GLOBAL MASTER INTL GROUP, INC., ET AL V. ESMOND NATURAL, INC., ET AL, No. 21-55809 (9th Cir. 2023)
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Global Master Corporation and its sister company Global Master International Group, Inc., located and headquartered in California (collectively, Global Master) imported nutritional supplements from the United States and marketed them to consumers in China. Global Master alleged that Esmond Natural used lower strength or entirely different supplements to fill orders. The district court held that Global Master failed to satisfy statutory standing because it lacked a domestic injury as its alleged harm was felt in China, and civil claims brought under RICO do not allow recovery for foreign injuries.
The Ninth Circuit reversed in part the district court’s summary judgment, based on a lack of statutory standing, in an action brought by Global Master Corporation, a Chinese company seeking relief under the Racketeer Influenced and Corrupt Organizations Act for allegedly defective products purchased from California-based Esmond Natural, Inc. The panel held that under Yegiazaryan v. Smagin, 143 S. Ct. 1900 (2023), the district court applied the wrong legal standard. The panel held that, under this test, Global Master suffered a domestic injury because, pursuant to the parties’ contracts, Global Master took all deliveries of the supplements in Los Angeles. Thus, Esmond Natural’s fraud injured Global Master’s property in California. The panel remanded to the district court for further proceedings. In a concurrently filed memorandum disposition, the panel affirmed on other issues.
Court Description: RICO The panel reversed in part the district court’s summary judgment, based on a lack of statutory standing, in an action brought by Global Master Corporation, a Chinese company, seeking relief under the Racketeer Influenced and Corrupt Organizations Act for allegedly defective products purchased from California-based Esmond Natural, Inc.
Global Master Corporation and its sister company Global Master International Group, Inc., located and headquartered in California (collectively, Global Master) imported nutritional supplements from the United States and marketed them to consumers in China. Global Master alleged that Esmond Natural used lower strength or entirely different supplements to fill orders. The district court held that Global Master failed to satisfy statutory standing because it lacked a domestic injury as its alleged harm was * The Honorable Gershwin A. Drain, United States District Judge for the Eastern District of Michigan, sitting by designation. GLOBAL MASTER INT’L GROUP, INC. V. ESMOND NATURAL, INC. 3 felt in China, and civil claims brought under RICO do not allow recovery for foreign injuries.
The panel held that under Yegiazaryan v. Smagin, 143 S.
Ct. 1900 (2023), the district court applied the wrong legal standard. Yegiazaryan clarified that a “plaintiff alleges a domestic injury for purposes of [18 U.S.C.] § 1964(c) when the circumstances surrounding the injury indicate it arose in the United States.” Yegiazaryan held that “courts should look to the circumstances surrounding the alleged injury to assess whether it arose in the United States,” including “the nature of the alleged injury, the racketeering activity that directly caused it, and the injurious aims and effects of that activity.” The panel held that, under this test, Global Master suffered a domestic injury because, pursuant to the parties’ contracts, Global Master took all deliveries of the supplements in Los Angeles. Thus, Esmond Natural’s fraud injured Global Master’s property in California.
The panel remanded to the district court for further proceedings. In a concurrently filed memorandum disposition, the panel affirmed on other issues.
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