Yegiazaryan v. Smagin, 599 U.S. ____ (June 22, 2023).
Opinion 2023 California RICO 2022CaliforniaSmaginCivilRICO
Yegiazaryan v. Smagin, 599 U.S. ____ (June 22, 2023).
Supreme Court of the United States.
Ashot YEGIAZARYAN, aka Ashot Egiazaryan, Petitioner
v.
Vitaly Ivanovich SMAGIN, et al.
CMB Monaco, fka Compagnie Monegasque de Banque, Petitioner
v.
Vitaly Ivanovich Smagin, et al.
No. 22-381, No. 22-383
Argued April 25, 2023
Decided June 22, 2023fn
fn
Together with No. 22–383, CMB Monaco, fka Compagnie Monegasque de Banque v. Smagin et al., also on certiorari to the same court.
Chief Justice Roberts, and Justices Kagan, Kavanaugh, Barrett, and Jackson, joined.
Justice Alito filed a dissenting opinion, in which Justice Thomas joined, and in which Justice Gorsuch joined as to Part I.
Syllabusfn
fh
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, 26 S.Ct. 282, 50 L.Ed. 499.
PAGE_1 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.
In 2020, Smagin filed this civil suit under the Racketeer Influenced and Corrupt Organizations Act (RICO), which provides a private right of action to “[a]ny person injured in his business or property by reason of a violation of” RICO's substantive provisions. 18 U.S.C. § 1964(c). As relevant, Smagin alleges Yegiazaryan and others worked together to frustrate Smagin's collection on the California judgment through a pattern of wire fraud and other RICO predicate racketeering acts, including witness tampering and obstruction of justice. The District Court dismissed the complaint on the ground that Smagin had failed to plead a “domestic injury” as required by RJR Nabisco, Inc. v. European Community, 579 U.S. 325, 346, 136 S.Ct. 2090, 195 L.Ed.2d 476. Smagin's Russian residency weighed heavily in the District Court's decision. The Ninth Circuit reversed. Rejecting the District Court's rigid, residency-based approach to the domestic-injury inquiry, the Ninth Circuit instead applied a context-specific approach and concluded that Smagin had pleaded a domestic injury because he had alleged that his efforts to execute on a California judgment in California against a California resident were foiled by a pattern of racketeering activity that largely occurred in California and was designed to subvert enforcement of the judgment there.
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. –––– – ––––.
(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, 136 S.Ct. 2090. 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, 136 S.Ct. 2090. 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, 136 S.Ct. 2090. 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. –––– – ––––.
PAGE_2 (b) The parties advance competing approaches to the domestic-injury inquiry. Petitioners urge a bright-line rule that locates a plaintiff's injury at the plaintiff's residence. They argue that because a private RICO action remedies only economic injuries and a plaintiff necessarily suffers that injury at its residence where the economic injury is felt, any cognizable § 1964(c) injury is necessarily suffered at the plaintiff's residence. Alternatively, petitioners argue that at least when intangible property is concerned, common-law principles locate the intangible property at the plaintiff's residence, such that the injury is also located there. Smagin defends a contextual approach that considers all case-specific facts bearing on where the injury arises. Pp. –––– – ––––.
(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, 136 S.Ct. 2090, 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, 136 S.Ct. 2090. 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. –––– – ––––.
(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. –––– – ––––.
(e) Petitioners argue that a contextual approach is inconsistent with certain common-law principles governing “the situs” of injuries to intangible property. Specifically, petitioners point to the Restatement (First) of Conflict of Laws—under which fraud is typically deemed felt at the plaintiff's residence—and to the principle of mobilia sequuntur personam—which generally locates intangible property at the domicile of its owner—and argue that both principles locate Smagin's alleged injury at his residence. Petitioners fail both to explain the relevance of these principles and to show that they were principles settled at common law at the time of RICO's enactment. The core problem with petitioners’ reliance on legal fictions concerning the situs of injuries in other areas of the law is that the justifications of that approach do not necessarily translate to the presumption against extraterritoriality, with its distinctive concerns for comity and discerning congressional meaning. Indeed, petitioners’ approach generates results counter to comity and far afield from any reasonable interpretation of what qualifies as a domestic application of § 1964(c). Consider two U. S. businesses targeted by racketeering activity, one owned by a U. S. resident and one owned by someone living abroad. There is no evidence that Congress intended that only the former business owner can bring a § 1964(c) suit, especially since doing so runs the risk of generating international discord. Finally, petitioners argue that a contextual approach is unworkable because it does not provide a bright-line rule. Such concerns about a fact-intensive test cannot displace congressional policy choices, where a more nuanced test is true to the statute's meaning. Pp. –––– – ––––.
PAGE_3 37 F.4th 562, affirmed and remanded.
SOTOMAYOR, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KAGAN, KAVANAUGH, BARRETT, and JACKSON, JJ., joined. ALITO, J., filed a dissenting opinion, in which THOMAS, J., joined, and in which GORSUCH, J., joined as to Part I.
Attorneys and Law Firms
Vincent Levy, New York, NY, for Petitioners.
Nicholas O. Kennedy, Dallas, TX, for Respondents.
Michael C. Tu, Counsel of Record, Peter J. Brody, Cooley LLP,Los Angeles, CA, for petitioner CMB Monaco, fka Compagnie Monégasque de Banque.
Vincent Levy, Counsel of Record, Gregory Dubinsky, Kevin D. Benish, Brian T. Goldman, Holwell Shuster & Goldberg LLP, New York, NY, for petitioner, Ashot Yegiazaryan, aka Ashot Egiazaryan.
Alexander D. Burch, Counsel of Record, Baker & McKenzie LLP, Houston, Texas, Nicholas O. Kennedy, Baker & McKenzie LLP, Dallas, TX, for respondent Vitaly Smagin.
Opinion
Justice SOTOMAYOR delivered the opinion of the Court.
Respondent Vitaly Smagin holds a multimillion dollar California judgment against petitioner Ashot Yegiazaryan, who lives in California. Smagin, who resides in Russia, filed suit in the Central District of California alleging that Yegiazaryan, with the assistance of petitioner CMB Monaco (formerly Compagnie Monégasque de Banque), engaged in a pattern of criminal activity, predominantly in and targeted at California, to prevent him from collecting on his California judgment, in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961–1968. The District Court dismissed the complaint after concluding that Smagin had failed to allege a “domestic injury,” as required by RJR Nabisco, Inc. v. European Community, 579 U.S. 325, 334, 136 S.Ct. 2090, 195 L.Ed.2d 476 (2016). The Ninth Circuit reversed, concluding that Smagin had alleged a domestic injury. This Court agrees with the Ninth Circuit.
I
A
The essential facts as alleged by Smagin are as follows. From 2003 to 2009, Yegiazaryan committed fraud against Smagin, stealing his shares in a joint real estate venture in Moscow. To avoid a Russian criminal indictment for that fraud, Yegiazaryan fled to a mansion in Beverly Hills in 2010, where he has lived ever since. In 2014, Smagin, who lives in Russia, won an arbitration award in London against Yegiazaryan for the misappropriation of his real estate investment (London Award). Yegiazaryan refused to pay that award, which is over $84 million.
Seeking to collect, Smagin filed an enforcement action in the Central District of California to confirm and enforce the London Award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U. S. T. 2517, T. I. A. S. No. 6997, as implemented by 9 U.S.C. §§ 201–208. The District Court issued a temporary protective order, followed by a preliminary injunction, freezing Yegiazaryan's California assets.
