried on commercial activity in the United States.
It remains for us to determine whether the claims of Sachs are
“based upon” this commercial activity.

                               B

     “[T]he phrase ‘based upon’ in § 1605(a)(2) ‘is read most
naturally to mean those elements of a claim that, if proven,
would entitle a plaintiff to relief under [his or her] theory of
the case.’” Lasheen, 603 F.3d at 1170–71 (quoting Nelson,
507 U.S. at 357); see also Santos, 934 F.2d at 893 (“An
action is based upon the elements that prove the claim, no
more and no less.”). The “based upon” language demands
“more than a mere connection with, or relation to,
commercial activity.” Nelson, 507 U.S. at 358. But it is not
necessary that the entire claim be based upon the commercial
activity of OBB. Sachs’s claims will be “based upon” the
commercial activity if “an element of [her] claim consists in
conduct that occurred in commercial activity carried on in the
United States.” Sun, 201 F.3d at 1109 (quoting Sugimoto v.
                 SACHS V. REPUBLIC OF AUSTRIA                          29

Exportadora De Sal, 19 F.3d 1309, 1311 (9th Cir. 1994)); see
also Terenkian, 694 F.3d at 1132.

    To establish that her action is “based upon” OBB’s
commercial activity, Sachs must show a nexus between her
claims and the sale of the Eurail pass. See Sun, 201 F.3d at
1109. We look to Sachs’s theory of the case to determine if
she meets this burden. See id. at 1110; see also Nelson,
507 U.S. at 357 (considering Nelson’s theory of the case to
determine jurisdiction). Sachs’s complaint asserts five claims
for relief: negligence; strict liability for a design defect; strict
liability for failure to warn for a design defect; breach of
implied warranty of merchantability; and breach of implied
warranty of fitness. “A court must analyze each claim and
determine if it is ‘based upon’ commercial activity . . . .”
Lasheen, 603 F.3d at 1172. We begin with Sachs’s
negligence claim.

    To show negligence, Sachs must establish that OBB owed
her a duty of care. Under Sachs’s theory of the case, OBB
owed her a duty of care because her purchase of the Eurail
pass established a common-carrier/passenger relationship. It
is well established that common carriers owe a duty of utmost
care to their passengers. See Andrews v. United Airlines, Inc.,
24 F.3d 39, 40 (9th Cir. 1994) (applying California law);14 see

  14
     Some courts have said that “as a general matter, state substantive law
is controlling in FSIA cases.” E.g., Barkanic v. General Administration
of Civil Aviation of the Peoples Republic of China, 923 F.2d 957, 959 (2d
Cir. 1991) (citing Bancec, 462 U.S. at 622 n.11). The Supreme Court in
Bancec stated in pertinent part: “Section 1606 provides that ‘[a]s to any
claim for relief with respect to which a foreign state is not entitled to
immunity . . ., the foreign state shall be liable in the same manner and to
the same extent as a private individual in like circumstances.’ Thus,
where state law provides a rule of liability governing private individuals,
30               SACHS V. REPUBLIC OF AUSTRIA

also Restatement (Third) of Torts § 40(b) (2012) (“Special
relationships giving rise to the duty [of reasonable care] . . .
include a common carrier with its passengers.”). And the
basis for that duty of care is established when a foreign state
or its agent sells a ticket or otherwise makes travel
arrangements for passage abroad. See Santos, 934 F.2d at
893–94.

   Here, buying the Eurail pass from RPE was the start of
Sachs’s tragic misadventure, and buying the pass in the
United States helped to define the scope of duty owed by
common carrier OBB to the pass purchaser and traveler,

the FSIA requires the application of that rule to foreign states in like
circumstances.” Bancec, 462 U.S. at 622 n.11 (quoting 28 U.S.C. § 1606).
So we think it is a permissible view of Supreme Court precedent to look
to California law to determine the elements of Sachs’s claims.

     However, it may also be permissible to view the above cases as
suggesting there be a choice-of-law decision, either based on the forum’s
choice of law principles, or some other rule. We have held that, with no
choice-of-law provision expressed in the FSIA, we should use the choice-
of-law principles of the federal common law, which leads us to the Second
Restatement of Conflicts. See Schoenberg, 930 F.2d at 782. The Second
Restatement factors for the “more significant relationship” test include:
the needs of the interstate and international systems; the relevant policies
of the forum; the relevant policies of other interested states; the protection
of justified expectations; the policies underlying a field of law; ideas on
certainty, predictability, and uniformity of result; and ease in
determination and application of applicable law. Id. at 783; see
Restatement (Second) of Conflicts § 6(2) (1971). Even if we should make
a separate conflicts analysis under the Restatement, that conflicts analysis
supports the same conclusion that California law applies to Sachs’s
claims. Although Sachs was injured in Austria, the purchase of the
common carrier ticket occurred in California. California has a strong
interest in providing compensation to its residents under its law when
those residents buy a common carrier ticket in California and then travel
abroad on state-owned transportation.
              SACHS V. REPUBLIC OF AUSTRIA                    31

Sachs. Because the sale of the Eurail pass is an essential fact
that Sachs must prove to establish her passenger-carrier
relationship with OBB, a nexus exists between an element of
Sachs’s negligence claim and the commercial activity in the
United States. See Kirkham, 429 F.3d at 292 (“[S]o long as
the alleged commercial activity establishes a fact without
which the plaintiff will lose, the commercial activity
exception applies . . . .”). Without the pass, Sachs could not
have boarded, or tried to board, the OBB train in Innsbruck.
Moreover, the Eurail pass created an exclusive relationship
between OBB and Sachs. No one could use this pass but
Sachs. The Eurail pass bore her name, said that it was non-
transferrable, and required that she present a valid passport to
use it. Thus, the sale of the Eurail pass in the United States
is “necessary to the ‘duty of care’ element of [Sachs’s]
negligence claim.” Id. To demand more at the jurisdictional
phase is to require a plaintiff to prove the merits of her claim,
“expanding the category of jurisdictional facts to include
actions and events other than the actual commercial activity
which triggers the exception.” Id. at 293.

