Global Master Intl Group, Inc. v. Esmond Natural, Inc.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

GLOBAL MASTER No. 21-55809

INTERNATIONAL GROUP, INC.;

GLOBAL MASTER D.C. No.

CORPORATION, 2:19-cv-10360-

RGK-PLA

Plaintiffs-Appellants,

v.

OPINION

ESMOND NATURAL, INC.; PAUL

CHIA-YIN WEI,

Defendants-Appellees.

Appeal from the United States District Court

for the Central District of California

R. Gary Klausner, District Judge, Presiding

Argued and Submitted August 30, 2022

Submission Withdrawn January 18, 2023

Resubmitted August 7, 2023

Pasadena, California

Filed August 11, 2023

2 GLOBAL MASTER INT’L GROUP, INC. V. ESMOND NATURAL, INC.

Before: Milan D. Smith, Jr. and Ryan D. Nelson, Circuit

Judges, and Gershwin A. Drain, * District Judge.

Opinion by Judge R. Nelson

SUMMARY **

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.

**

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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.

COUNSEL

Richard A. De Liberty (argued) and Kavon Adli, The

Internet Law Group, Beverly Hills, California, for Plaintiffs-

Appellants.

Andres F. Quintana (argued), Quintana Law Group APC,

Agoura Hills, California, for Defendants-Appellees.

4 GLOBAL MASTER INT’L GROUP, INC. V. ESMOND NATURAL, INC.

OPINION

R. NELSON, Circuit Judge:

Global Master Corporation, a Chinese company, seeks

relief under the Racketeer Influenced and Corrupt

Organizations Act for allegedly defective products

purchased from California-based Esmond Natural, Inc. The

district court held that Global Master Corporation failed to

satisfy statutory standing because it lacked a domestic injury

as its alleged harm was felt in China. Under the Supreme

Court’s decision in Yegiazaryan v. Smagin, 599 U.S. ---, 143

S. Ct. 1900 (2023), the district court applied the wrong legal

standard. Applying Yegiazaryan, we reverse and remand. 1

I

A

Plaintiffs-Appellants Global Master Corporation (GMC)

and Global Master International Group, Inc. (GMIG)

(collectively, Global Master) import nutritional supplements

from the United States and market them to consumers in

China. GMC is located and headquartered in China. GMIG

is GMC’s sister company located and headquartered in

California. From 2006 to 2017, Esmond Natural, Inc., a

California company, was GMC’s chief supplier of private-

label, U.S.-made supplements. Around 2017, GMC

allegedly grew dissatisfied with Esmond Natural’s products

because of production delays and product defects. GMC

began to terminate its business relationship with Esmond

1

We address the Appellants’ remaining challenges in a concurrently

filed Memorandum Disposition which affirms the district court on those

issues.

GLOBAL MASTER INT’L GROUP, INC. V. ESMOND NATURAL, INC. 5

Natural, and GMIG was established to supply supplements.

GMIG then hired a former Esmond Natural employee,

Anson Hsu, to build relationships with new suppliers,

including some that had manufactured supplements used by

Esmond Natural and sold to GMC.

GMC claims that after Hsu started working at GMIG, he

uncovered a systematic scheme of fraud in which Esmond

Natural allegedly used lower strength or entirely different

supplements to fill GMC’s orders. GMC sued Esmond

Natural under the Racketeer Influenced and Corrupt

Organizations Act (RICO), alleging predicate acts of mail

and wire fraud.

B

The district court granted summary judgment for the

defendants, finding that GMC had not suffered a domestic

injury because its alleged injury was mainly felt in China.

Noting, at that time, that neither the Supreme Court nor the

Ninth Circuit had defined the meaning of “domestic injury,”

the district court pointed to two definitions used by courts:

(1) where the plaintiff suffered the injury (“injury-felt test”)

or (2) where the conduct that caused the injury occurred

(“injury-causing test”). Compare City of Almaty v.

Ablyazov, 226 F. Supp. 3d 272, 282 (S.D.N.Y. 2016) (“[T]he

appropriate subject of the inquiry required by RJR Nabisco

is not the location of the Crossclaim Defendants’ purportedly

injurious conduct but the location where the injury itself

arose.”), with Tatung Co. v. Shu Tze Hsu, 217 F. Supp. 3d

1138, 1156 (C.D. Cal. 2016) (“[T]he defendants specifically

targeted their conduct at California with the aim of thwarting

Tatung’s rights in California. It would be absurd to find that

such activity did not result in a domestic injury to Plaintiff.”

(citation & internal quotation marks omitted)). The district

6 GLOBAL MASTER INT’L GROUP, INC. V. ESMOND NATURAL, INC.

court applied the “injury-felt test,” concluding that most

courts have adopted the first line of reasoning: where the

plaintiff suffered, or felt, the injury controls whether the

injury is “domestic.” The district court noted that GMC’s

inferior products (which it sold in China), and loss of

goodwill (in the Chinese market) demonstrated harm felt in

China. This timely appeal followed. We stayed this appeal

pending the Supreme Court’s decision in Yegiazaryan v.

