Yegiazaryan v. Smagin

Background

Respondent Vitaly Smagin, a resident of Russia, won a multimillion-dollar arbitration in 2014 and obtained a California judgment against Ashot Yegiazaryan, who lives in California. Smagin sued in federal court to enforce the award after Yegiazaryan hid assets, received a separate $198 million settlement, routed funds through offshore entities and a CMB Monaco account, used U.S. shell companies, and allegedly forged a doctor's note and intimidated a California witness. Smagin brought a civil RICO claim alleging wire fraud, witness tampering, and obstruction to stop his collection efforts.

Reasoning

The Supreme Court addressed whether a RICO plaintiff must allege a “domestic injury.” Relying on RJR Nabisco's presumption against extraterritoriality, the Court adopted a context-specific test: courts should look at the nature of the injury, the racketeering acts that caused it, and the wrongful aims and effects to decide if the injury arose in the United States. The Court rejected a bright-line rule locating injury at the plaintiff’s residence and declined to import common-law situs fictions for this inquiry. Applying the test, the Court concluded Smagin pleaded a domestic injury because the scheme was aimed at frustrating enforcement of a California judgment and much of the wrongful conduct and effects occurred in California.

Real world impact

The decision allows foreign residents to sue under RICO when alleged wrongdoing is directed at U.S. rights or enforcement in the United States, and it keeps RICO suits available to plaintiffs who show the injury arose here. The ruling lets Smagin proceed and sends the case back to lower courts for further proceedings on the merits.

Dissents or concurrances

Justice Alito dissented, arguing the Court’s context-specific rule gives little guidance, risks confusion, and preferred dismissing the case rather than deciding this unsettled question.