    Sachs’s purchase of the couchette reservation upgrade in
Innsbruck does not change our conclusion. The passenger-
carrier relationship had already been established, and the
couchette purchase did not change this relationship or OBB’s
duty in any way; it rather upgraded the means of her transit in
Austria. OBB acknowledges that Sachs could have boarded
the train from Innsbruck to Prague with just her Eurail pass,
so the couchette reservation merely constitutes an upgrade to
her existing pass, not a new transaction. The situation is
similar to a person who buys a coach-class airline ticket but
pays an additional fee for a first-class upgrade before
boarding the plane. The latter is not a new transaction that
changes the duty of care owed by the airline to the passenger.
32               SACHS V. REPUBLIC OF AUSTRIA

Similarly, Sachs’s purchase of the upgrade changed nothing
about the duty of care OBB owed her. Because the sale of the
Eurail pass in the United States forms the basis of an element
of Sachs’s negligence claim, she satisfies the “based upon”
requirement for that claim.

    OBB contends that this conclusion is inconsistent with
our decision in Sun v. Taiwan. We disagree. In Sun, we
considered whether the appellants could bring a wrongful
death action against Taiwan under the commercial-activity
exception after their son drowned during a cultural tour of
Taiwan. 201 F.3d at 1106. The Suns alleged that Taiwan
was negligent by failing to warn their son of the swimming
hazards and failing to exercise reasonable supervision. Id. at
1109. We concluded that Taiwan had engaged in commercial
activity in the United States by promoting and managing
applications for the program, but that this activity did not
form the basis of Sun’s negligence claims. Id. at 1110. We
explained that “[t]he promotion and application process in the
United States was not conduct involved in proving any of the
elements of the Suns’ action.” Id.15 Sachs’s negligence claim
is different from that considered in Sun because OBB’s
conduct in the United States—the sale of the Eurail pass—is
essential to proving the duty-of-care element of Sachs’s
negligence claim.

    Similarly, our conclusion is consistent with the Supreme
Court’s decision in Saudi Arabia v. Nelson, which analyzed
the “based upon” requirement of the commercial-activity
exception. The Supreme Court concluded that Nelson’s

 15
    The Suns later claimed that the organization of the trip in the United
States established a duty of care, but because that was a new issue on
appeal, we did not decide it. Sun, 201 F.3d at 1110 & n.2.
                 SACHS V. REPUBLIC OF AUSTRIA                          33

action “alleging personal injury resulting from unlawful
detention and torture by the Saudi Government [was] not
‘based upon a commercial activity’ within the meaning of
[the FSIA].” Nelson, 507 U.S. at 351. To reach this
conclusion, the Court rejected Nelson’s argument that the
defendant’s act of recruiting and signing a contract with
Nelson in the United States was the relevant commercial
activity that formed the basis of Nelson’s tort claims. Id. at
358. Although those acts within the United States preceded
the torts alleged by Nelson, they were not relevant to proving
Nelson’s claims. Id. In contrast, Sachs’s negligence claim
requires her to show that OBB owed her a duty of care as a
passenger on its train—a duty based upon the sale of the
Eurail pass within the United States.

    For similar reasons, we conclude that Sachs’s breach-of-
implied-warranty claims and strict-liability claims are “based
upon” the sale of the Eurail pass.16 Products-liability claims
and breach-of-implied-warranty claims are variations on a
theme: attributing liability based on the sale of a product into
the market. See Greenman v. Yuba Power Prods. Inc.,
377 P.2d 897, 900–901 (Cal. 1963) (discussing implied
warranties and strict liability for design defects); see also Dan
B. Dobbs et al., The Law of Torts § 448 (2d ed. 2011) (“To a
large extent, the law of implied warranty gradually merged
with strict tort liability.”). A transaction between a seller and
a consumer is a necessary prerequisite to proving either type
of claim. See Restatement (Second) of Torts § 402A (1965)

  16
    We review Sachs’s claims only to the extent necessary to determine
whether jurisdiction exists under the FSIA. Whether Sachs has properly
pleaded these claims is not before us. See Kirkham, 429 F.3d at 293
(explaining that the jurisdictional inquiry under the FSIA is distinct from
the Rule 12(b)(6) analysis).
34               SACHS V. REPUBLIC OF AUSTRIA

(establishing liability for those who sell products to
consumers); West’s Ann. Cal. Com. Code § 2314(1) (“[A]
warranty that the goods shall be merchantable is implied in a
contract for their sale. . . .”); West’s Ann. Cal. Com. Code
§ 2315 (establishing an implied warranty that the goods shall
be fit for a particular purpose at the time of contracting).
Here, the sale relevant to proving these claims is the sale of
the Eurail pass to Sachs in the United States.17 As we
explained above, Sachs’s purchase of the couchette upgrade
does not change our conclusion because her existing Eurail
pass was a necessary precedent to the upgrade. Because the
sale of the Eurail pass in the United States forms an essential
element of each of Sachs’s claims, we conclude that Sachs’s
claims are “based upon a commercial activity carried on in
the United States” by OBB.18 28 U.S.C § 1605(a)(2).

  17
     The dissent of Judge O’Scannlain does not contest that if the ticket
sale of the Eurail pass to Sachs in the United States was commercial
activity of OBB, then the negligence claim is based on that conduct in the
sense that one of the elements of negligence is the creation of the duty of
the common carrier. But the dissent of Judge O’Scannlain argues that
strict liability stands on a different footing because that claim does not
require privity of contract. This misses the point. Under the standard
formulation for strict liability for harm to a consumer, there must be a sale
of the product. See Restatement (Second) of Torts § 402A (1965). Here,
the sale by RPE was in the United States, and there is jurisdiction on the
strict liability claim.
  18
     Chief Judge Kozinski, though he joins Judge O’Scannlain’s dissenting
analysis, launches his own independent theory to take agency out of the
case. Thus, Chief Judge Kozinski’s dissent argues that even if the Eurail
pass tickets here sold by OBB’s agent had been sold directly by Austria
“from a kiosk in Times Square,” Chief Judge Kozinski Dissent at 53,
nonetheless, Sachs’s claims would not be based upon commercial activity
in the United States. To reach this conclusion, Chief Judge Kozinski
would simply overrule all prior case law in the Ninth Circuit which had
held that it was sufficient if an element of the claim was supported by the
                 SACHS V. REPUBLIC OF AUSTRIA                           35

                                    V

    We hold that the first clause of the FSIA commercial-

domestic commercial activity. Chief Judge Kozinski, in his separate
dissent, does not persuasively rebut the reasoning of our precedents
holding, or the Supreme Court’s prior opinion in Nelson, 507 U.S. at 358
n.4, leaving open, that commercial activity in the United States,
supporting an element of a claim, was sufficient for jurisdictional
purposes.