Smagin, 599 U.S. ---, 143 S. Ct. 1900 (2023) and now

address the merits.

II

We review the grant of summary judgment on GMC’s

RICO claim de novo. Ikuno v. Yip, 912 F.2d 306, 308 (9th

Cir. 1990). “[V]iewing the evidence in the light most

favorable to the nonmoving party,” we determine whether

“there are any genuine issues of material fact and whether

the district court correctly applied the relevant substantive

law.” Lopez v. Smith, 203 F.3d 1122, 1131 (9th Cir. 2000)

(en banc).

III

We first review RICO’s statutory framework and

relevant precedent to define domestic injury.

A

RICO, codified at 18 U.S.C. §§ 1961–1968, extends civil

and criminal penalties for acts performed as part of an

ongoing criminal organization or enterprise, known as

“prohibited activities.” H.J. Inc. v. Nw. Bell Tel. Co., 492

U.S. 229, 232 (1989). A party violates RICO by engaging

in a “pattern of racketeering activity—a series of related

predicates that together demonstrate the existence or threat

of continued criminal activity” to “infiltrate, control, or

GLOBAL MASTER INT’L GROUP, INC. V. ESMOND NATURAL, INC. 7

operate an enterprise which is engaged in, or the activities of

which affect, interstate or foreign commerce.” RJR Nabisco,

Inc. v. Eur. Cmty., 579 U.S. 325, 330 (2016) (citations &

internal quotation marks omitted).

18 U.S.C. § 1964(c) allows for a private civil action to

be brought by “[a]ny person injured in his business or

property by reason of” a RICO violation. The required

elements of a RICO private civil action are: “(1) conduct (2)

of an enterprise (3) through a pattern (4) of racketeering

activity (known as ‘predicate acts’) (5) causing injury to

plaintiff’s business or property.” United Brotherhood of

Carpenters & Joiners of Am. v. Bldg. & Constr. Trades

Dep’t, 770 F.3d 834, 837 (9th Cir. 2014) (quoting Living

Designs, Inc. v. E.I. Dupont de Nemours & Co., 431 F.3d

353, 361 (9th Cir. 2005)).

Parties suing under RICO must also satisfy its statutory

standing requirement. See Canyon County v. Syngenta

Seeds, Inc., 519 F.3d 969, 975 (9th Cir. 2008). “A civil

RICO ‘plaintiff only has standing if, and can only recover to

the extent that, he has been injured in his business or

property by the conduct constituting the violation.”’ Id.

(quoting Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496

(1985)). Thus, to establish statutory standing, a civil RICO

plaintiff must show: “(1) that his alleged harm qualifies as

injury to his business or property; and (2) that his harm was

by reason of the RICO violation, which requires the plaintiff

to establish proximate causation.” Just Film, Inc. v. Buono,

847 F.3d 1108, 1118–19 (9th Cir. 2017) (quoting Canyon

County, 519 F.3d at 972). The injury to the business or

property, however, must be “domestic,” as civil claims

brought under RICO do not allow recovery for foreign

injuries. RJR Nabisco, 579 U.S. at 354.

8 GLOBAL MASTER INT’L GROUP, INC. V. ESMOND NATURAL, INC.

The Supreme Court has applied a presumption against

extraterritorial application for private civil RICO claims.

“Absent clearly expressed congressional intent to the

contrary, federal laws will be construed to have only

domestic application.” Id. at 335. Thus, “[w]hen a statute

gives no clear indication of an extraterritorial application, it

has none.” Id. (quoting Morrison v. Nat’l Austl. Bank Ltd.,

561 U.S. 247, 255 (2010)). The presumption “serves to

avoid the international discord that can result when U.S. law

is applied to conduct in foreign countries.” Id. at 335. This

said, § 1964(c)’s domestic injury requirement “does not

mean that foreign plaintiffs may not sue under RICO.” Id.

at 353 n.12. As the Supreme Court explained, “[t]he

application of [the domestic injury] rule in any given case

will not always be self-evident, as disputes may arise as to

whether a particular alleged injury is ‘foreign’ or

‘domestic.’” Id. at 354.

B

The Supreme Court recently defined domestic injury

under § 1964(c). Yegiazaryan, 143 S. Ct. at 1912.

Yegiazaryan clarified that a “plaintiff alleges a domestic

injury for purposes of §1964(c) when the circumstances

surrounding the injury indicate it arose in the United States.”

Id. In so doing, the Court affirmed our opinion below and

agreed that the domestic injury requirement is context

specific and turns on the facts alleged in the complaint. Id.

at 1909. As such, “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.” Id.

