Yegiazaryan v. Smagin

The RICO Act provides a private right of action to “any person injured in his business or property by reason of a violation of” RICO’s substantive provisions. 18 U.S.C. §1964(c).

Between 2003-2009, Yegiazaryan allegedly committed fraud against Smagin by stealing shares in a joint real estate venture in Moscow. In the underlying case, Smagin filed an enforcement action in California for the award won through arbitration against Yegiazaryan for misappropriation of his real estate investment. Smagin subsequently brought a civil RICO suit in 2020, arguing that Yegiazaryan intended to frustrate Smagin’s collection on the California judgment through a pattern of racketeering acts. The District Court dismissed the complaint on the ground that Smagin had failed to adequately plead a domestic injury, after placing considerable weight on the fact that Smagin is a resident and citizen of Russia. The Ninth Circuit reversed and rejected petitioner’s request to follow the Seventh Circuit’s residency-based domestic-injury approach, which locates a plaintiff’s injury at the plaintiff’s residence. Smagin argued for a contextual approach that considers all case-specific facts bearing on where the injury arises, not just where it is felt. The Supreme Court agreed that the determination of whether a plaintiff alleged a domestic injury is a context-specific inquiry that turns largely on the particular facts alleged in the complaint, which is most consistent with the Court’s decision in RJR Nabisco.  Additionally, the Court found that Smagin’s interests in the California judgment against Yegiazaryan, a California resident, were directly injured by racketeering activity either taken in California or directed from California, with the aim and effect of subverting Smagin’s rights to execute on that judgment in California thus demonstrating a domestic injury. The Court affirmed the judgment of the Ninth Circuit and remanded for further proceedings.