     Further, the cases that Chief Judge Kozinski relies upon do not have
the type of nexus to the United States that would be created, using his
hypothetical example, by Austria itself selling its Eurail pass tickets from
a kiosk in Times Square. Sosa concerned a Mexican physician’s suit
against the United States under the Federal Tort Claims Act, after he was
seized by Mexican nationals in Mexico at the behest of the U.S. Drug
Enforcement Agency. See Sosa v. Alvarez-Machain, 542 U.S. 692,
697–98 (2004). Sosa did not involve the FSIA. Kiobel concerned the
alleged complicity of foreign corporations with the Nigerian government
for atrocities committed in Nigeria against Nigerian citizens, in violation
of international law norms. See Kiobel v. Royal Dutch Petroleum Co.,
133 S. Ct. 1659, 1662–63 (2013). Kiobel was an Alien Tort Statute case,
and did not involve the FSIA. Morrison concerned securities transactions
that neither occurred in the United States nor involved securities listed on
U.S. exchanges. See Morrison v. Nat’l Australia Bank Ltd., 130 S. Ct.
2869, 2884 (2010). Morrison did not involve the FSIA.

     Cases like Sosa, Kiobel, and Morrison, while they caution against
opening U.S. courts or applying U.S. laws to foreign activities of foreign
entities, do not engage with the commercial-activity exception of the
FSIA, and do not properly bear on whether that exception can be satisfied
by a foreign country selling common carrier tickets through a kiosk in
Times Square, Chief Judge Kozinski’s hypothetical, or on the practice of
foreign sovereign airlines or rail systems selling tickets in the United
States through travel agents within the United States. Congress enacted
the commercial-activity exception so that foreign sovereigns, if they
engaged in commercial activity in the United States, could be called into
account in our courts.
36              SACHS V. REPUBLIC OF AUSTRIA

activity exception applies to a common carrier owned by a
foreign state that acts through a domestic agent to sell tickets
to United States citizens or residents for passage on the
foreign common carrier’s transportation system. Sachs has
met her burden of proving that the first clause of the
commercial-activity exception applies. The district court
erred in concluding that it lacked subject-matter jurisdiction
over Sachs’s claims. We reverse and remand for further
proceedings consistent with this opinion, including
consideration of the other claims raised by OBB in its motion
to dismiss.19

      REVERSED and REMANDED.

O’SCANNLAIN, Circuit Judge, dissenting, with whom
KOZINSKI, Chief Judge, and RAWLINSON, Circuit Judge,
join:

    Because I am not persuaded that an instrumentality of the
Republic of Austria may be subjected to the jurisdiction of
the United States Courts on the basis of the facts alleged in
this case, I must respectfully dissent from the decision of the
en banc court to the contrary.

                                    I

    The Foreign Sovereign Immunities Act of 1976 (FSIA) is
“the sole basis for obtaining jurisdiction over a foreign state

 19
    Whether Sachs can successfully pursue her claims depends on a great
many issues that are not presently before us. We express no view on those
issues.
              SACHS V. REPUBLIC OF AUSTRIA                   37

in our courts.” Argentine Republic v. Amerada Hess Shipping
Corp., 488 U.S. 428, 434 (1989). Under the FSIA, a foreign
state is presumptively “immune from the jurisdiction of the
courts of the United States” unless the plaintiff can show that
his action falls within a specified statutory exception.
28 U.S.C. § 1604; see also Terenkian v. Republic of Iraq,
694 F.3d 1122, 1127 (9th Cir. 2012).

    Exceptions to sovereign immunity must be interpreted
narrowly. Courts should guard against overly broad readings
because expanding federal jurisdiction in this area can have
serious foreign policy consequences. See Sampson v. Federal
Republic of Germany, 250 F.3d 1145, 1155–56 (7th Cir.
2001) (“In interpreting the FSIA, we are mindful that judicial
resolution of cases bearing significantly on sensitive foreign
policy matters, like the case before us, might have serious
foreign policy implications which courts are ill-equipped to
anticipate or handle.”) (internal quotation marks omitted); see
also J.H. Trotter, Narrow Construction of the FSIA
Commercial Activity Exception: Saudi Arabia v. Nelson,
33 Va. J. Int’l L. 717, 733–34 (1993) (“As [the FSIA]
exceptions undergo judicial expansion . . . the strains on
foreign policy intensify.”). Indeed, we have expressly
recognized the restricted nature of these exceptions. Peterson
v. Islamic Republic of Iran, 627 F.3d 1117, 1125 (9th Cir.
2010) (describing the FSIA’s exceptions as “narrow”); see
also McKesson Corp. v. Islamic Republic of Iran, 672 F.3d
1066, 1075 (D.C. Cir. 2012) (describing the FSIA’s
exceptions as “narrowly drawn”).

    By expanding the commercial-activity exception to
encompass the facts in this case, the court, regrettably, claims
jurisdiction that is denied to us by statute.
38               SACHS V. REPUBLIC OF AUSTRIA

                                      II

    Carol P. Sachs, who lives in California, purchased a
Eurail pass online from Rail Pass Experts (RPE), an entity
located in Massachusetts. A Eurail pass enabled her to ride
railways in Austria and the Czech Republic. RPE gained
authority to sell Eurail passes from the Eurail Group. OBB
Personenverkehr AG (OBB), a railway wholly owned by the
Austrian government, is one of many Eurail Group members.
OBB and Eurail are separate entities with distinct
managements, employees, and purposes. While in Austria,
Sachs attempted to board a moving train operated by OBB.
She fell between the platform and the train such that she
landed on the tracks, suffering severe bodily injuries. Sachs
has sued OBB for negligence, strict liability, and breach of
implied warranties.

