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Media Alerts - Jorge Yarur Bascuñán, et al. v. Daniel Yarur Elsaca, et al. - Second Circuit
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October 31, 2017
  Jorge Yarur Bascuñán, et al. v. Daniel Yarur Elsaca, et al. - Second Circuit
Headline: Second Circuit Reverses District Court, Holding Foreign Plaintiff Sufficiently Alleged a Domestic Injury under Civil RICO Statute as Required by the United States Supreme Court's 2016 RJR Nabisco Decision

Area of Law: Civil RICO

Issue(s) Presented: Whether the foreign plaintiff, residing abroad, alleged a domestic injury as required to state a private action under civil RICO.

Brief Summary:
The United States District Court for the Southern District of New York dismissed a civil RICO lawsuit by a foreign national against his financial manager, seeking damages under the civil RICO statute, finding that the plaintiff failed to allege a domestic injury as required by the recent United States Supreme Court decision in RJR Nabisco Inc. v. European Community. The Second Circuit disagreed with the District Court's exclusive reliance on the plaintiff's foreign residence as indicative of a foreign injury, holding that injuries occurring to property located within the United States were sufficient to satisfy the domestic injury requirement. Accordingly the Second Circuit vacated and remanded to the District Court for further proceedings.

To read the full opinion, please visit:
http://www.ca2.uscourts.gov/de...98e70485a9b/1/hilite/

Significance, if Any: This case is one of first impression in any United States Court of Appeals interpreting the "domestic injury" requirement for Civil RICO established in the Supreme Court's RJR Nabisco decision.

Extended Summary:
In 2015, Plaintiff-Appellant Bascuñán filed an action under Section 1964(c) of the Racketeer Influenced and Corrupt Organizations Act (RICO), commonly referred to as a civil RICO suit. In his complaint, Bascuñán alleged that his cousin Elsaca, Defendant-Appellee, continuously violated RICO in his capacity as Bascuñán's financial manager by setting up several fraudulent financial schemes, resulting in an economic loss to Bascuñán of over $64 million. The United States District Court for the Southern District of New York dismissed Bascuñán's complaint on the ground that he failed to allege a domestic injury, a requirement set forth by the United States Supreme Court in RJR Nabisco Inc. v. European Community (2016). In RJR Nabisco, the Court held that a civil RICO suit does not allow recovery for foreign injuries, so a plaintiff must allege and prove a domestic injury to business or property. In its dismissal of Bascuñán's complaint, the District Court relied on Bascuñán's place of residence, Chile, as determinative that he alleged only foreign injuries.

On appeal, the Second Circuit disagreed with the District Court's exclusive reliance on place of residence to determine whether the injuries alleged are foreign or domestic. While recognizing that a plaintiff's place of residence could be relevant to such a determination, the Second Circuit emphasizes that this fact is not by itself determinative. Sufficient contact with the United States to support a domestic injury can be satisfied by showing that there were injuries to property located within the United States, even if the plaintiff is not a resident of the United States. In this case, Bascuñán satisfied this requirement for two of his claimed injuries by alleging misappropriation of funds and theft of bearer shares that were held in New York banks, despite his residence in Chile.

In reaching this conclusion, the Court emphasizes that not just any contact with the United States will suffice to make an injury domestic. The Court found that Bascuñán's allegations of injuries to property located outside of the United States do not become domestic injuries merely because Elsaca laundered the funds through the United States. Rather, the injury must have a "sufficient relationship" with the United States, which the Court finds is satisfied by Bascuñán's claims that property located in New York was injured therein. Finding the District Court incorrectly applied the Supreme Court's requirement of domestic injury set forth in RJR Nabisco, the Second Circuit remands the case back to the District Court for a determination that is consistent with the Second Circuit's reading of the requirement.

Given that this is a case of first impression across all United States Courts of Appeals, it is likely that the Second Circuit's interpretation of RJR Nabisco could affect civil RICO lawsuits across multiple jurisdictions.

To read the full opinion, please visit:

http://www.ca2.uscourts.gov/de...98e70485a9b/1/hilite/

Panel: Circuit Judges Cabranes and Livingston; District Judge Pauley

Argument Date:
04/28/2017

Date of Issued Opinion: 10/30/2017

Docket Number: 16-3626-cv

Decided: Vacated and Remanded

Case Alert Author: Alexandra Dobles

Counsel: Robin L. Alperstein, Becker, Glynn, Muffly, Chassin & Hosinski LLP for Plaintiffs-Appellants; Jennifer M. Selendy, Quinn Emanuel Urquhart & Sullivan, LLP for Defendants-Appellees

Author of Opinion:
Judge Cabranes

Case Alert Circuit Supervisor: Elyse Diamond

    Posted By: Elyse Diamond @ 10/31/2017 08:52 AM     2nd Circuit  

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