In his application for injunctive relief, Smagin informed the District Court that Yegiazaryan had been granted a substantial arbitration award in an unrelated proceeding involving Yegiazaryan and yet another Russian businessman, Suleymon Kerimov (Kerimov Award). At the time, no funds had yet been paid to Yegiazaryan in satisfaction of that award, but Smagin was concerned that when they were paid, Yegiazaryan would take steps to transfer the money out of Smagin's reach.
PAGE_4 Smagin's concerns were justified. In May 2015, Yegiazaryan received a $198 million settlement in satisfaction of the Kerimov Award. To avoid the District Court's asset freeze, Yegiazaryan accepted the money through the London office of an American law firm headquartered in Los Angeles. Yegiazaryan then created “a complex web of offshore entities to conceal the funds,” App. 56a, and ultimately transferred the funds to a bank account with petitioner CMB Monaco. Yegiazaryan also directed those in his inner circle to file fraudulent claims against him in foreign jurisdictions, which he would not oppose, in an attempt to obtain sham judgments that would encumber the $198 million, thereby blocking Smagin's access to it.
Around the same time, Yegiazaryan was hiding his assets in the United States through a system of “shell companies” owned by family members. Id., at 61a. This included a Nevada company, which was owned by his brother and created “for the purpose of sheltering [Yegiazaryan's] U. S. assets from his creditors,” including Smagin. Id., at 44a.
Smagin did not learn about the $198 million settlement, Yegiazaryan's efforts to hide it, or the U. S. shell companies until February 2016, when Smagin was granted leave to intervene in Yegiazaryan's California divorce proceedings. The next month, the California District Court in the London Award enforcement action granted Smagin's motion for summary judgment on his petition for confirmation of the Award and entered judgment against Yegiazaryan for $92 million, including interest. The court also issued several postjudgment orders barring Yegiazaryan and those acting at his direction from preventing collection on the judgment.
For failing to comply with those orders, the District Court subsequently found Yegiazaryan in contempt of court. To avoid having to comply with the contempt order, however, Yegiazaryan falsely claimed he was too ill, and submitted a forged doctor's note to the District Court. When Smagin notified Yegiazaryan that he would be seeking to depose the doctor in question, who resides in California, Yegiazaryan used “intimidation, threats, or corrupt persuasion,” id., at 82a, to get the doctor to avoid service of the subpoena.
B
At issue here is a civil RICO suit that Smagin brought in 2020 based on the allegations just described. RICO provides a private right of action to “[a]ny person injured in his business or property by reason of a violation of ” RICO's substantive provisions. 18 U.S.C. § 1964(c). Invoking that cause of action, Smagin sued Yegiazaryan and CMB Bank (the two petitioners here), as well as 10 other defendants, in the Central District of California.fn1 The complaint asserts two claims against each: a substantive RICO violation, § 1962(c), and a RICO conspiracy claim, § 1962(d). The thrust of Smagin's allegations is that the defendants worked together under Yegiazaryan's direction to frustrate Smagin's collection on the California judgment through a pattern of wire fraud and other RICO predicate racketeering acts, including witness tampering and obstruction of justice. For these violations, Smagin seeks not only actual damages “no less than $130 million,” App. 100a, but also attorney's fees and treble damages as authorized under RICO. See § 1964(c).
fn1
Only Yegiazaryan and CMB Bank petitioned for this Court's review. The other defendants include three family members (Suren Yegiazaryan, Artem Yegiazaryan, and Stephan Yegiazaryan); an alleged Russian accomplice (Vitaly Gogokhia); French, Russian, and Luxembourger individuals who have been administrators of the trust holding the $198 million (Natalia Dozortseva, Murielle Jouniaux, and Alexis Gaston Thielen); an allegedly corrupt Russian bankruptcy officer (Ratnikov Evgeny Nikolaevich); and a registered company hired by Yegiazaryan (Prestige Trust Company, Ltd.) and its U. S. lawyer (H. Edward Ryals).
PAGE_5 The District Court dismissed the complaint on the ground that Smagin had “fail[ed] to adequately plead a domestic injury,” id., at 31a, as required by this Court's decision in RJR Nabisco. See 579 U.S., at 346, 136 S.Ct. 2090 (“A private RICO plaintiff therefore must allege and prove a domestic injury to its business or property”). The District Court “place[d] great weight on the fact that Smagin is a resident and citizen of Russia and therefore experiences the loss from his inability to collect on his judgment in Russia.” App. 27a (internal quotation marks and alterations omitted).
The Ninth Circuit reversed. It rejected petitioners’ invitation to follow the domestic-injury approach of the Seventh Circuit, “which has adopted a rigid, residency-based test for domestic injuries involving intangible property,” such as a judgment. 37 F.4th 562, 568, 570 (2022) (citing Armada (Sing.) PTE Ltd. v. Amcol Int'l Corp., 885 F.3d 1090 (2018)). Under the Seventh Circuit's rule, which locates an injury to intangible property at the plaintiff ’s residence, Smagin could not allege a domestic injury because he resides in Russia. See Armada, 885 F.3d, at 1094. The Ninth Circuit instead adopted a “context-specific” approach to the domestic-injury inquiry, which it found consistent with the approaches of the Second and Third Circuits. 37 F.4th, at 568–570; see Bascuñán v. Elsaca, 874 F.3d 806, 809 (CA2 2017); Humphrey v. GlaxoSmithKline PLC, 905 F.3d 694, 696 (CA3 2018). Applying that approach, the Ninth Circuit concluded that Smagin had pleaded a domestic injury because he had alleged that his efforts to execute on a California judgment in California against a California resident were foiled by a pattern of racketeering activity that largely “occurred in, or was targeted at, California” and was “designed to subvert” enforcement of the judgment in California. 37 F.4th, at 567–568.
This Court granted certiorari to resolve the Circuit split. 598 U. S. ––––, 143 S.Ct. 645, ––– L.Ed.2d –––– (2023). Because a context-specific inquiry is most consistent with this Court's decision in RJR Nabisco, and because the context here makes clear Smagin has alleged a domestic injury, the Court affirms.
II
A
The “domestic-injury” requirement for private civil RICO suits stems from this Court's decision in RJR Nabisco. There, the question before the Court was whether RICO applies extraterritorially. To answer that question, the Court employed the presumption against extraterritoriality, which “represents a canon of construction, or a presumption about a statute's meaning, rather than a limit upon Congress's power to legislate.” Morrison v. National Australia Bank Ltd., 561 U.S. 247, 255, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010). The presumption provides that “[a]bsent clearly expressed congressional intent to the contrary, federal laws will be construed to have only domestic application.” RJR Nabisco, 579 U.S., at 335, 136 S.Ct. 2090.
Dual rationales support the presumption against extraterritoriality. On the one hand, it reflects concerns of international comity insofar as it “ ‘serves to protect against unintended clashes between our laws and those of other nations which could result in international discord.’ ” Kiobel v. Royal Dutch Petroleum Co., 569 U.S. 108, 115, 133 S.Ct. 1659, 185 L.Ed.2d 671 (2013) (quoting EEOC v. Arabian American Oil Co., 499 U.S. 244, 248, 111 S.Ct. 1227, 113 L.Ed.2d 274 (1991)). On the other hand, the presumption is informed by “the commonsense notion that Congress generally legislates with domestic concerns in mind.” Smith v. United States, 507 U.S. 197, 204, n. 5, 113 S.Ct. 1178, 122 L.Ed.2d 548 (1993). In fact, consistent application of the presumption “preserv[es] a stable background against which Congress can legislate with predictable effects.” Morrison, 561 U.S., at 261, 130 S.Ct. 2869.