    Our analytical task in this case is made easier by the
limited nature of the parties’ arguments. Sachs does not
contest that OBB is an instrumentality of the Republic of
Austria and therefore entitled to foreign sovereign immunity
under the FSIA. The majority correctly notes that “[t]he
[only] exception relevant to this appeal is the first clause of
the commercial-activity provision.”1 Slip Op. at 10. The
commercial-activity exception can helpfully be divided into
three requirements: (1) the activity must be commercial rather
than sovereign, (2) the activity must be “carried on in the

 1
   “A foreign state shall not be immune from the jurisdiction of courts of
the United States . . . 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). Like the majority, I use the phrase “commercial-
activity exception” to refer to the first clause of § 1605(a)(2). See Slip Op.
at 10 n.3.
                SACHS V. REPUBLIC OF AUSTRIA                         39

United States by the foreign state,” and (3) the plaintiff’s suit
must be “based upon” that activity. 28 U.S.C. § 1605(a)(2).

    The parties do not dispute that the only relevant
commercial activity in the United States was Sachs’ purchase
of a Eurail pass from RPE. See Slip Op. at 11 n.4. OBB does
not contest that the sale of the Eurail pass was commercial,
rather than sovereign, activity. The first requirement is
therefore satisfied. It is the two other requirements that are
disputed.

                                   III

     To repeat, the commercial-activity exception applies only
if the activity in question was “carried on in the United States
by the foreign state.” 28 U.S.C. § 1605(a)(2).2 Although the
sale of the ticket by RPE clearly occurred in the United
States, OBB disputes that it “carried on” that activity. Rather,
OBB argues that the sale is attributable exclusively to RPE.
See Phaneuf v. Republic of Indonesia, 106 F.3d 302, 306 (9th
Cir 1997) (“Defendants should be permitted to argue . . . that
they did not act: that there was no commercial activity of the
foreign state.”) (internal quotation marks omitted).

     To determine whether the activity is attributable to OBB,
it is necessary to consider the meaning of “foreign state.”
Because foreign states are not natural persons, they
necessarily act through agents. See Slip Op. at 20. The
question is what principle limits the extent to which another

 2
   Congress defined “commercial activity carried on in the United States
by a foreign state” to mean “commercial activity carried on by such state
and having substantial contact with the United States.” 28 U.S.C.
§ 1603(e).
40                SACHS V. REPUBLIC OF AUSTRIA

entity’s activity can be attributed to a foreign state for
purposes of the FSIA.

    Relying on Phaneuf, the majority rules that the activity of
any authorized agent can be imputed to a foreign sovereign.
See Slip Op. at 17 (“Because we conclude RPE acted as an
authorized agent of OBB, we impute RPE’s sale of the Eurail
pass in the United States to OBB.”) (citing Phaneuf, 106 F.3d
at 307–08).3 Thus, it effectively reads “activity carried on . . .
by a foreign state” and “activity carried on by such state” to
mean activity carried on by the authorized agents of a foreign
state. This necessarily equates a foreign state and its
authorized agents.

    With respect, I suggest that such a reading is inconsistent
with other provisions of the FSIA. Rather, “foreign state”
must be interpreted more narrowly. The approach we
adopted in Doe v. Holy See, 557 F.3d 1066 (9th Cir. 2009),
correctly interpreted “foreign state” and provides a
framework with which to analyze this case. Under this
narrower reading, “activity carried on . . . by a foreign state”
cannot include activity carried on by RPE.

 3
   While Phaneuf held that an agent must have acted with actual authority
in order for its actions to be attributed to a foreign state, Phaneuf, 106 F.3d
at 308, it did not hold that actual authority was sufficient to allow for such
attribution in all circumstances. The actions at issue in Phaneuf were
taken by members of Indonesia’s National Defense Security Council,
rather than a corporate entity with whom Indonesia had only a loose
relationship, so the closeness of the connection between the foreign state
and the alleged agent was not at issue. See id. at 304, 307.
                  SACHS V. REPUBLIC OF AUSTRIA                             41

                                      A

    The term “foreign state,” of course, is used repeatedly in
the FSIA, not just in the commercial-activity exception. The
meaning of “foreign state” remains constant throughout the
statute, and textual evidence from other provisions
demonstrates that “foreign state” cannot be so broad as to
include all authorized agents of a foreign state.

                                      1

    Courts generally presume that a term is used consistently
throughout a statute. See Powerex Corp. v. Reliant Energy
Services, Inc., 551 U.S. 224, 232 (2007) (“A standard
principle of statutory construction provides that identical
words and phrases within the same statute should normally be
given the same meaning.”); Antonin Scalia & Bryan A.
Garner, Reading Law 170 (2012) (discussing the presumption
of consistent usage).4 Here, far from indicating that different
uses of “foreign state” have different meanings, the FSIA
suggests that the definition remains constant throughout the
statute (with the express exception of § 1608, which is not
relevant here). See 28 U.S.C. § 1603(a) (“For purposes of
this chapter—(a) A ‘foreign state,’ except as used in section

  4
    The majority misinterprets this analysis as applying the presumption
of consistent usage to distinct phrases, “agency or instrumentality of a
foreign state” in § 1603(b), “agent of that foreign state [ ] acting within the
scope of his or her . . . agency” in § 1605A(c), and the commercial-
activity exception in § 1605(a)(2). Slip Op. at 26 n.13. In reality, I apply
the presumption of consistent usage to the term “foreign state,” not to each
phrase as a whole. Such application is consistent with Samantar v.
Yousuf, 560 U.S. 305, 317–18 & n.11 (2010) (interpreting “foreign state”
in § 1604 in light of the use of “foreign state” in § 1605A and
§ 1605(a)(5)).
42            SACHS V. REPUBLIC OF AUSTRIA

1608 of this title, includes a political subdivision of a foreign
state or an agency or instrumentality of a foreign state as
defined in subsection (b).”) (emphasis added).

    Confirming this analysis, the Supreme Court has
interpreted the term “foreign state” consistently. In Samantar
v. Yousuf, 560 U.S. 305 (2010), the Court interpreted “foreign
state” as it was used in § 1604, which grants immunity to
“foreign state[s].” 28 U.S.C. § 1604. In doing so, the Court
expressly relied on the meaning of “foreign state” in an
exception to immunity found in § 1605(a)(5). See Samantar,
560 U.S. at 317–18. Such approach is sensible only if
“foreign state” has the same meaning in both provisions.
Clearly, Supreme Court precedent indicates that “foreign
state” has the same meaning when providing an exception to
immunity as it does when granting immunity.

