# Yegiazaryan v. Smagin

Note: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
YEGIAZARYAN, AKA EGIAZARYAN v. SMAGIN ET AL. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No. 22–381. Argued April 25, 2023—Decided June 22, 2023
Respondent Vitaly Smagin won a multimillion dollar arbitration award in 2014 against petitioner Ashot Yegiazaryan stemming from the misappropriation of investment funds in a joint real estate venture in Moscow. Because Yegiazaryan has lived in California since 2010, Smagin, who lives in Russia, filed suit to confirm and enforce the award in the Central District of California pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The District Court initially froze Yegiazaryan’s California assets before finally entering judgment against him. The District Court also entered several postjudgment orders barring Yegiazaryan and those acting at his direction from preventing collection on the judgment. While the action was ongoing, Yegiazaryan himself was awarded a multimillion dollar arbitration award in an unrelated matter and sought to avoid the District Court’s asset freeze by concealing the funds, which were ultimately transferred to a bank account with petitioner CMB Monaco.
Held: A plaintiff alleges a domestic injury for purposes of §1964(c) when the circumstances surrounding the injury indicate it arose in the United States. Pp. 5–14.
(a) The “domestic-injury” requirement for private civil RICO suits stems from RJR Nabisco, a case in which the Court was asked whether RICO applies extraterritorially. To answer the question, the Court applied the presumption against extraterritoriality, a canon of construction that provides “[a]bsent clearly expressed congressional intent to the contrary, federal laws will be construed to have only domestic application.” 579 U. S., at 335. Guided by concerns of international comity and the reasonable discernment of congressional intent, the Court distilled the presumption against extraterritoriality into two steps. The first asks “whether the statute gives a clear, affirmative indication that it applies extraterritorially.” Id., at 337. If the answer is “yes,” the presumption is rebutted, and the test ends. If the answer is “no,” the inquiry proceeds and step two asks whether the case involves a domestic application of the statute, which is assessed “by looking to the statute’s ‘focus.’ ” Ibid. Applying this framework, the Court assessed the extraterritoriality of RICO’s private right of action, §1964(c), and determined that it does not overcome the presumption at step one. Proceeding to step two, the Court held that “[a] private RICO plaintiff … must allege and prove a domestic injury to its business or property.” Id., at 346. Because the RJR Nabisco plaintiffs were not seeking redress for domestic injuries, the Court did not have occasion to explain what constitutes a “domestic injury.” Pp. 5–7.
(c) The Court agrees with Smagin and the Ninth Circuit that the domestic-injury inquiry is context specific and turns largely on the facts alleged in the complaint. Specifically, courts should look to the circumstances surrounding the alleged injury to assess whether it arose in the United States. Here, that means looking to the nature of the alleged injury, the racketeering activity that directly caused it, and the injurious aims and effects of that activity.
The context-specific approach is most consistent with RJR Nabisco. The Court’s statements in RJR Nabisco that the domestic-injury requirement “does not mean that foreign plaintiffs may not sue under RICO,” 579 U. S., at 353, n. 12, and that “application of [the] rule in any given case will not always be self-evident,” point toward a case-specific inquiry that considers the particular facts surrounding the alleged injury, id., at 354. That approach also better reflects the requirement’s origin in step two, which assesses whether there is a domestic application of a statute by looking to the statute’s focus. RJR Nabisco implied that §1964(c)’s focus is injuries in “business or property by reason of a violation of” RICO’s substantive provisions. So understood, §1964(c)’s focus is not on the isolated injury but on the injury as a product of racketeering activity. This requires courts to look to the circumstances surrounding the injury to see if those circumstances sufficiently ground the injury in the United States. Pp. 8–10.
(d) The circumstances surrounding Smagin’s injury make clear that the injury arose in the United States. Smagin’s alleged injury is his inability to collect his judgment. Much of the alleged racketeering activity that caused that injury occurred in the United States. And while some of Yegiazaryan’s scheme to avoid collection occurred abroad, the scheme was directed toward frustrating the California judgment. Further, the injurious effects of the racketeering activity largely manifested in California. Smagin obtained a judgment in California where Yegiazaryan lives, and the rights provided by that judgment exist only in California. The alleged RICO scheme thwarted those rights, thereby undercutting the orders of the California District Court and Smagin’s efforts to collect on Yegiazaryan’s assets in California. Under a contextual approach, Smagin’s allegations suffice to state a domestic injury. Pp. 10–11.
37 F. 4th 562, affirmed and remanded.
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