PAGE_6 RJR Nabisco distilled the presumption against extraterritoriality into two steps. The first asks “whether the statute gives a clear, affirmative indication that it applies extraterritorially.” 579 U.S., at 337, 136 S.Ct. 2090. If the answer is “yes,” then the presumption is rebutted, obviating any need to proceed to step two. If the presumption is not rebutted, however, then step two asks whether the case involves a domestic application of the statute, which is assessed “by looking to the statute's ‘focus.’ ” Ibid.fn2
fn2
“While ‘it will usually be preferable’ to begin with step one, courts have the discretion to begin at step two ‘in appropriate cases. ” WesternGeco LLC v. ION Geophysical Corp., 585 U. S. ––––, ––––, 138 S.Ct. 2129, 2136, 201 L.Ed.2d 584 (2018) (citing RJR Nabisco, 579 U.S., at 338, n. 5, 136 S.Ct. 2090).
Applying this framework, the Court assessed the extraterritoriality of two of RICO's substantive provisions and, as relevant here, its private cause of action. As to the substantive provisions, the Court held at step one that they apply extraterritorially to the same extent that RICO's predicates do, making it unnecessary to proceed to step two. Id., at 340, 136 S.Ct. 2090. Regarding RICO's private right of action, § 1964(c), however, the Court's conclusion was different. The Court determined that § 1964(c) does not overcome the presumption at step one because there is no “clear indication that Congress intended to create a private right of action for injuries suffered outside of the United States.” Id., at 349, 136 S.Ct. 2090. “If anything,” the Court reasoned, by “cabining” the private cause of action to “injur[ies] to ‘business or property,’ ” “Congress signaled that the civil remedy is not coextensive with § 1962's substantive prohibitions.” Id., at 350, 136 S.Ct. 2090. Accordingly, in reference 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, 136 S.Ct. 2090.
In announcing this “domestic-injury” requirement, the Court did not have occasion to explain what constitutes a “domestic-injury,” because the plaintiffs in RJR Nabisco had stipulated that they were not seeking redress for domestic injuries. Id., at 354, 136 S.Ct. 2090. The question now before the Court is whether Smagin has alleged a domestic injury.
B
The parties advance competing approaches to the domestic injury inquiry. Petitioners urge the Court to adopt a bright-line rule, akin to the Seventh Circuit's, that locates a plaintiff ’s injury at the plaintiff ’s residence. Petitioners advance two different versions of this rule.
As their primary position, petitioners argue that any injury cognizable under § 1964(c) is necessarily suffered at the plaintiff ’s residence because “the private cause of action remedies only economic injuries, and a plaintiff necessarily suffers that injury at its residence” where the economic injury is felt. Brief for Petitioners 2. In the alternative, petitioners argue that, at least when the alleged injury involves intangible property, such as the judgment here, relevant common-law principles locate the intangible property at the plaintiff ’s place of residence, such that the injury is also located there. Id., at 2–3, 43–44. On either version of petitioners’ rule, Smagin cannot allege a domestic injury because he lives in Russia.
Smagin, in contrast, defends a contextual approach that considers all case-specific facts bearing on where the injury “arises,” not just where it is “felt.” Brief for Respondent 9. In the context of this suit, Smagin argues that he has stated a domestic injury because he has alleged that he was injured in his ability to enforce a California judgment, against a California resident, through racketeering acts that were largely “designed and carried out in California” and were “targeted at California.” Id., at 3, 21.
C
PAGE_7 The Court agrees with Smagin and the Ninth Circuit that “determining whether a plaintiff has alleged a domestic injury [for purposes of RICO] is a context-specific inquiry that turns largely on the particular facts alleged in a complaint.” 37 F.4th, at 570. Specifically, courts should look to the circumstances surrounding the alleged injury to assess whether it arose in the United States. In this suit, that means looking to the nature of the alleged injury, the racketeering activity that directly caused it,fn3 and the injurious aims and effects of that activity.
fn3
The alleged RICO violation must have proximately caused the injury in order for the plaintiff to be able to sue under § 1964(c). See Holmes v. Securities Investor Protection Corporation, 503 U.S. 258, 268, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992); Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 457–458, 126 S.Ct. 1991, 164 L.Ed.2d 720 (2006) (describing the proximate causation requirement as a “directness requiremen[t]”).
This approach to the domestic-injury requirement is most consistent with RJR Nabisco. There, the Court clarified that its domestic-injury requirement “does not mean that foreign plaintiffs may not sue under RICO.” 579 U.S., at 353, n. 12, 136 S.Ct. 2090. Similarly, the Court explained that “application of [the domestic-injury] rule in any given case will not always be self-evident, as disputes may arise as to whether a particular alleged injury is ‘foreign’ or ‘domestic.’ ” Id., at 354, 136 S.Ct. 2090. These remarks point toward a case-specific inquiry that considers the particular facts surrounding the alleged injury. Petitioners’ bright-line rule, in contrast, dispenses with any such subtlety. It makes the location of the plaintiff ’s residence determinative, thus barring all foreign plaintiffs, exactly as RJR Nabisco said it was not doing.
A contextual approach to the domestic-injury requirement also better reflects the requirement's origin in step two of the extraterritoriality framework, which assesses whether there is a domestic application of a statute by looking to the statute's focus. RJR Nabisco implied that the focus of § 1964(c) is injuries in “business or property by reason of a violation of [RICO's substantive provisions].” § 1964(c). This focus makes sense because, in the context of RICO, “the compensable injury necessarily is the harm caused by predicate acts sufficiently related to constitute a pattern, for the essence of the violation is the commission of those acts in connection with the conduct of an enterprise.” Sedima, S. P. R. L. v. Imrex Co., 473 U.S. 479, 497, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985). So understood, § 1964(c)’s focus is on the injury, not in isolation, but as the product of racketeering activity. Thus, in assessing whether there is a domestic injury, courts should engage in a case-specific analysis that looks to the circumstances surrounding the injury. If those circumstances sufficiently ground the injury in the United States, such that it is clear the injury arose domestically, then the plaintiff has alleged a domestic injury.
Because of the contextual nature of the inquiry, no set of factors can capture the relevant considerations for all cases. RICO covers a wide range of predicate acts and is notoriously “expansive” in scope. Id., at 498–499, 105 S.Ct. 3275. Thus, depending on the allegations, what is relevant in one case to assessing where the injury arose may not be pertinent in another. While a bright-line rule would no doubt be easier to apply, fealty to the statute's focus requires a more nuanced approach.
D
This suit illustrates well why the domestic-injury inquiry must account for the facts of the case, rather than rely on a residency-based rule. While it may be true, in some sense, that Smagin has felt his economic injury in Russia, focusing solely on that fact would miss central features of the alleged injury. Zooming out, the circumstances surrounding Smagin's injury make clear it arose in the United States.