     The majority, by contrast, treats the meaning of “foreign
state” for the purposes of § 1604 and the meaning of “foreign
state” for the purposes of § 1605 as separate inquiries. See
Slip Op. at 20 (contrasting the status required to claim
sovereign immunity and the status required for activity to be
attributable under the commercial-activity exception). In
light of the presumption of consistent usage and Supreme
Court precedent applying it to the FSIA, I cannot accept the
majority’s assumption that the interpretation of this term
differs so greatly between provisions.

                               2

   Given that the meaning of “foreign state” is consistent, we
can turn to analyzing the meaning of that term in other
provisions of the FSIA. Textual evidence from § 1605A,
                SACHS V. REPUBLIC OF AUSTRIA                         43

which also uses “foreign state,” indicates that the term does
not embrace all authorized agents.

    Section 1605A(c) creates a cause of action against “[a]
foreign state that is or was a state sponsor of terrorism . . . and
any official, employee, or agent of that foreign state while
acting within the scope of his or her office, employment, or
agency.” 28 U.S.C. § 1605A(c) (emphasis added). In
Samantar, the Supreme Court tells us that “the creation of a
cause of action against both the ‘foreign state’ and ‘any
official, employee, or agent’ thereof reinforces the idea that
‘foreign state’ does not by definition include foreign
officials.” Samantar, 560 U.S. at 318 n.11 (citation omitted).
Relying on § 1605A(c) and a similar provision in
§ 1605(a)(5), the Court invoked the rule against superfluity:
“If the term ‘foreign state’ by definition includes an
individual acting within the scope of his office, the phrase ‘or
of any official or employee . . .’ in 28 U.S.C. § 1605(a)(5)
would be unnecessary.” Id. at 318 (citing Dole Food Co. v.
Patrickson, 538 U.S. 468, 476–77 (2003) (“[W]e should not
construe the statute in a manner that is strained and, at the
same time, would render a statutory term superfluous.”)).

    Just as the inclusion of “official” in § 1605(a)(5) and
§ 1605A(c) would be superfluous were “foreign state” to
include officials, the inclusion of “agent” in § 1605A(a)5 and

 5
    Section 1605A(a) uses similar language to create a specific exception
to immunity for:

         any case not otherwise covered by this chapter in which
         money damages are sought against a foreign state for
         personal injury or death that was caused by [specified
         acts] if such act . . . is engaged in by an official,
         employee, or agent of such foreign state while acting
44             SACHS V. REPUBLIC OF AUSTRIA

§ 1605A(c) would be superfluous if “foreign state” included
all agents acting in the scope of their agencies (that is,
authorized agents). And just as the avoidance of superfluity
in another provision informed Samantar’s interpretation of
“foreign state” in § 1604, it similarly affects the meaning of
“foreign state” in § 1605(a)(2). Therefore, by the same logic
that the Supreme Court used in Samantar, the commercial-
activity exception’s use of “foreign state” does not include all
authorized agents.

                                 B

    Because the majority’s approach is inconsistent with the
text of the statute, another approach is required. Our opinion
in Holy See provides the proper standard for attributing the
actions of third parties to foreign states. In determining
whether acts taken by the Archdiocese of Portland, the
Catholic Bishop of Chicago, and the Order of the Friar
Servants could be imputed to the Holy See for determining
jurisdiction under the FSIA, the Holy See court relied on First
National City Bank v. Banco Para el Comercio Exterior de
Cuba (“Bancec”), 462 U.S. 611 (1983). Bancec created a
presumption of separate status for liability purposes. Id. at
626–27. This presumption could be overcome “in two
instances: when ‘a corporate entity is so extensively
controlled by its owner that a relationship of principal and

        within the scope of his or her office, employment, or
        agency.

28 U.S.C. § 1605A(a)(1) (emphasis added).
                 SACHS V. REPUBLIC OF AUSTRIA                          45

agent is created,’[6] or when recognizing the separate status of
a corporation ‘would work fraud or injustice.’” Holy See,
557 F.3d at 1077–78 (quoting Bancec, 462 U.S. at 629).

    While Bancec dealt with questions of substantive liability
rather than jurisdiction, Holy See decided that the standard
announced in Bancec applied to jurisdictional questions as
well. See Holy See, 557 F.3d at 1079. Thus, a determination
of whether to attribute the actions of another entity to a
foreign state for jurisdictional purposes begins with a
presumption against such attribution. That presumption can
be rebutted if the other entity is the alter ego of the foreign
state or if failure to attribute the entity’s actions to the foreign
state “would work fraud or injustice.” Id. at 1077–78. Other
circuits have applied Bancec to jurisdictional issues as well.
See Transamerica Leasing, Inc. v. La Republica de
Venezuela, 200 F.3d 843, 848 (D.C. Cir. 2000); Arriba Ltd.
v. Petroleos Mexicanos, 962 F.2d 528, 533 (5th Cir. 1992).

    The standard from Holy See fits the statutory text well.
Holy See counsels in favor of reading “activity . . . by a
foreign state” to mean activity by a foreign state, its alter ego,
or an entity the recognition of whose separateness would

   6
     As will be discussed below, the Court used the term “agent” in a
different sense than the majority does. Courts have interpreted this prong
of the Bancec standard to refer to an “alter ego” analysis. See, e.g., Holy
See, 557 F.3d at 1080 (comparing the Bancec standard to an “‘alter ego’
or ‘piercing the corporate veil’” standard); Transamerica Leasing, Inc. v.
La Republica de Venezuela, 200 F.3d 843, 848 (D.C. Cir. 2000) (noting
that “in the case cited by the Supreme Court to illustrate the agency
exception, various corporations were allegedly operated as a ‘single
enterprise.’”).
46              SACHS V. REPUBLIC OF AUSTRIA

work fraud or injustice.7 Incorporation of the Bancec
standard has the considerable benefits of not rendering any
statutory terms superfluous and being capable of consistent
application throughout the FSIA. An interpretation of
“foreign state” that includes a foreign state’s alter ego would
not make any words in § 1605A superfluous. See supra Part
III.A.2.

