Yegiazaryan v. Smagin
The Supreme Court ruled that whether a foreign-based plaintiff suffered a 'domestic injury' under federal racketeering law depends on the full circumstances of the case — not simply on where the plaintiff lives.
The decision lets a Russian investor's multimillion-dollar civil racketeering suit move forward, because the scheme used to block him from collecting a California court judgment was orchestrated primarily in California.
How it got here: The Central District of California dismissed Smagin's civil RICO complaint for failure to allege a domestic injury; the Ninth Circuit reversed; the Supreme Court granted certiorari to resolve a split among the circuit courts.
The Case in Depth
What happened
Vitaly Smagin, a Russian investor, won a London arbitration award — later converted into a $92 million California court judgment — against Ashot Yegiazaryan, a Russian businessman who had fled to Beverly Hills to escape criminal charges at home. Smagin alleged that Yegiazaryan, aided by a Monaco bank, used shell companies, forged court documents, witness intimidation, and wire fraud — most of it in or directed at California — to prevent Smagin from ever collecting on that judgment.
The question before the Court
Can a Russian resident who holds a California court judgment sue under federal racketeering law in U.S. courts, when the scheme to block him from collecting on that judgment was carried out largely in California?
The Court's answer
Yes — a foreign resident can allege a "domestic injury" under federal racketeering law when the full circumstances show the injury arose in the United States, even if the plaintiff does not live here. The Court rejected a bright-line rule that would automatically place every plaintiff's injury at their home address, finding that approach inconsistent with its 2016 RJR Nabisco decision, which had explicitly said the domestic-injury requirement "does not mean that foreign plaintiffs may not sue under RICO."
Courts must instead look at the context: where the racketeering activity occurred, where its effects were felt, and what rights were at stake. Here, Smagin's injury was his inability to collect on a California court judgment against a California resident; the alleged scheme was largely carried out in or directed at California; and the legal rights that judgment gave him — including the right to seize California assets and seek relief from the California court — existed only in California. Those facts together establish a domestic injury, allowing the lawsuit to proceed.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Foreign nationals harmed by racketeering schemes carried out inside the United States are not automatically shut out of U.S. courts just because they live abroad. Businesses and creditors with U.S. court judgments may bring civil racketeering lawsuits when the fraud blocking collection occurs on American soil, broadening access to RICO's powerful treble-damages remedy.
What changes now
The case returns to the lower courts for further proceedings on Smagin's civil RICO claims, which can now proceed past the threshold domestic-injury question. The ruling does not resolve Smagin's underlying claims on the merits. For future RICO cases, courts must apply the same contextual, fact-specific analysis case by case; the decision does not provide a fixed checklist, leaving the precise contours of the domestic-injury inquiry to be developed through future litigation.
What this does not decide
The decision does not establish a definitive checklist for determining domestic injury in all civil RICO cases, does not say which factors are most important or sufficient, and does not address how courts should weigh competing factors pointing in different directions. Different types of intangible property, or different racketeering schemes, may call for different considerations.
Concurrences and dissents
Dissent — Justice Alito
Justice Alito, joined by Justice Thomas in full and Justice Gorsuch as to Part I, would have dismissed the case as improvidently granted rather than decide it. Part I argues the circuit split was not developed enough to resolve — the Seventh Circuit's opinion contained little analysis, and the Second and Ninth Circuits had not coalesced around any common set of factors. Part II argues the majority's open-ended contextual approach provides virtually no guidance to lower courts, risks sowing confusion in the Court's extraterritoriality doctrine, and improperly allows the plaintiff's foreign residence to play no role in the analysis — contrary to the spirit of RJR Nabisco and the Court's general preference for workable bright-line rules in extraterritoriality cases.
How the Court got there
The legal reasoning, step by step
- RICO's private civil lawsuit provision (18 U.S.C. § 1964(c)) requires that a plaintiff's injury arose in the United States — a rule established in RJR Nabisco v. European Community (2016), which applied the 'presumption against extraterritoriality,' the default rule that federal laws apply only within the U.S. unless Congress clearly says otherwise. RJR Nabisco did not define 'domestic injury' because those plaintiffs had conceded they were not seeking redress for domestic injuries.
- Two approaches competed: petitioners urged a bright-line rule placing every plaintiff's injury at their home address — which would automatically bar any foreign-based plaintiff — while Smagin and the Ninth Circuit favored a contextual approach looking at all facts surrounding where the injury actually arose.
- The Court adopted the contextual approach as more consistent with RJR Nabisco, which had explicitly said the domestic-injury rule 'does not mean that foreign plaintiffs may not sue under RICO' and that applying the rule 'will not always be self-evident' — language that points toward a fact-specific inquiry rather than a mechanical residence-based bar.
- Under the contextual approach, courts look to the nature of the alleged injury, where the racketeering activity occurred, and where its harmful effects were felt — because § 1964(c)'s focus is on the injury as the product of racketeering activity, not the isolated injury in the abstract.
- Applying that test here: most of the alleged racketeering happened in or was directed at California; Smagin's rights under the California judgment existed only there (including the right to seize California assets and seek relief from the California court); and the scheme was specifically designed to thwart those California-based rights — all pointing to a domestic injury.
- The Court also rejected petitioners' reliance on common-law legal fictions — the First Restatement of Conflict of Laws (placing fraud injury at the plaintiff's domicile) and the principle of mobilia sequuntur personam (locating intangible property at the owner's domicile) — finding those doctrines serve different purposes than the presumption against extraterritoriality and could produce absurd results, such as barring a foreign-resident owner of a U.S. storefront from suing even when an American racketeering organization burns it down.
Doctrinal impact
Cases affected by this decision
Reaffirms RJR Nabisco, Inc. v. European Community (579 U. S. 325)
The Court reaffirms that civil RICO plaintiffs must allege a domestic injury, and gives that requirement content for the first time.