PAGE_8 Smagin alleges that he “has been injured in his inability to collect [his] massive judgment.” App. 38a. Much of the alleged racketeering activity that caused the injury occurred in the United States. Yegiazaryan took domestic actions to avoid collection, including allegedly creating U. S. shell companies to hide his U. S. assets, submitting a forged doctor's note to a California District Court, and intimidating a U. S.-based witness. It is true that other components of the scheme occurred abroad. As Smagin alleges, however, even those “wrongful acts and plans were devised, initiated, and carried out ... through acts and communications initiated in and directed towards Los Angeles County, California,” with the “central purpose of frustrating enforcement of [the] California judgment.” Id., at 45a–46a.
Further, the injurious effects of the racketeering activity largely manifested in California. Smagin obtained a judgment in California because that is where Yegiazaryan lives, and where Smagin had thus hoped to collect. The rights that the California judgment provides to Smagin exist only in California, including the right to obtain postjudgment discovery, the right to seize assets in California, and the right to seek other appropriate relief from the California District Court. 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.
In sum, Smagin's interests in his 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. On the Court's contextual approach, those allegations suffice to state a domestic injury in this suit.
III
Petitioners argue that a contextual approach is inconsistent with certain common-law principles, which instead favor their bright-line rule. According to petitioners, because Smagin has alleged an “economic injury” or an “injury in intangible property,” Brief in Opposition 15–16, courts should look to common-law principles governing “the situs” of such injuries, when determining whether those injuries are foreign or domestic. Specifically, as to economic injuries, petitioners point to the Restatement (First) of Conflict of Laws § 377 (1934), from which they discern the principle that “a fraud plaintiff suffers an economic loss at the plaintiff ’s domicile.” Brief for Petitioners 36; see also Sack v. Low, 478 F.2d 360, 366 (CA2 1973) (Under the First Restatement, “loss from fraud is deemed to be suffered where its economic impact is felt, normally the plaintiff ’s residence”). As to intangible injuries, petitioners further rely on the principle of mobilia sequuntur personam, which they claim “generally locat[es] intangible property at the domicile of its owner.” Brief for Petitioners 44. Both principles, they argue, locate Smagin's alleged injury at his residence.
Petitioners fall short, however, when explaining the relevance of these principles. They do not clearly explain why choice-of-law principles are germane here, let alone why the First Restatement dictates those principles.fn4 Meanwhile, it is far from clear that petitioners’ gloss on the principle of mobilia sequuntur personam was as well established or as wide sweeping as petitioners take it to be, in light of the many twists and turns in the doctrine across a range of contexts. See A. Simowitz, Siting Intangibles, 48 N. Y. U. J. Int'l L. & Pol. 259, 270–292 (2015). In short, at the time of RICO's enactment, both principles were hardly “settled ... at common law.” Beck v. Prupis, 529 U.S. 494, 500, 120 S.Ct. 1608, 146 L.Ed.2d 561 (2000).
fn4
Although the First Restatement was in effect in 1970, when RICO was enacted, numerous jurisdictions had by then moved away from the First Restatement's methodology and toward a “ ‘most significant relationship’ ” test, which resembles “the kind of ‘multi-factor’ analysis the Court of Appeals conducted here.” Brief for George A. Bermann as Amicus Curiae 15. This shift was reflected in § 145 of the Restatement (Second) of Conflict of Laws, which superseded the First Restatement the following year in 1971. Thus, even assuming choice-of-law principles are relevant, petitioners’ identification and application of those principles is questionable.
PAGE_9 The core problem with petitioners’ approach is that it is unmoored from the presumption against extraterritoriality. While legal fictions regarding the situs of economic injuries and intangible property have their justifications in other areas of law, those justifications do not necessarily translate to the presumption against extraterritoriality, with its distinctive concerns for comity and discerning congressional meaning.
Indeed, it is because petitioners’ view invokes these fictions that it generates results so counter to comity and so far afield from any reasonable interpretation of what qualifies as a domestic application of § 1964(c). On petitioners’ primary view, a business owner who resides abroad but owns a brick-and-mortar business in the United States cannot bring a § 1964(c) suit even if an American RICO organization burns down her storefront. Perhaps aware of how odd this seems, petitioners offer a fallback rule for intangible property. That rule fares no better. It provides that if racketeering activity targets the intangible business interests of two U. S. businesses, one owned by a U. S. resident and one owned by someone living abroad, only the former business owner can bring a § 1964(c) suit. There is no evidence Congress intended to impose such a double standard, especially because doing so runs its own risks of generating international discord. These implausible consequences are strong evidence that petitioners have gone astray in assessing the focus of § 1964(c) and, thus, the meaning of “domestic injury” as contemplated by RJR Nabisco.
Finally, petitioners, as well as the dissent, post, at 5 (opinion of ALITO, J.), argue that a contextual approach is unworkable because it does not provide a bright-line rule. Reply Brief 17–18. An approach is not unworkable, however, merely because it directs courts to consider the case-specific circumstances surrounding an injury when assessing where it arises. While “the ease with which [petitioners’] bright-line rule can be applied gives it some surface appeal,” Humphrey, 905 F.3d at 709, a look beneath the surface quickly reveals that the test is inconsistent with RJR Nabisco, the presumption against extraterritoriality, and the thrust of § 1964(c) itself. Concerns about a fact-intensive test cannot displace congressional policy choices, where a more nuanced test is true to the statute's meaning.
— — —
A plaintiff has alleged a domestic injury for purposes of § 1964(c) when the circumstances surrounding the injury indicate it arose in the United States. Smagin alleges that he was injured in California because his ability to enforce a California judgment in California against a California resident was impaired by racketeering activity that largely occurred in or was directed from and targeted at California. Those allegations state a domestic injury. The judgment of the Ninth Circuit is affirmed, and the cases are remanded for further proceedings consistent with this opinion.
It is so ordered.
DISSENTING OPINION
Justice ALITO, with whom Justice THOMAS joins, and with whom Justice GORSUCH joins as to Part I, dissenting.
These are the first cases in which we have been required to decide when injury to intangible property that a civil plaintiff attributes to a violation of the Racketeer Influenced and Corrupt Organizations Act (RICO) qualifies as a “domestic injury” and may therefore provide the basis for recovery under 18 U.S.C. § 1964(c). See RJR Nabisco, Inc. v. European Community, 579 U.S. 325, 346–354, 136 S.Ct. 2090, 195 L.Ed.2d 476 (2016). This question has divided the lower courts, but the Court's decision resolves very little. It holds only that ascertaining the site of intangible injuries for purposes of civil RICO requires a court to consult a variety of factors and that two factors it identifies show that respondent has suffered a domestic injury. This analysis offers virtually no guidance to lower courts, and it risks sowing confusion in our extraterritoriality precedents. Rather than take this unhelpful step, I would dismiss the writ of certiorari as improvidently granted.