    The majority purports to distinguish Holy See on the
ground that Bancec and Holy See, unlike this case, arose in
the context “of corporate affiliates.” Slip Op. at 18
(distinguishing “a corporate relationship” from “principles of
agency”). Even assuming the validity of this distinction, the
majority draws the wrong conclusion. That Holy See applies
a stringent alter ego test to the activity of corporate affiliates
does not suggest that we should apply a more lenient
authorized agent standard to the activity of non-affiliate
entities. If anything, the lack of an affiliate relationship
supports application of a more stringent test because a
corporate affiliate is more likely to have a close and
substantial relationship with its foreign state than another
entity is. That is borne out in this case: OBB may not have
even been aware that RPE existed before this lawsuit. Thus,
the majority’s “authorized agent” standard creates an
anomaly in our case law because it retains the Holy See
standard for affiliates but creates a much looser test for non-
affiliate entities that will often have fewer ties to the foreign
state.

  7
     How (or whether) this standard would apply to the actions of an
individual agent, rather than entity agent, need not be addressed in this
case. RPE is an entity, not an individual.
               SACHS V. REPUBLIC OF AUSTRIA                    47

    But the majority’s distinction between the corporate
affiliate context and the agency context is problematic for
another reason as well: courts applying the Bancec standard
have spoken expressly in terms of agency. In Bancec itself,
the Court described the alter ego analysis as relevant because
such extensive control creates “a relationship of principal and
agent.” Bancec, 462 U.S. at 629; see also Holy See, 557 F.3d
at 1079 (“[I]n applying the jurisdictional provisions of the
FSIA, courts will routinely have to decide whether a
particular individual or corporation is an agent of a foreign
state.”). Thus, at least in certain circumstances, we have held
that the Bancec standard is the method for determining
whether another entity is an agent of a foreign state. The
majority, therefore, cannot distinguish Holy See on the
ground that it applies to the actions of corporate affiliates
rather than agents.

    Of particular importance here is that the meaning of
“agent” or “agency” varies in different legal contexts. See
Holy See, 557 F.3d at 1080 (“‘Agent’ can have more than one
legal meaning.”). In Holy See, the court contrasted the
typical common law agency analysis with the first prong of
the Bancec standard. See id. (“The Bancec standard is in fact
most similar to the ‘alter ego’ or ‘piercing the corporate veil’
standards . . .”).

    The plaintiff in Holy See alleged a traditional agency
relationship as the basis for attributing the actions of others to
the Holy See. See id. (“Doe does directly allege in his
complaint that the corporations are ‘agents’ of the Holy
See.”); Pl.-Appellee/Cross-Appellant John V. Doe’s Principal
and Resp. Br., 2007 WL 923313, II.C.1 (“Appellants Catholic
Bishop, Archdiocese and Order, were the agents of Appellant
Holy See, acting in furtherance of the purposes of the the [sic]
48            SACHS V. REPUBLIC OF AUSTRIA

Holy See, doing the kind of acts they were engaged to
perform, and were motivated, at least in part, to further the
purposes of the Holy See.”). Nonetheless, the Holy See court
ruled that it could not “infer from the use of the word ‘agent’
that Doe [wa]s alleging the type of day-to-day control that
Bancec . . . require[s] to overcome the presumption of
separate juridical status.” Holy See, 557 F.3d at 1080. If a
common law agency relationship were all that is required for
the imputation of an agent’s actions to the foreign state,
surely the court would have treated Doe’s allegation
differently in Holy See. Thus, it is clear that the sort of
agency relationship that Bancec and Holy See required for the
imputation of actions to the foreign state (an alter ego
relationship, for example) differs significantly from the all-
authorized-agents standard adopted by the majority.

                              C

     Sachs simply cannot show that RPE’s actions are
attributable to OBB under the Bancec standard. The first
method of rebutting the presumption of separateness, the alter
ego analysis, certainly cannot apply on these facts. Far from
being the alter ego of OBB, RPE and Eurail are independent
companies with different managements from OBB. RPE may
be a subagent of Eurail, but Eurail is controlled by a group of
railways, not OBB alone. The second method of rebutting the
presumption of separateness—whether recognizing separate
existences would work fraud or injustice—certainly does not
suggest that the actions of RPE should be attributed to OBB.
In Bancec, the Court found such equitable prong applicable
because Bancec was attempting to recover money that would
directly benefit the Cuban government while simultaneously
arguing that its claim should not be subject to a set-off that
would have applied if the Cuban government sued directly.
              SACHS V. REPUBLIC OF AUSTRIA                   49

Bancec, 462 U.S. at 631–32. Here, OBB has not behaved in
a comparable way. OBB has not, for example, inconsistently
characterized RPE’s actions to its advantage; it has
consistently asserted that RPE’s actions cannot be attributed
to it.

    If there is any “injustice” at all from failing to impute
RPE’s actions to OBB, it stems from Sachs’ inability to sue
OBB in American courts. This, however, is not the sort of
injustice that validates treating RPE as if it were OBB. The
inability to sue in American courts is a natural result of
recognizing foreign sovereign immunity, the general rule and
policy of the FSIA. See Sachs v. Republic of Austria,
695 F.3d 1021, 1026 (9th Cir. 2012) (“Any injustice that
results is no greater than the mine-run of cases—jurisdiction
over a foreign state is, after all, ordinarily not available.”).

                               D

     The majority relies on Barkanic v. General
Administration of Civil Aviation of the People’s Republic of
China, 822 F.2d 11 (2d Cir. 1987), and Kirkham v. Societe
Air France, 429 F.3d 288 (D.C. Cir. 2005). These cases do
not analyze when the acts of agents can be attributed to a
foreign state. As acknowledged by the majority, see Slip Op.
at 14 n.5a, the parties in Barkanic and Kirkham did not
dispute that the relevant actions constituted activity of the
foreign state. See Barkanic, 822 F.2d at 13 (assuming
without discussion that a ticket sale by Pan American was
attributable to the defendant); Kirkham, 429 F.3d at 291–92
(noting that the “sole question” before the court related to the
“based upon” prong of the commercial-activity exception).
Although those courts “had an independent duty to assess
jurisdiction,” see Slip Op. at 14 n.5b, their decisions “do[ ]
50            SACHS V. REPUBLIC OF AUSTRIA

not stand for the proposition that no defect existed.” Arizona
Christian School Tuition Organization v. Winn, 131 S. Ct.
1436, 1448 (2011) (“When a potential jurisdictional defect is
neither noted nor discussed in a federal decision, the decision
does not stand for the proposition that no defect existed.”).

