37 F.4th 562
9th Cir.2022Background
- Vitaly Smagin, a Russian citizen, obtained a London arbitration award against Ashot Yegiazaryan and secured confirmation of that award as a federal district-court judgment in the Central District of California (the "California Judgment").
- Ashot, a Russian citizen residing in California, later received a separate $198M settlement (the Kerimov Award) and allegedly used offshore trusts, shell companies (including U.S. entities), and bank accounts to conceal funds and frustrate collection on the California Judgment.
- The California court entered asset-freeze orders, a preliminary injunction, and found Ashot in contempt for violating orders; Smagin alleges additional obstructive acts (forged doctor’s note, intimidation of a California-based witness, and filings intended to create competing sham foreign judgments).
- Smagin sued Ashot and others under RICO, alleging the defendants’ conduct injured his property—the California Judgment—by delaying or preventing execution and discovery.
- The district court dismissed the RICO complaint for failure to plead a "domestic" injury under RJR Nabisco; Smagin appealed.
- The Ninth Circuit reversed and remanded, holding the alleged harm to the California Judgment is a domestic injury for RICO standing because the judgment’s enforcement and discovery rights are exercisable in California and much of the alleged misconduct was directed at California.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an injury to a U.S. district-court judgment confirming a foreign arbitral award is a "domestic" injury for RICO standing | Smagin: the California Judgment is domestic because it confers enforcement and discovery rights exercisable in California | Ashot: injury originates from foreign arbitration/acts and plaintiff is foreign, so injury is foreign | Held: Injury to the California Judgment is domestic; the judgment exists as property in California where its rights can be exercised |
| Proper situs for intangible property (judgment) in RICO domestic-injury analysis | Smagin: situs is where enforcement/discovery rights exist (California) | Ashot: situs should follow plaintiff’s residence or location of underlying award | Held: For RICO standing, situs is context-specific; here the judgment’s rights are California-based, so situs is California |
| Whether U.S.-directed predicate acts (e.g., filings, witness intimidation, U.S. shell companies) make the injury domestic | Smagin: substantial predicate acts occurred in or targeted California and directly harmed the California Judgment | Ashot: use of U.S. financial system or some U.S. acts is insufficient to convert the injury into a domestic one | Held: Alleged U.S.-directed acts that targeted and impeded enforcement of the California Judgment support a domestic injury |
| Applicable standard for domestic-injury inquiry vs. competing circuit tests | Smagin: adopt a context-specific, multi-factor approach (as in Third Circuit) | Ashot: favors a bright-line residency-based test (Seventh Circuit approach) | Held: Ninth rejects Seventh’s residency rule; adopts a context-sensitive inquiry aligned with Second and Third Circuit approaches |
Key Cases Cited
- RJR Nabisco, Inc. v. Eur. Cmty., 579 U.S. 325 (2016) (private RICO action requires alleging a domestic injury)
- Kingvision Pay-Per-View Ltd. v. Lake Alice Bar, 168 F.3d 347 (9th Cir. 1999) (a judgment constitutes property)
- Off. Depot Inc. v. Zuccarini, 596 F.3d 696 (9th Cir. 2010) (situs of intangible property is context-specific)
- Ministry of Def. & Support for the Armed Forces of the Islamic Republic of Iran v. Cubic Def. Sys., Inc., 665 F.3d 1091 (9th Cir. 2011) (foreign arbitration award confirmed in U.S. has same force as domestic judgment)
- City of Almaty v. Khrapunov, 956 F.3d 1129 (9th Cir. 2020) (foreign plaintiff that later obtained U.S. judgment could bring that judgment to U.S. for execution; no cognizable independent domestic injury shown there)
- Bascuñán v. Elsaca, 874 F.3d 806 (2d Cir. 2017) (misappropriation of tangible U.S. property supports domestic injury; limits on intangible-property analysis)
- Humphrey v. GlaxoSmithKline PLC, 905 F.3d 694 (3d Cir. 2018) (domestic-injury inquiry is fact-specific and multi-factor; rejects bright-line residency test)
- Armada (Sing.) PTE Ltd. v. Amcol Int’l Corp., 885 F.3d 1090 (7th Cir. 2018) (adopts a residency-based rule for intangible-property injuries; rejected by Ninth in this case)