I
PAGE_10 We granted certiorari “to resolve [a] Circuit split” between, on the one hand, the Third and Ninth Circuits, which embrace a totality-based inquiry like the one the Court adopts here, and, on the other hand, the Seventh Circuit, which has held that RICO injuries to intangible property are sited at the plaintiff ’s residence. Ante, at ––––; compare Humphrey v. GlaxoSmithKline PLC, 905 F.3d 694, 706–707 (CA3 2018), and 37 F.4th 562, 567–568 (CA9 2022) (case below), with Armada (Sing.) PTE Ltd. v. Amcol Int'l Corp., 885 F.3d 1090, 1094–1095 (CA7 2018).fn1 The Seventh Circuit's decision, however, contains little analysis and simply declares that “[i]t is well understood that a party experiences or sustains injuries to its intangible property at its residence.” Id., at 1094; see also Czyzewski v. Jevic Holding Corp., 580 U.S. 451, 471, 137 S.Ct. 973, 197 L.Ed.2d 398 (2017) (THOMAS, J., dissenting) (referring to a dearth of “reasoned opinions ... from the courts of appeals” regarding “a novel and important question”). The Third and Ninth Circuits, for their parts, did not coalesce around any common set of factors to guide the civil RICO domestic-injury inquiry for intangible-property claims. See Humphrey, 905 F.3d, at 706–707; 37 F.4th, at 567–568. And no court of appeals has even broached the possibility that different categorical rules might be available for different types of intangible property (e.g., perhaps there could be a rule that injuries to trademark rights should be sited in the country that provided the trademark). “[W]e would greatly benefit from the views of additional courts of appeals on this question.” Czyzewski, 580 U.S., at 472, 137 S.Ct. 973 (THOMAS, J., dissenting).
fn1
The Second Circuit has adopted a bright-line rule that RICO injuries to tangible property are sited at the location of the property. Bascuñán v. Elsaca, 874 F.3d 806, 818–824 (2017). The Second Circuit's holding is not implicated in this split, nor did that court offer any analysis of intangible property relevant to these cases.
Bringing clarity to this area of the law is not an easy task, and I must conclude that the Court falls short. It cites petitioners’ domestic racketeering conduct and the California rights conferred by the California judgment Smagin has obtained to enforce his London arbitral award, but it gives no indication of the relative import of each of these factors. Ante, at –––– – ––––. And while the Court appears to envision a long list of factors that might be relevant to this inquiry, see ante, at ––––, it mentions none other than these two. Nor does it say anything about the circumstances that would call for consideration of additional factors, when such factors might outweigh one or both of the ones it mentions, or what these other factors might be.
Of course, under the majority's all-factors-considered approach, many other features of this very suit could be relevant, such as the history and location of the underlying dispute, where any relevant business relationships were formed, Smagin's residence, and the existence of the London arbitral award. Are future courts to infer that these matters have no import? It is difficult to come to any other conclusion given that the Court pays them no heed in undertaking what is ostensibly an examination of all relevant “contex[t].” Ante, at –––– – ––––. But it is equally difficult to see why they are irrelevant (especially in light of the Court's unexplored acknowledgment that “in some sense, ... Smagin has felt his economic injury in Russia,” ante, at ––––), or what room the Court is leaving for additional factors to be identified if none of these counts. And because the Court sets aside the factors that would favor petitioners, it also provides no guidance on how to weigh competing considerations that do not all point toward the same result.
One might additionally think that the nature of the intangible property itself could be relevant under the majority's approach, such as whether the property is a debt, a stock, a trademark, etc. In these cases, however, the relationship between the California judgment Smagin has obtained and the underlying arbitral award that that judgment confirmed is uncertain, so the precise property at issue is another aspect of this suit that is shrouded in confusion. Smagin acknowledged at oral argument that even though he has obtained multiple judgments confirming the arbitral award, he can collect on only one. See Tr. of Oral Arg. 49. There is thus at least some relevant relationship between the California judgment and the London arbitral award—the latter of which is not “domestic” in any way—but the Court does not address this point, either.
PAGE_11 Even with respect to the two factors it focuses on, the Court engenders confusion. It offers no hint which of the two might be more important (should they point in different directions), whether either or both are necessary, or whether either is sufficient. And the Court acknowledges that there was also substantial foreign conduct in these cases, but writes that off because it was “ ‘initiated in and directed towards’ ” the United States. Ante, at ––––. Once more, I am unsure of the origin or scope of this rule. If domestic conduct is “initiated in” a foreign nation, does that make it foreign? What exactly does it mean to direct conduct “towards” the United States? All in all, were I a lower-court judge, I would struggle to apply today's decision to any set of facts other than the precise combination present here. In my view, it is not worth our deciding a case when we provoke so many more questions than we provide answers. That is especially so now that the lower courts must additionally decide whether and how today's cryptic decision binds them, rather than continuing to think through unencumbered when intangible-property injuries are the basis of a domestic application of civil RICO.
II
It is not just that we are contributing little by deciding these cases, however; we are also risking significant harm, particularly to the uniformity of our case law. A thrust of our international-comity jurisprudence is that we should not lightly give foreign plaintiffs access to U. S. remedial schemes that are far more generous than those available in their home nations. See RJR Nabisco, 579 U.S., at 347–348, 136 S.Ct. 2090; F. Hoffmann-La Roche Ltd v. Empagran S. A., 542 U.S. 155, 166–167, 124 S.Ct. 2359, 159 L.Ed.2d 226 (2004). In light of RICO's unusually plaintiff-friendly remedies, that concern applies in spades here. See RJR Nabisco, 579 U.S., at 348, 136 S.Ct. 2090. But in today's decision, the Court countenances that the plaintiff ’s residence may play no role at all in the civil RICO extraterritoriality inquiry. The Court justifies this result with the assertion that favoring U. S. plaintiffs’ access to American courts over that of foreign plaintiffs “runs its own risks of generating international discord,” ante, at ––––, a concern that the Court directly rejected in RJR Nabisco, see 579 U.S., at 361, 136 S.Ct. 2090 (Ginsburg, J., dissenting in relevant part).
Additionally, we have placed a premium on workability in our extraterritorial-application cases. The Court acknowledges that a bright-line rule would be preferable here, but essentially shrugs: RICO is too “nuanced” for that. Ante, at ––––, ––––. Our cases do not let us off the hook so easily. Compare Morrison v. National Australia Bank Ltd., 561 U.S. 247, 258–259, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010) (“There is no more damning indictment of the [Second Circuit's] ‘conduct’ and ‘effects’ tests than the Second Circuit's own declaration that ‘the presence or absence of any single factor which was considered significant in other cases ... is not necessarily dispositive in future cases’ ”), with ante, at –––– (“[N]o set of factors can capture the relevant considerations for all cases”).
Perhaps there is a reason why RICO justifies these departures from our customary rules, but I have no confidence in reaching that conclusion now (let alone sub silentio). RJR Nabisco was relatively recent, and there have been only a small number of court of appeals decisions implementing it, and even fewer with respect to intangible property. Moreover, unlike in our typical extraterritoriality case, we have received no input here from the sovereign states our rules will affect, including the U. S. Government. RJR Nabisco, 579 U.S., at 348, 136 S.Ct. 2090; Morrison, 561 U.S., at 269, 130 S.Ct. 2869; F. Hoffmann-La Roche, 542 U.S., at 167–168, 124 S.Ct. 2359.
— — —
The only rule of law that the Court announces today is that there is no rule, and despite offering such minimal guidance regarding how to site a RICO injury, the Court nonetheless manages to sow confusion regarding our broader law of extraterritoriality. Respectfully, the most we could contribute to this issue at this juncture is to stay away from it. I would dismiss the writ of certiorari as improvidently granted.
CASE BELOW
Smagin v. Yegiazaryan, 37 F.4th 562 (9th Cir., June 10, 2022).
United States Court of Appeals, Ninth Circuit.
Vitaly Ivanovich SMAGIN, Plaintiff-Appellant,
v.