    The majority makes much of the possibility that, if its
reading were rejected, federal courts would not be able to
exercise jurisdiction over foreign states based on the actions
of travel agents. Slip Op. at 21–24. The majority’s concern
seems to stem from the idea that the lack of federal
jurisdiction would leave plaintiffs to sue abroad, a result the
majority describes as too “chaotic” for Congress to have
intended. Slip Op. at 24. But, the general rule for the FSIA
is that foreign states are immune from suit; there will be
many instances in which Americans who wish to sue foreign
sovereigns can only do so overseas. This is a result Congress
clearly intended in many instances, so it is hard to see why
the same result in this situation should strike the majority as
so “chaotic.”

    Because Sachs has not shown that RPE and OBB have a
relationship that rebuts the Bancec presumption of separate
status, I would affirm the district court’s dismissal for lack of
jurisdiction.

                               IV

     Even if the sale of the Eurail pass by RPE were
“commercial activity carried on . . . by the foreign state,”
sovereign immunity would still, at a minimum, bar Sachs’
strict liability claims because they are not “based upon” the
sale of the pass, as would be required for the commercial-
activity exception to apply. 28 U.S.C. § 1605(a)(2).
               SACHS V. REPUBLIC OF AUSTRIA                    51

Assuming the majority’s interpretation of this requirement is
correct, I agree that Sachs’ negligence and implied warranty
claims would be “based upon” the sale of the Eurail pass had
the sale been attributable to OBB. The Supreme Court has
clarified that the commercial activity in question, here the
sale of the Eurail pass, must be an “element[ ] of a claim that,
if proven, would entitle a plaintiff to relief under his theory of
the case.” Saudi Arabia v. Nelson, 507 U.S. 349, 357 (1993).
The majority understands this to mean that a claim is based
upon commercial activity if that activity will establish one
element of the claim. But still, a mere connection between
the claim and the commercial activity is insufficient. Sun v.
Taiwan, 201 F.3d 1105, 1110 (9th Cir. 2000) (citing Nelson,
507 U.S. at 362).

     The majority believes that Sachs’ negligence claim is
“based upon” the sale of the Eurail pass because the sale
evidences that OBB, as a common carrier, owed a duty of
care to Sachs, a passenger. Slip Op. at 29–31. This strikes
me as a proper application of the majority’s rule; however,
the majority also concludes that Sachs’ other claims are
“based upon” the sale of the Eurail pass because the sale was
the transaction necessary for an implied warranty claim or
strict liability claim. Slip Op. at 33.

    This theory inappropriately lumps together Sachs’ strict
liability claims and implied warranty claims. While the
majority is correct that both types of claims center on
“attributing liability based on the sale of a product into the
market,” Slip Op. at 33, there is a crucial difference between
them. Strict liability claims do not require proof that the
plaintiff entered a transaction with the defendant. Greenman
v. Yuba Power Products, Inc., 377 P.2d 897 (Cal. 1963),
which the majority relies on to explain California law on
52             SACHS V. REPUBLIC OF AUSTRIA

strict liability, discusses “the abandonment of the requirement
of a contract between” the manufacturer and the plaintiff. Id.
at 901; see also Restatement (Third) of Torts: Products
Liability § 1 cmt a (1998) (“Strict liability in tort for
defectively manufactured products merges the concept of
implied warranty, in which negligence is not required, with
the tort concept of negligence, in which contractual privity is
not required.”).

    While the majority claims that Sachs’ strict liability claim
requires her to prove that OBB was a “seller,” Slip Op. at 33,
California cases suggest that a strict liability plaintiff need not
prove that the defendant is a seller. See Price v. Shell Oil
Co., 466 P.2d 722, 726 (Cal. 1970) (“[W]e can perceive no
substantial difference between sellers of personal property
and non-sellers, such as bailors and lessors. In each instance,
the seller or non-seller places [an article] on the market,
knowing that it is to be used without inspection for defects.”)
(second alteration in original) (internal quotation marks
omitted); Greenman, 377 P.2d at 901 (“To establish the
manufacturer’s liability it was sufficient that plaintiff proved
that he was injured while using the Shopsmith in a way it was
intended to be used as a result of a defect in design and
manufacture of which plaintiff was not aware that made the
Shopsmith unsafe for its intended use.”) Under California
law, it appears that OBB’s provision of train service and
Sachs’ use of it are sufficient to subject OBB to strict
liability. Therefore, Sachs has not established that she must
prove that OBB was a “seller” in order to prevail on her strict
liability claim.

    Because contractual privity is not an element of Sachs’
strict liability claims, they are not “based upon” the sale by
RPE, the only relevant commercial activity. Sachs, therefore,
              SACHS V. REPUBLIC OF AUSTRIA                   53

may not invoke the commercial-activity exception to
overcome OBB’s sovereign immunity. Even if RPE’s sale of
the Eurail pass to Sachs were attributable to OBB, the
majority should affirm the district court insofar as it
dismissed the strict liability claims for lack of jurisdiction.

                               V

     For the foregoing reasons, I would affirm the district
court’s dismissal for lack of jurisdiction. Because RPE’s sale
of the Eurail pass is not attributable to OBB, Sachs has not
alleged commercial activity “by the foreign state.” Indeed,
even if the majority’s theory of attribution were valid, the
strict liability claims would still need to be dismissed because
they are not “based upon” the sale to Sachs in the United
States.

Chief Judge KOZINSKI, dissenting:

    I agree with Judge O’Scannlain that a foreign sovereign
doesn’t engage in commercial activity in the United States
when a subagent over which it exercises no direct control
sells tickets for passage on a common carrier wholly owned
by that sovereign. But there is another, simpler way to affirm
the district court. Because plaintiff’s claim arises from events
that transpired entirely in Austria, it isn’t “based upon”
commercial activity carried on in the United States.
28 U.S.C. § 1605(a)(2). This would be true even if Austria
were itself selling train tickets from a kiosk in Times Square.

