Yegiazaryan v. Smagin
The Supreme Court ruled that courts must examine all the surrounding circumstances — not just where the victim lives — to decide whether an injury qualifies as 'domestic' under the federal anti-racketeering law known as RICO.
The decision allows a Russian investor to pursue his RICO case in California and sets a flexible, fact-based standard that other foreign plaintiffs can use when organized criminal activity in the United States blocks their ability to enforce U.S. court judgments.
How it got here: The federal district court dismissed Smagin's RICO complaint for failing to allege a domestic injury; the Ninth Circuit reversed; both defendants asked the Supreme Court to step in, and the Court agreed to resolve a split among the federal appeals courts.
The Case in Depth
What happened
Vitaly Smagin, a Russian investor, won an $84 million arbitration award against Ashot Yegiazaryan — a Russian businessman who had defrauded him in a Moscow real estate deal and then fled to a Beverly Hills mansion. After Smagin obtained a California court judgment to enforce the award, Yegiazaryan allegedly ran an elaborate scheme — including creating shell companies, submitting a forged doctor's note to a California court, and intimidating a witness — to prevent Smagin from ever collecting. Smagin sued under RICO, the federal anti-racketeering law, in California.
The question before the Court
When a person living abroad tries to collect a U.S. court judgment and an organized scheme in the United States blocks that effort, does the victim's injury count as "domestic" enough to bring a federal anti-racketeering lawsuit?
The Court's answer
Yes — a foreign plaintiff can allege a domestic injury under RICO when the circumstances surrounding the injury show it arose in the United States. Courts must conduct a context-specific inquiry looking at the nature of the harm, the racketeering activity that caused it, and where the injurious aims and effects played out. The plaintiff's home address is one data point, not a trump card.
Applying that framework here, Smagin's injury — his inability to collect a California judgment against a California resident — arose in the United States. Most of the alleged racketeering was carried out in California or directed at California, and the rights the California judgment provides (including seizing California assets and seeking relief from a California court) exist only in California. The scheme directly targeted and undercut those rights, so the injury was domestic even though Smagin lives in Russia.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Foreign investors, businesses, and individuals who hold U.S. court judgments can now pursue civil RICO claims — which carry the right to triple damages — as long as the racketeering scheme targeting their rights was rooted in the United States. A foreign address alone will no longer automatically close the courthouse door.
What changes now
The case goes back to the lower courts for further proceedings under the context-specific standard the Supreme Court adopted. Smagin's RICO claims against Yegiazaryan and CMB Monaco now proceed, rather than being dismissed at the pleading stage. Other federal courts handling civil RICO suits involving foreign plaintiffs must now apply the same fact-by-fact inquiry, assessing each case's particular circumstances rather than applying a simple residency rule.
What this does not decide
The Court did not identify a definitive list of factors to weigh in every RICO domestic-injury case, nor did it say what happens when the relevant facts point in different directions. It also left open how the test applies to different kinds of intangible property, such as trademarks or debts, and how courts should weigh a plaintiff's residence when other factors are mixed.
Concurrences and dissents
Dissent — Justice Alito
“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.”Justice Alito's central critique of the majority's open-ended, case-by-case approach.
Justice Alito argued the Court should have dismissed the case as improvidently granted rather than decide it at all (a view Justice Gorsuch joined as to this Part). He contended the majority's context-specific test provides virtually no guidance to lower courts, leaves unanswered how to weigh competing factors, and contradicts the Court's own preference for workable bright-line rules in extraterritoriality cases. He also argued the decision improperly opens the door to foreign plaintiffs using RICO's unusually generous remedies, in tension with the comity concerns that animate extraterritoriality doctrine.
How the Court got there
The legal reasoning, step by step
- The domestic-injury requirement for private civil RICO suits comes from the Court's 2016 decision in RJR Nabisco v. European Community, which applied the 'presumption against extraterritoriality' — a legal rule that federal statutes are assumed to apply only within the United States unless Congress clearly says otherwise. RJR Nabisco required every private RICO plaintiff to show a 'domestic injury,' but the Court never defined the term because the plaintiffs there had already conceded their injuries were foreign.
- Faced with competing approaches, the Court had to choose between a bright-line rule that automatically places any injury at the plaintiff's residence (the approach used by the Seventh Circuit, which would bar Smagin as a Russian resident) and a context-specific test that examines all facts surrounding where the injury arose (the approach used by the Ninth Circuit).
- The Court rejected the bright-line residency rule because RJR Nabisco itself stated that the domestic-injury requirement 'does not mean that foreign plaintiffs may not sue under RICO' and acknowledged that the analysis 'will not always be self-evident.' A rule that automatically disqualifies every foreign plaintiff would contradict those statements and effectively bar the very plaintiffs RJR Nabisco said could still sue.
- The context-specific approach also fits the second step of the extraterritoriality framework, which asks whether a statute is being applied domestically by looking at the statute's 'focus.' RICO's private suit provision focuses on injury as the product of racketeering activity — not on where economic loss is felt in isolation — so courts must look at the circumstances surrounding the injury, including where the racketeering occurred and what rights it targeted.
- Applying that framework to Smagin's case: his injury (inability to collect a California judgment against a California resident) arose in the United States because the racketeering scheme was mostly conducted in California or directed at California, and the rights the California judgment provides — including the right to seize California assets and seek relief from a California court — exist only in California. The RICO scheme directly undermined those California-specific rights.
- The Court also rejected the argument that old common-law legal fictions — such as the rule that fraud losses are felt at the plaintiff's home, or the Latin principle that intangible property follows its owner's domicile — should govern the analysis. Those principles were designed for choice-of-law disputes, not for the extraterritoriality framework, which has its own distinct concerns about international harmony and reading what Congress actually intended.
Doctrinal impact
Cases affected by this decision
Reaffirms RJR Nabisco, Inc. v. European Community (579 U.S. 325)
The Court reaffirms the domestic-injury requirement from RJR Nabisco and applies its two-step extraterritoriality framework to define it.