Ashot YEGIAZARYAN, aka Ashot Egiazaryan, an individual; Compagnie Monégasque de Banque, aka CMB Bank; Natalia Dozortseva, an individual; Artem Egiazaryan, an individual; Vitaly Gogokhia, an individual; Murielle Jouniaux, an individual; Ratnikov Evgeny Nikolaevich, an individual; Prestige Trust Company, Ltd.; H. Edward Ryals, an individual; Alexis Gaston Thielen, an individual; Stephan Yegiazaryan, aka Stephan Egiazarian, an individual; Suren Yegiazaryan, aka Suren Egiazaryian, an individual, Defendants-Appellees.
No. 21-55537
Argued and Submitted April 6, 2022 Pasadena, California
Filed June 10, 2022
Attorneys and Law Firms
Alexander D. Burch (argued), Baker & McKenzie LLP, Houston, Texas; Barry J. Thompson, Baker & McKenzie LLP, Los Angeles, California; Nicholas O. Kennedy, Baker & McKenzie LLP, Dallas, Texas; for Plaintiff-Appellant.
Michael C. Tu (argued) and Peter J. Brody, Cooley LLP, Santa Monica, California, for Defendant-Appellee Compagnie Monégasque de Banque.
David J. Stein (argued), Masuda Funai Eifert & Mitchell Ltd., Chicago, Illinois; Asa Markel, Masuda Funai Eifert & Mitchell Ltd., Torrance, California; for Defendant-Appellee Alexis Gaston Thielen.
Ashot Yegiazaryan (argued), Beverly Hills, California, pro se Defendant-Appellee.
Before: Mary M. Schroeder and Susan P. Graber, Circuit Judges, and Stephen M. McNamee,* District Judge.
The Honorable Stephen M. McNamee, United States District Judge for the District of Arizona, sitting by designation.
OPINION
GRABER, Circuit Judge:
Plaintiff Vitaly Smagin, a Russian citizen who resides in Russia, filed a civil suit under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961–68, against Defendant Ashot Yegiazaryan ("Ashot"), a Russian citizen who resides in California, and eleven other defendants.1 After securing a foreign arbitration award against Ashot, Plaintiff obtained a judgment from a United States district court confirming the award and giving Plaintiff the rights to execute on that judgment in California and to pursue discovery. Plaintiff alleges that Defendants engaged in illegal activity, in violation of RICO, to thwart the execution of that California judgment. On appeal, we are asked to decide whether the alleged injuries to a judgment obtained by Plaintiff from a United States district court in California are domestic injuries such that Plaintiff has statutory standing under RICO. We conclude that Plaintiff alleges a domestic injury, reverse the district court's dismissal of the complaint, and remand for further proceedings.
- fn1. Plaintiff asserts that the alleged RICO enterprise comprised (1) Compagnie Monegasque De Banque ("CMB Bank"); (2) Ashot Yegiazaryan; (3) Suren Yegiazaryan; (4) Artem Yegiazaryan; (5) Stephan Yegiazaryan; (6) Natalia Dozortseva; (7) Murielle Jouniaux; (8) Alexis Gaston Thielen; (9) Ratnikov Evgeny Nikolaevich; (10) H. Edward Ryals; and (11) Prestige Trust Company, Ltd. For simplicity, we will refer to Defendant Ashot Yegiazaryan as Ashot.
BACKGROUND
Plaintiff's allegations span decades and continents. As alleged, the chief architect of Plaintiff's woes is Defendant Ashot Yegiazaryan. Between 2003 and 2009, Ashot and others used a series of fraudulent transactions to steal Plaintiff's shares in a joint real estate investment in Moscow, Russia. In 2010, Russian authorities criminally *565 indicted Defendants Ashot and Artem Yegiazaryan in Russia for that fraud. The pair fled to California. They now live in Beverly Hills, in a home owned by Ashot's cousin, Defendant Suren Yegiazaryan.
Also in 2010, Plaintiff commenced arbitration proceedings in London, U.K., against Ashot for his alleged fraudulent actions and for his attempts to conceal the fraud. In November 2014, the arbitration panel rendered a final award in Plaintiff's favor and against Ashot in the amount of $84 million ("London Award").
Plaintiff then filed an enforcement action in the Central District of California to confirm and enforce the London Award against Ashot. In December 2014, a district judge confirmed the London Award and entered a judgment against Ashot under Federal Rule of Civil Procedure 58 ("California Judgment"). The district judge entered the California Judgment pursuant to the New York Convention, also known as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The Federal Arbitration Act provides that the New York Convention is enforceable in the United States and that federal district courts have original jurisdiction of actions falling under the Convention. 9 U.S.C. §§ 201–209; China Nat'l Metal Prods. Imp./Exp. Co. v. Apex Digit., Inc., 379 F.3d 796, 799 (9th Cir. 2004).
On December 23, 2014, the district court entered a temporary protective order freezing Ashot's assets in California. That order specifically referenced assets that Ashot may receive in the future, related to an arbitration dispute between Ashot and Suleymon Kerimov. In February 2015, that temporary order was converted into a preliminary injunction with the same terms.
In May 2015, Ashot settled the arbitration dispute against Suleymon Kerimov for $198 Million ("Kerimov Award"). Plaintiff alleges in this action that, in order to avoid using these funds to pay the London Award, which also would satisfy the California Judgment, Ashot "create[d] a web of offshore entities and a complex ownership structure to secret the Kerimov Award settlement proceeds and avoid [the district] court's reach."
Many of the alleged components of Ashot's scheme occurred outside the United States. For example, Plaintiff alleges that Ashot received the Kerimov Award through his attorneys in London; established a trust in Lichtenstein to hold proceeds from the Kerimov Award ("the Alpha Trust"); purchased a business incorporated in Nevis to create additional layers of complexity; established a bank account in Monaco with Defendant CMB Bank for that Nevis corporation; and then moved the funds from the Alpha Trust to that bank account.
But Plaintiff also alleges numerous RICO activities involving domestic entities and property in the United States. For example, Plaintiff alleges that, as a part of keeping the settlement proceeds out of the California district court's reach, Ashot, with the help of others, developed a scheme to hide assets in the United States by using shell companies owned by Suren and other members of the Yegiazaryan family. The shell companies included Clear Voices, Inc., a Nevada company "created by Suren Yegiazaryan, but controlled by Ashot Yegiazaryan, for the purpose of sheltering Ashot Yegiazaryan's U.S. assets from his creditors."
Plaintiff also alleges that Ashot schemed to have associates file fraudulent claims against him in foreign jurisdictions so that they could obtain sham judgments that were designed to compete with the California Judgment. On April 1, 2020, the district court issued an order stating that *566 Ashot, Defendant Suren Yegiazaryan, and others acting on behalf of Ashot "must immediately cease all actions in Nevis or any other jurisdiction that would prevent, hinder, or delay [Plaintiff's] ability to collect on the assets of the Alpha Trust pursuant to the current and forthcoming orders of the Liechtenstein Court or this Court." On July 9, 2020, the district court issued another order that prohibited Ashot from making further modifications to the Alpha Trust or to the administration of the bank account opened with CMB Bank without first obtaining court approval. On September 16, 2020, the district court found Ashot in contempt for violating the previous two orders.