   The majority holds that all of plaintiff’s claims are based
on domestic commercial activity, relying on our cases
54            SACHS V. REPUBLIC OF AUSTRIA

requiring that only “‘an element’” of the claim consist of such
activity. Maj. op. at 28 (quoting Sun v. Taiwan, 201 F.3d
1105, 1109 (9th Cir. 2000)). But an en banc court can
overrule circuit law; in fact, that’s the principal reason for
taking a case en banc. See Atonio v. Wards Cove Packing
Co., 810 F.2d 1477, 1479 (9th Cir. 1987) (en banc). Because
these earlier cases conflict with Supreme Court precedent, we
should take the opportunity to sweep them aside.

    The Supreme Court has addressed what it means for a
claim to be “based upon” commercial activity only once. In
Saudi Arabia v. Nelson, 507 U.S. 349 (1993), the Court
observed that “the phrase 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.” Id. at 357. Nelson
emphasized the limited scope of its holding: “We do not
mean to suggest that the first clause of § 1605(a)(2)
necessarily requires that each and every element of a claim be
commercial activity by a foreign state, and we do not address
the case where a claim consists of both commercial and
sovereign elements.” Id. at 358 n.4. Some of our cases have
misread this holding—that a claim can be based upon
commercial activity even if proving that activity won’t
establish every element of the claim—for an endorsement of
the converse proposition—that a claim is based upon
commercial activity so long as proving that activity will
establish at least one element of the claim. See, e.g., Sun,
201 F.3d at 1109; Sugimoto v. Exportadora de Sal, S.A. de
C.V., 19 F.3d 1309, 1311 (9th Cir. 1994).

   This broad interpretation of the “based upon” requirement
runs contrary to our “background rule that foreign states are
immune from suit,” subject only to “narrow exceptions.”
Peterson v. Islamic Republic of Iran, 627 F.3d 1117, 1125
              SACHS V. REPUBLIC OF AUSTRIA                   55

(9th Cir. 2010). It also invites plaintiffs’ lawyers to
manufacture jurisdiction through artful pleading.

    An action can frequently be brought under multiple
theories, as plaintiff’s negligence, breach-of-contract and
product-liability claims amply demonstrate. Each of these
theories accords plaintiffs plenty of opportunity to find at
least one element involving domestic commercial conduct.
For example, the Supreme Court observed in Sosa v. Alvarez-
Machain, 542 U.S. 692 (2004), that “‘[i]t will virtually
always be possible to assert that the negligent activity that
injured the plaintiff [abroad] was the consequence of faulty
training, selection or supervision . . . in the United States.’”
Id. at 702 (second alteration in original) (quoting Beattie v.
United States, 756 F.2d 91, 119 (D.C. Cir. 1984) (Scalia, J.,
dissenting)). Sosa considered a claim under the Federal Tort
Claims Act (FTCA) arising out of plaintiff’s abduction in
Mexico. Although the Court recognized that negligent acts
or omissions during the planning stages in the United States
may have contributed to the injury, this was not sufficient to
overcome the FTCA’s exclusion of “[a]ny claim arising in a
foreign country.” 28 U.S.C. § 2680(k).

    This mode of analysis applies with even greater force
when we are dealing with suits against foreign sovereigns.
Earlier this year, the Supreme Court cited “the danger of
unwarranted judicial interference in the conduct of foreign
policy” in holding that the Alien Tort Statute did not
automatically apply to violations of the law of nations that
occur within the territory of a foreign sovereign. Kiobel v.
Royal Dutch Petroleum Co., 133 S. Ct. 1659, 1664 (2013).
Similarly, in Morrison v. Nat’l Australia Bank Ltd., 130 S.
Ct. 2869 (2010), the Court interpreted Section 10(b) of the
Securities Exchange Act of 1934 as inapplicable to
56            SACHS V. REPUBLIC OF AUSTRIA

transactions that neither occurred in the United States nor
involved securities listed on U.S. exchanges. Id. at 2886.
Although the government argued that the term “in connection
with the purchase or sale of any security registered on a
national securities exchange” should be read more broadly,
the Court reasoned that “it is a rare case of prohibited
extraterritorial application that lacks all contact with the
territory of the United States. But the presumption against
extraterritorial application would be a craven watchdog
indeed if it retreated to its kennel whenever some domestic
activity is involved in the case.” Id. at 2884 (emphasis in
original).

    The Nelson Court recognized the perils of an overly
permissive reading of the FSIA’s “based upon” requirement
when it rejected plaintiff’s failure-to-warn claim as a
“semantic ploy” designed to dress up what was, at its heart,
an intentional tort claim based on conduct that occurred
exclusively in Saudi Arabia. Nelson, 507 U.S. at 363. It
didn’t dispute that the commercial activity would prove one
element of a failure-to-warn claim, but recognized that “[t]o
give jurisdictional significance to this feint of language would
effectively thwart the Act’s manifest purpose to codify the
restrictive theory of foreign sovereign immunity.” Id.

    Our case illustrates the expansive sweep of the majority’s
approach. Plaintiff had a train ticket to travel from Austria to
the Czech Republic. She was injured due to defendant’s
alleged negligence when she tried to board. The injury and
any negligence occurred in Austria. But, because plaintiff
happened to buy her ticket online from a vendor in
Massachusetts, a federal court in California now asserts
power to hale the Austrian government before it and make it
defend against a claim based on facts that occurred in Austria.
              SACHS V. REPUBLIC OF AUSTRIA                   57

This makes as much sense as forcing Mrs. Palsgraf to litigate
her case in Vienna.

    As the Sosa Court recognized with respect to the FTCA,
a critical element in this analysis is proximate causation, with
jurisdiction hinging on whether “the act or omission [in the
United States] was sufficiently close to the ultimate injury,
and sufficiently important in producing it, to make it
reasonable to follow liability back to the [domestic]
behavior.” Sosa, 542 U.S. at 703. “[U]nderstanding that
California planning was a legal cause of the harm in no way
eliminates the conclusion that the claim here arose from harm
proximately caused by acts” abroad. Id. at 704. Because
plaintiff hasn’t shown a sufficient nexus between her
purchase and the injury, we have no jurisdiction over Austria.
I would affirm the district court on that basis. See Weiser v.
United States, 959 F.2d 146, 147 (9th Cir. 1992) (“Our
review is not limited to a consideration of the grounds upon
which the district court decided the issues; we can affirm the
district court on any grounds supported by the record.”).