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Yegiazaryan v. Smagin

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Supreme Court of the United States
Yegiazaryan v. Smagin
Term: 2022
Important Dates
Argued: April 25, 2023
Decided: June 22, 2023
Outcome
affirmed and remanded
Vote
6-3
Majority
Chief Justice John Roberts • Stephen Breyer • Sonia Sotomayor • Elena Kagan • Brett Kavanaugh • Amy Coney Barrett
Dissenting
Samuel Alito • Clarence Thomas • Neil Gorsuch (in part)

Yegiazaryan v. Smagin is a case that was decided by the Supreme Court of the United States on June 22, 2023, during the court's October 2022-2023 term. It was argued before the Supreme Court of the United States on April 25, 2023. The case was consolidated with CMB Monaco v. Smagin.

HIGHLIGHTS
  • The issue: The case concerned the Racketeer Influenced and Corrupt Organizations Act and whether a foreign plaintiff can state a civil case under the act when it suffers an injury to intangible property. Click here to learn more about the case's background.
  • The questions presented: “Does a foreign plaintiff state a cognizable civil RICO claim when it suffers an injury to intangible property, and if so, under what circumstances.”[1] “Whether a foreign plaintiff with no alleged connection to the United States may nevertheless allege a "domestic" injury under RJR Nabisco sufficient to maintain a RICO action based only on injury to intangible property”[2]
  • The outcome: In a 6-3 opinion, the court affirmed and remanded the judgment of the United States Court of Appeals for the Ninth Circuit. The court held that a plaintiff has alleged a domestic injury under section 1964(c) of the Racketeer Influenced and Corrupt Organizations (RICO) Act when the circumstances around the injury show that it arose in the United States. Smagin alleged that he was injured in California because his ability to enforce a California judgment in California against a California resident was hindered by racketeering activity that largely occurred in or was directed from and targeted at California. The court concluded that those allegations constitute a domestic injury. Justice Sonia Sotomayor delivered the opinion of the court.[3]


    • The cases came on a writ of certiorari to the United States Court of Appeals for the Ninth Circuit. To review the lower court's opinion, click here.

    Timeline

    The following timeline details key events in these cases:[4]

    • June 22, 2023: The U.S. Supreme Court affirmed and remanded the decision of the [United States Court of Appeals for the Ninth Circuit]].
    • April 25, 2023: The U.S. Supreme Court heard oral argument.
    • January 13, 2023: The U.S. Supreme Court agreed to hear the case.
    • October 20, 2022: Ashot Yegiazaryan and CMB Monaco appealed to the U.S. Supreme Court.
    • Jun 10, 2022: The United States Court of Appeals for the Ninth Circuit reversed the district court's dismissal of Smagin’s complaint and remanded for further proceedings.

    Background

    In 2010, Russian authorities charged Ashot and Artem Yegiazaryan with fraud against Vitaly Ivanovich Smagin. They were accused of using fraudulent transactions between 2003 and 2009, to steal Smagin's shares in a joint real estate investment in Moscow, Russia. After being indicted, Ashot and Artem Yegiazaryan moved to California. In 2010, Smagin also began arbitration proceedings in London, U.K. against Ashot Yegiazaryan, and was awarded $84 million by the arbitration panel in 2014.[5]

    Smagin filed an enforcement action with the United States District Court for the Central District of California against Yegiazaryan to confirm and enforce the $84 million awarded to him; In 2014, the district court confirmed the award under the Federal Rule of Civil Procedure 58. The district court entered this judgment in accordance with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The Federal Arbitration Act states that the New York Convention is enforceable in the United States and that federal district courts have original jurisdiction regarding actions that fall under the Convention.[5]

    In 2015, Ashot Yegiazaryan settled an arbitration dispute against Suleymon Kerimov for $198 Million. Smagin alleges that through these actions, Yegiazaryan created offshore entities and a complex ownership structure to illegally avoid paying the $84 million awarded to him, and he sues Yegiazaryan in the United States District Court for the Central District of California under the Racketeer Influenced and Corrupt Organizations (RICO) Act. Concluding that Smagin did not suffer a domestic injury, a requirement for a RICO claim, the district court dismissed the claim. The United States Court of Appeals for the Ninth Circuit found that Smagin did potentially suffer a domestic injury and reversed and remanded the district court's decision.[6][2][5]


    Questions presented

    The petitioner presented the following questions to the court:[7][8]


    Questions presented:
    • Does a foreign plaintiff state a cognizable civil RICO claim when it suffers an injury to intangible property, and if so, under what circumstances.
    • Whether a foreign plaintiff with no alleged connection to the United States may nevertheless allege a "domestic" injury under RJR Nabisco sufficient to maintain a RICO action based only on injury to intangible property

    Oral argument

    Audio

    Audio of oral argument:[9]



    Transcript

    Transcript of oral argument:[10]

    Outcome

    In a 6-3 opinion, the court affirmed and remanded the judgment of the United States Court of Appeals for the Ninth Circuit. The court held that a plaintiff has alleged a domestic injury under section 1964(c) of the Racketeer Influenced and Corrupt Organizations (RICO) Act when the circumstances around the injury show that it arose in the United States. Smagin alleged that he was injured in California because his ability to enforce a California judgment in California against a California resident was hindered by racketeering activity that largely occurred in or was directed from and targeted at California. The court concluded that those allegations constitute a domestic injury. Justice Sonia Sotomayor delivered the opinion of the court.[3]

    Opinion

    In the court's majority opinion, Justice Sonia Sotomayor wrote:[3]

    “ This suit illustrates well why the domestic-injury inquiry must account for the facts of the case, rather than rely on a residency-based rule. While it may be true, in some sense, that Smagin has felt his economic injury in Russia, focusing solely on that fact would miss central features of the alleged injury. Zooming out, the circumstances surrounding Smagin’s injury make clear it arose in the United States.


