Cevdet Aksüt Oğullari Koll. Sti v. Cavusoglu
245 F. Supp. 3d 650
D.N.J.2017Background
- Plaintiff Cevdet Aksüt Ogullari Koll. Sti, a Turkish corporation, sues U.S. residents (including Sunrise defendants) alleging a RICO conspiracy that fraudulently induced shipment and sale of Turkish food products in the U.S., leaving Plaintiff unpaid for roughly $1.1 million.
- Plaintiff previously obtained a $1.12 million judgment against an entity tied to the alleged scheme and alleges defendants conspired to frustrate collection and to convert its goods.
- Key dispute for this motion: whether Plaintiff, a foreign corporation with no U.S. operations, has pleaded a "domestic injury" under federal and New Jersey RICO statutes sufficient to sustain civil RICO claims (Counts IV and V).
- Defendants rely on the Supreme Court’s RJR Nabisco decision and subsequent district-court interpretations arguing injuries occurred in Turkey (where Plaintiff relinquished goods and conducts its business), so RICO’s private cause of action does not apply.
- Plaintiff contends RJR is distinguishable because predicate acts occurred in the U.S., the judgment is domestic property, and Plaintiff had U.S. sales—so its injury is domestic.
- The Court focused on the locus of the injury (where impact was felt) rather than where predicate acts occurred and dismissed Counts IV and V with prejudice for failure to allege a domestic injury.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1964(c) permits a foreign corp without U.S. operations to sue for injury caused by predicate acts committed in U.S. | RJR is distinguishable; harms are domestic because predicate acts occurred in U.S. and Plaintiff had U.S. business/judgment. | RJR requires a domestic injury; Plaintiff’s injury was suffered in Turkey where it relinquished goods and operates. | Court: Domestic-injury inquiry looks to where the injury was felt; Plaintiff’s injuries occurred in Turkey, so §1964(c) not available. |
| Whether Plaintiff’s 2011 judgment against a related entity is "domestic property" for RICO recovery | Judgment is domestic property and its frustration was caused by defendants’ U.S. conduct. | The judgment is a downstream effect of the original foreign injury and Plaintiff has not shown concrete, irrecoverable loss. | Court: Judgment is a downstream effect; Plaintiff cannot show concrete loss now, so judgment is not a cognizable domestic RICO injury. |
| Whether conversion of goods constitutes a domestic property injury | Goods were converted in the U.S. after arrival; invoices/acts began to harm in U.S. | Plaintiff relinquished possession in Izmir (FOB Izmir); injury occurred where control was lost—Turkey. | Court: FOB Izmir and shipment to carrier show loss of control in Turkey; conversion injury is foreign. |
| Whether Plaintiff’s alleged lost U.S. business constitutes a domestic business injury | Plaintiff had ~$1M annual U.S. sales previously; defendants’ U.S. conduct harmed that U.S. business. | Plaintiff has no U.S. operations, presence, instrumentalities, or evidence in the record; impact was felt in Turkey. | Court: No record evidence of U.S. business presence; injury felt in Turkey; cannot plead domestic business injury. |
Key Cases Cited
- RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090 (2016) (private RICO plaintiff must allege and prove a domestic injury to business or property)
- Elsevier, Inc. v. Grossman, 199 F. Supp. 3d 768 (S.D.N.Y. 2016) (situs of injury is where business consequences are felt or where property was parted with)
- Tatung Co., Ltd. v. Shu Tse Hsu, 217 F. Supp. 3d 1138 (C.D. Cal. 2016) (focuses on where predicate acts occurred; domestic injury may exist if defendants targeted U.S. interests)
- City of Almaty v. Ablyazov, 226 F. Supp. 3d 272 (S.D.N.Y. 2016) (the §1964(c) domestic-injury requirement is distinct from substantive RICO analysis; injury location controls)