Often, RICO cases fail due to very specific pleading errors. A RICO plaintiff may fail to meet the law’s requirements for pleading continuity, for pleading a valid RICO enterprise, for pleading underlying fraud claims with particularity, or for pleading an injury that qualifies under the law as “domestic,” not foreign. Whether you are pursuing a civil RICO case or defending against one, details matter a great deal, so be sure you have an experienced Atlanta civil RICO lawyer on your side.
Earlier this month, the U.S. Supreme Court issued an important ruling looking at the issue of domestic (versus foreign) injuries and civil RICO law. The case is an important win, in this world of multinational business, for non-U.S. residents who suffer racketeering harm in the U.S.
The RICO case upon which the Supreme Court just ruled involved a Russian plaintiff, V.S., and a real estate venture in Moscow gone wrong. V.S. filed an arbitration action in London and won a multimillion-dollar sum.
Following that win, V.S. successfully filed an action in a California federal court to recognize and enforce his arbitration award. The man chose California because, although the defendant was Russian, he had fled Russia and relocated to California.
Subsequently, V.S. pursued the defendant under the Racketeer Influenced and Corrupt Organizations Act. The man’s RICO case accused the defendant of using racketeering activities in California to dodge the execution of the federal court judgment enforcing the arbitration award.
The defendant sought to toss the RICO claim, arguing that V.S. hadn’t pled a valid “domestic injury.”
Under Section 1964(c) of the RICO statute, a person or entity pursuing a civil RICO claim must assert a qualifying injury, and that harm must have been domestic, not foreign. The trial court looked at the case, saw a Russian plaintiff and a Russian business venture, and concluded that the plaintiff had failed to plead a domestic injury.
Rejecting the Strict ‘Residency-Based’ Test
The 7th Circuit Court of Appeals used a similar analysis in rejecting a plaintiff’s RICO case. That court said that “economic injuries are felt at a corporation’s principal place of business” and the plaintiff in that case was headquartered in Singapore, so the claim lacked a domestic injury.
The Supreme Court, however, rejected the type of “rigid, residency-based test” that the 7th Circuit used, and instead favored a “context-based” test. The majority’s opinion expressly declared that the proper focus — in a Section 1964(c) injury analysis — should be “on the injury, not in isolation, but as the product of racketeering activity” and that “courts should look to the circumstances surrounding the alleged injury to assess whether it arose in the United States.”
The court pointed out that V.S. had alleged considerable misconduct in the United States. The defendant, who resided in California, allegedly hid his assets “through a system of ‘shell companies’ owned by family members.” Among those was a Nevada company that the defendant’s brother owned and that existed for the specific purpose of shielding the defendant’s U.S. assets from creditors like V.S., according to the complaint. Applying a context-based analysis, this was enough to satisfy the domestic injury requirement.
If your case involves RICO, you need to ensure you have the right legal team. RICO trial experience is vital because litigating these matters differs from other types of civil cases. For your legal needs, count on the knowledgeable Atlanta civil RICO attorneys at Poole Huffman, LLC. Our team offers clients personalized attention and a proven track record of success. Contact us online or by calling (404) 373-4008 to schedule your confidential consultation today.