Plaintiff further alleges that, in an attempt to avoid following the district court's orders, Ashot submitted to the district court in California a doctor's note that Plaintiff believed to be forged. Plaintiff alleges that, when Plaintiff attempted to depose the California doctor who wrote the note, Ashot used "intimidation, threats, or corrupt persuasion" to influence the doctor to avoid service of the subpoena so as to prevent her from providing evidence to the district court.
On December 11, 2020, Plaintiff filed his complaint in this case. The complaint contains two claims against all Defendants: (1) a substantive RICO claim of participating in a criminal enterprise in violation of 18 U.S.C. § 1962(c) and (2) a RICO conspiracy claim of conspiring to participate in a criminal enterprise in violation of 18 U.S.C. § 1962(d). Plaintiff alleges that Defendants' illegal conduct has harmed his property, namely, the California Judgment, through the delay and loss of opportunity to execute on the judgment. On May 5, 2021, the district court dismissed the complaint on the ground that Plaintiff "fail[ed] to adequately plead a domestic injury in support of his two RICO claims."
Plaintiff timely appeals.
STANDARD OF REVIEW
We review de novo a district court's dismissal of a complaint for failure to plead statutory standing. Cetacean Cmty. v. Bush, 386 F.3d 1169, 1173 (9th Cir. 2004). We accept as true all well-pleaded facts in the complaint and draw all reasonable inferences in Plaintiff's favor. Brown v. Elec. Arts, Inc., 724 F.3d 1235, 1247–48 (9th Cir. 2013).
DISCUSSION
RICO provides a private right of action for persons pursuing civil remedies. Specifically, "[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter may sue [ ] in any appropriate United States district court ...." 18 U.S.C. § 1964(c). To have statutory standing, "a civil RICO plaintiff must show: (1) that his alleged harm qualifies as injury to his business or property; and (2) that his harm was by reason of the RICO violation, which requires the plaintiff to establish proximate causation." Just Film, Inc. v. Buono, 847 F.3d 1108, 1118–19 (9th Cir. 2017) (quoting Canyon Cnty. v. Syngenta Seeds, Inc., 519 F.3d 969, 972 (9th Cir. 2008)) (internal quotation marks omitted).
In RJR Nabisco, Inc. v. Eur. Cmty., 579 U.S. 325, 346, 136 S.Ct. 2090, 195 L.Ed.2d 476 (2016), the Supreme Court held that there is an additional standing requirement for the alleged harm to business or property. The Court explained that, although RICO may have some extraterritorial effects, the statute's private right of action does not overcome the presumption against extraterritoriality. "A private RICO plaintiff therefore must allege and *567 prove a domestic injury to its business or property." Id. The Court offered no further explanation of what constitutes a domestic injury. See id. at 354, 136 S.Ct. 2090 ("The application of this rule in any given case will not always be self-evident, as disputes may arise as to whether a particular alleged injury is 'foreign' or 'domestic.' But we need not concern ourselves with that question in this case.").
"A judgment is property ...." Kingvision Pay-Per-View Ltd. v. Lake Alice Bar, 168 F.3d 347, 352 (9th Cir. 1999). It provides legal rights to a judgment creditor, including the right to have the judgment enforced by a writ of execution in a manner that "accord[s] with the procedure of the state where the court is located" and the right to "obtain discovery from any person—including the judgment debtor—as provided in these rules or by the procedure of the state where the court is located." Fed. R. Civ. P. 69(a); see also JUDGMENT CREDITOR, Black's Law Dictionary (11th ed. 2019) ("A person having a legal right to enforce execution of a judgment for a specific sum of money."); Restatement (Second) of Judgments § 18 cmt. c (1982) ("A judgment for the plaintiff awarding him a sum of money creates a debt in that amount in his favor. He may maintain proceedings by way of execution for enforcement of the judgment.").
The nature of a domestic judgment is unaffected by the fact that it confirms a foreign arbitration award. Once a foreign arbitration award is confirmed by a federal district court under the New York Convention, "the judgment has the same force and effect of a judgment in a civil action and may be enforced by the means available to enforce any other judgment." Ministry of Def. & Support for the Armed Forces of the Islamic Republic of Iran v. Cubic Def. Sys., Inc., 665 F.3d 1091, 1094 n.1 (9th Cir. 2011).
The key question, then, is where the California Judgment exists as property. We have previously concluded that "the location of intangible property varies depending on the purpose to be served" by that property. See Off. Depot Inc. v. Zuccarini, 596 F.3d 696, 702 (9th Cir. 2010) (noting that "attaching a situs to intangible property is necessarily a legal fiction; therefore, the selection of a situs for intangibles must be context-specific, embodying a common-sense appraisal of the requirements of justice and convenience in particular conditions." (internal quotation marks omitted)).
We conclude that, for purposes of standing under RICO, the California Judgment exists as property in California. The rights that the California Judgment provides to Plaintiff exist only in California, the place where he can obtain a writ of execution against or obtain discovery from Ashot. Indeed, Plaintiff obtained the judgment in California precisely because Ashot resides in California, and that is where Plaintiff desires to exercise the rights conferred by the California Judgment. It would make no sense to conclude that the California Judgment exists as property in Russia, because the judgment grants no rights whatsoever to Plaintiff in Russia.
Our conclusion is bolstered by the fact that much of the conduct underlying the alleged injury also occurred in, or was targeted at, California. As noted, Plaintiff alleges that Defendants corruptly and illegally prevented him from executing the judgment by, among other things, filing false documents in the California court; intimidating a witness who resides in California; and directing, from California, a scheme to funnel millions of dollars into the United States through various companies, including a U.S.-based company that Ashot effectively controlled. Plaintiff also *568 alleges that Ashot had associates file fraudulent claims against him in various jurisdictions in order to obtain sham judgments that were designed to compete with the California Judgment. Those alleged illegal acts were designed to subvert Plaintiff's rights that are executable in California. Accordingly, the alleged harm to Plaintiff's rights under the California Judgment constitutes a domestic injury.
Our conclusion comports with our prior case law. We have discussed domestic injuries under RICO only once in the years since the Supreme Court issued RJR Nabisco. In City of Almaty v. Khrapunov, 956 F.3d 1129, 1130–31 (9th Cir. 2020), the plaintiff, a city in Kazakhstan, alleged that the defendants, citizens of Kazakhstan who resided in California, violated RICO by rigging auctions of public properties in Kazakhstan and then laundering money into property in the United States. The plaintiff asserted that its alleged domestic injury was the city's voluntary expenditure of funds to track down the stolen property, which was now in the United States. Id. at 1132. We concluded that this alleged injury was not an independent harm, but "a mere downstream effect of the Khrapunovs' initial theft." Id. at 1133. Because the voluntary expenditure of funds was only a consequential damage of the initial theft suffered in Kazakhstan, it was not causally connected to the predicate act of money laundering. Id. at 1134. We held that, accordingly, the plaintiff had "fail[ed] to state a cognizable injury at all." Id. Importantly, we noted that the plaintiff was not left without recourse in the United States: The city could "obtain[ ] a legal judgment anywhere in the world against Defendants," and then it "could bring that judgment to the United States and execute it against any of Defendants' assets for the full amount of the money owed." Id. at 1133.
Here, Plaintiff has done exactly what we suggested the plaintiff could do in City of Almaty—he obtained a legal judgment and brought it to the United States to execute it against the Defendants' assets. In so doing, Plaintiff obtained domestic property in the United States—a judgment issued by a United States district court, conferring rights that Plaintiff can exercise in California. Plaintiff now alleges that Defendants engaged in RICO-violating activity (much of it in the United States) that harmed that property. Accordingly, Plaintiff has alleged an injury that is both cognizable and domestic.