    Smagin alleges that he “has been injured in his inability to collect [his] massive judgment.” App. 38a. Much of the alleged racketeering activity that caused the injury occurred in the United States. Yegiazaryan took domestic actions to avoid collection, including allegedly creating U. S. shell companies to hide his U. S. assets, submitting a forged doctor’s note to a California District Court, and intimidating a U. S.-based witness. It is true that other components of the scheme occurred abroad. As Smagin alleges, however, even those “wrongful acts and plans were devised, initiated, and carried out . . . through acts and communications initiated in and directed towards Los Angeles County, California,” with the “central purpose of frustrating enforcement of [the] California judgment.” Id., at 45a–46a.
    Further, the injurious effects of the racketeering activity largely manifested in California. Smagin obtained a judgment in California because that is where Yegiazaryan lives, and where Smagin had thus hoped to collect. The rights that the California judgment provides to Smagin exist only in California, including the right to obtain postjudgment discovery, the right to seize assets in California, and the right to seek other appropriate relief from the California District Court. The alleged RICO scheme thwarted those rights, thereby undercutting the orders of the California District Court and Smagin’s efforts to collect on Yegiazaryan’s assets in California.
    In sum, Smagin’s interests in his California judgment against Yegiazaryan, a California resident, were directly injured by racketeering activity either taken in California or directed from California, with the aim and effect of subverting Smagin’s rights to execute on that judgment in California. On the Court’s contextual approach, those allegations suffice to state a domestic injury in this suit. [11]

    		”
    —Justice Sonia Sotomayor

    Dissenting opinion

    Justice Samuel Alito filed a dissenting opinion, joined by Justices Clarence Thomas and Neil Gorsuch as to Part I.

    In his dissent, Justice Alito wrote:[3]

    “ These are the first cases in which we have been required to decide when injury to intangible property that a civil plaintiff attributes to a violation of the Racketeer Influenced and Corrupt Organizations Act (RICO) qualifies as a “domestic injury” and may therefore provide the basis for recovery under 18 U. S. C. §1964(c). See RJR Nabisco, Inc. v. European Community, 579 U. S. 325, 346–354 (2016). This question has divided the lower courts, but the Court’s decision resolves very little. It holds only that ascertaining the site of intangible injuries for purposes of civil RICO requires a court to consult a variety of factors and that two factors it identifies show that respondent has suffered a domestic injury. This analysis offers virtually no guidance to lower courts, and it risks sowing confusion in our extraterritoriality precedents. Rather than take this unhelpful step, I would dismiss the writ of certiorari as improvidently granted.[11] ”
    —Justice Samuel Alito

    Text of the opinion

    Read the full opinion here.


    October term 2022-2023

    See also: Supreme Court cases, October term 2022-2023

    The Supreme Court began hearing cases for the term on October 3, 2022. The court's yearly term begins on the first Monday in October and lasts until the first Monday in October the following year. The court generally releases the majority of its decisions in mid-June.[12]


    See also

    External links

    Footnotes

    1. ↑ Supreme Court, "22-381 YEGIAZARYAN V. SMAGIN," accessed January 20, 2023
    2. ↑ 2.0 2.1 Supreme Court, "22-383 CMB MONACO V. SMAGIN," accessed January 20, 2023 Cite error: Invalid <ref> tag; name "question2" defined multiple times with different content
    3. ↑ 3.0 3.1 3.2 3.3 U.S. Supreme Court, "Yegiazaryan, Aka Egiazaryan V. Smagin et al, On Petition for a Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit," accessed June 23, 2023
    4. ↑ SCOTUSblogg', "Yegiazaryan v. Smagin," accessed January 20, 2023
    5. ↑ 5.0 5.1 5.2 Casetext, "Smagin v. Yegiazaryan," June 10, 2022
    6. ↑ Oyez, "Yegiazaryan v. Smagin," accessed June 27, 2023
    7. ↑ Supreme Court of the United States, A22-381 YEGIAZARYAN V. SMAGIN - "Questions presented," accessed March 24, 2023
    8. ↑ Supreme Court of the United States, 22-383 CMB MONACO V. SMAGIN - "Questions presented," accessed March 24, 2023
    9. ↑ Supreme Court of the United States, "Oral Argument - Audio," argued April 25, 2023
    10. ↑ Supreme Court of the United States, "Oral Argument - Transcript," argued April 25, 2023
    11. ↑ 11.0 11.1 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
    12. ↑ SupremeCourt.gov, "The Supreme Court at Work: The Term and Caseload," accessed January 24, 2022
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