Our decision is also consistent with the approaches taken by the Second and Third Circuits after RJR Nabisco. We part ways, however, with the Seventh Circuit, which has adopted a rigid, residency-based test for domestic injuries involving intangible property.
In Bascuñán v. Elsaca, 874 F.3d 806, 809 (2d Cir. 2017), a citizen and resident of Chile brought a civil RICO action against another citizen and resident of Chile. The plaintiff alleged that the defendant had fraudulently stolen $64 million from the plaintiff through four separate schemes. Id. at 811. The district court dismissed the case because the plaintiff had failed to allege a domestic injury. Id. at 813. Because the plaintiff resided in Chile, the district court reasoned, any economic loss he suffered had occurred in Chile. Id. at 814. The Second Circuit reversed the dismissal, concluding that the plaintiff had alleged a domestic injury.2 The court reasoned *569 that "us[ing] bank accounts located within the United States to facilitate or conceal the theft of property located outside of the United States, on its own, does not establish that a civil RICO plaintiff has suffered a domestic injury." Id. at 824. But when a plaintiff alleges that a defendant misappropriated "tangible property located in the United States ... even if the owner of the property resides abroad," the plaintiff has alleged a domestic injury. Id. at 824–25.3
- fn2. The Bascuñán court concluded that there were four distinct RICO schemes alleged in the complaint and that two of those schemes, as pleaded by the plaintiff, involved a domestic injury. Bascuñán, 874 F.3d at 811, 824. Nevertheless, it reversed the district court's dismissal of the complaint in its entirety because the district court had "erred in dismissing Bascuñán's Amended Complaint on the grounds that he alleged only foreign injuries." Id. at 824 (emphasis added).fn3. After reversal and remand, the plaintiffs in Bascuñán filed a second amended complaint, the district court dismissed the second amended complaint, and the plaintiffs appealed. Bascuñán v. Elsaca (Bascuñán II), 927 F.3d 108 (2d Cir. 2019). The Second Circuit again reversed the district court's dismissal, concluding that, with one exception, "each of the injuries alleged in the [second amended complaint] ... calls for a domestic application of civil RICO." Id. at 120.
The Second Circuit limited its holding to tangible property, leaving for another day the question of when an injury to intangible property is domestic. Id. at 814 ("At a minimum, when a foreign plaintiff maintains tangible property in the United States, the misappropriation of that property constitutes a domestic injury."). But here, as in Bascuñán, Plaintiff's allegations go beyond Defendants' use of the United States' financial system to hide property located outside the United States. Although Plaintiff alleges, among other things, that Defendants hid assets by moving them through shell companies in the United States, his central allegation is that those predicate acts injured his right to seek property in California from a California resident under the California Judgment. Accordingly, we see no conflict between our holding and that of Bascuñán.
In Humphrey v. GlaxoSmithKline PLC, 905 F.3d 694, 696 (3d Cir. 2018), the plaintiffs, who resided in China and owned a business in China, filed RICO claims against a multinational company with offices in the United States and England. They alleged that the defendants had "engaged in widespread bribery in China in order to obtain improper commercial advantages" and that the defendants' corrupt dealing in China eventually led to the plaintiffs' being imprisoned by Chinese authorities. Id. at 696–97. The district court dismissed the RICO claims because the plaintiffs failed to allege a domestic injury: "Plaintiffs' business was in China, their only offices were in China, no work was done outside of China, Plaintiffs resided in China, and ... any destruction of Plaintiffs' business occurred while Plaintiffs were imprisoned in China by Chinese authorities." Id. at 697–98.
The Third Circuit affirmed, adopting a "standard that is not susceptible to mechanical application" and by which "few answers will be written in black or white." Id. at 707–08 (internal quotation marks omitted). The inquiry would "ordinarily include consideration of multiple factors that vary from case to case." Id. at 701.
Whether an alleged injury to an intangible interest was suffered domestically is a particularly fact-sensitive question requiring consideration of multiple factors. These include, but are not limited to, where the injury itself arose; the location of the plaintiff's residence or principal place of business; where any alleged services were provided; where the plaintiff received or expected to receive the benefits associated with providing such services; where any relevant business agreements were entered into and the laws binding such agreements; *570 and the location of the activities giving rise to the underlying dispute.
Id. at 707. In addition to noting that its list of factors is not exhaustive, the Third Circuit explained that "the applicable factors depend on the plaintiff's allegations; no one factor is presumptively dispositive." Id.
In adopting its standard, the Third Circuit explicitly rejected a rigid, residency-based rule developed by the Seventh Circuit. See id. at 708–09 ("Although the ease with which [the Seventh Circuit's] bright-line rule can be applied gives it some surface appeal, we resist the temptation to adopt it as the law of this circuit.") In Armada (Sing.) PTE Ltd. v. Amcol Int'l Corp., 885 F.3d 1090, 1091 (7th Cir. 2018), a Singaporean shipping company brought RICO claims against defendants who resided in Illinois and India. As in this case, the plaintiff alleged that the defendants had attempted to thwart a judgment issued by a United States district court that confirmed a foreign arbitration award. Id. at 1092. The Seventh Circuit affirmed the district court's dismissal of the case after concluding that the plaintiff had failed to allege a domestic injury. Id. at 1095. It distinguished Bascuñán on the ground that a judgment, unlike the assets at issue in Bascuñán, is "intangible property." Id. at 1094. The Seventh Circuit then concluded that "a party experiences or sustains injuries to its intangible property at its residence." Id. Because the plaintiff was a foreign corporation, any injury to its intangible property, even if that property is a judgment issued by a United States district court, is a foreign injury. Id. at 1095.
We agree with the Third Circuit that the Seventh Circuit's residency test does not align with RJR Nabisco. The Armada test strays from the Supreme Court's decision in two ways. First, the test makes the location of the plaintiff dispositive, when the Supreme Court stated that it is the location of the injury that is relevant to standing. RJR Nabisco, 579 U.S. at 346, 136 S.Ct. 2090. Second, the Seventh Circuit's test effectively truncates the standing requirement set forth in RJR Nabisco if the harm is to intangible property. Rather than asking whether a plaintiff alleges "a domestic injury to its business or property," as the Supreme Court described, id. (emphasis omitted and added), the Seventh Circuit requires that a plaintiff allege a domestic injury to its business only, with the location of that business defined by the plaintiff's residence.
We also agree with the Third Circuit that determining whether a plaintiff has alleged a domestic injury is a context-specific inquiry that turns largely on the particular facts alleged in a complaint. Even though few, if any, of the listed factors in Humphrey are relevant here, as this case does not concern corrupt dealings between competitors, we see no conflict between the Third Circuit's ruling in Humphrey and our conclusion that Plaintiff has alleged a domestic injury.
Finally, we note that, in holding that Plaintiff alleges a domestic injury, we express no view on the merits of Plaintiff's claims. Nor do we assess whether the district court has jurisdiction over all parties in the action or whether Plaintiff has sufficiently alleged proximate causation for each Defendant, Just Film, Inc., 847 F.3d at 1118–19. We hold only that Plaintiff's well-pleaded allegations include a domestic injury.
REVERSED AND REMANDED for further proceedings.