GLOBAL MASTER INT’L GROUP, INC. V. ESMOND NATURAL, INC. 9

Yegiazaryan concerned a Russian citizen residing in

Russia (Smagin), who filed a civil RICO suit against another

Russian citizen living in California (Yegiazaryan). See 37

F.4th 562, 564 (9th Cir. 2022). Smagin secured a foreign

arbitration award against Yegiazaryan and subsequently

obtained a federal district court judgment confirming the

award, giving him a right to execute it in California. Id. In

his RICO suit, Smagin alleged that Yegiazaryan engaged in

fraudulent conduct to prevent him from executing the

California judgment. Id. at 565.

We held that the judgment existed as intangible property

in California because “that is where Plaintiff desires to

exercise the rights conferred by the California Judgment.”

Id. at 567. The California Judgment was not property in

Russia because the judgment granted Smagin no rights in

Russia. Id. Thus, because Smagin claimed that

Yegiazaryan’s illegal conduct was designed to subvert

Smagin’s right to execute California property, we concluded

that the alleged harm constituted a domestic injury. Id. at

567–68. We emphasized that “[t]he key question, then, is

where the California Judgment exists as property.” Id. at

567. This, we noted, followed RJR Nabisco’s statement that

“it is the location of the injury that is relevant to standing.”

Id. at 568. Our approach also aligned with the Second and

Third Circuits after RJR Nabisco. Id. at 568, 570 (citing

Humphrey v. GlaxoSmithKline PLC, 905 F.3d 694, 702, 706

(3d Cir. 2018); Bascuñán v. Elsaca, 874 F.3d 806, 820–21

(2d Cir. 2017)).

The Supreme Court agreed.

So understood, §1964(c)’s focus is on the

injury, not in isolation, but as the product of

racketeering activity. Thus, in assessing

10 GLOBAL MASTER INT’L GROUP, INC. V. ESMOND NATURAL, INC.

whether there is a domestic injury, courts

should engage in a case-specific analysis that

looks to the circumstances surrounding the

injury. If those circumstances sufficiently

ground the injury in the United States, such

that it is clear the injury arose domestically,

then the plaintiff has alleged a domestic

injury.

Yegiazaryan, 143 S. Ct. at 1910. The Court also noted that

“[b]ecause of the contextual nature of the inquiry, no set of

factors can capture the relevant considerations for all cases.”

Id. Therefore, “what is relevant in one case to assessing

where the injury arose may not be pertinent in another.” Id.

The Court’s opinion also approved the contextual

approaches taken by the Second and Third Circuits and

invalidated the Seventh Circuit’s residency requirement. Id.

at 1907. The Second Circuit first applied an “injury-

occurred” test for tangible property in Bascuñán,874 F.3d at

820–21. The court held that “absent some extraordinary

circumstance, the injury [to tangible property] is domestic if

the plaintiff’s property was located in the United States when

it was stolen or harmed, even if the plaintiff himself resides

abroad.” Id. Under this standard, the court concluded that

the misappropriation of funds held in the plaintiff’s New

York bank accounts constituted a domestic injury even

though both parties were citizens and residents of Chile. See

id. at 820–24. “[T]he location of the property and not the

residency of the plaintiff is the dispositive factor.” Id. at 824.

Because the money and bearer shares were in New York

when stolen, the plaintiff sufficiently alleged a domestic

injury. See id. at 810–11.

GLOBAL MASTER INT’L GROUP, INC. V. ESMOND NATURAL, INC. 11

The Second Circuit reasoned that plaintiffs who suffer

injury as a result of harm to their domestically located

tangible property are entitled to relief under RICO for two

reasons: (1) such litigants would expect that United States

law would protect their property interests in the event of

damage and (2) a foreign resident’s property located in the

United States is otherwise subject to all the regulations

imposed on private property by state and federal law. Id. at

821.

Also recognizing the need to avoid expanding RICO

extraterritorially, the Bascuñán court did not hold that “a

plaintiff’s place of residence is never relevant to the

domestic injury inquiry required by RJR Nabisco.” Id. at

824. Nor did the court hold that any contact with the United

States suffices to make an injury domestic. See id. But the

injuries must have a sufficient relationship to the United

States to qualify as “domestic” under the circumstances. Id.

The Third Circuit also rejected a residency requirement

for claims related to intangible property. Humphrey, 905

F.3d at 702, 706. Instead, the court applied a multi-factor

test that examined:

(1) where the injury itself arose; (2) the

location of the plaintiff's residence or

principal place of business; (3) where any

alleged services were provided; (4) where the

plaintiff received or expected to receive the

benefits associated with providing such

services; (5) where any relevant business

agreements were entered into and the laws

binding such agreements; and (6) the location

12 GLOBAL MASTER INT’L GROUP, INC. V. ESMOND NATURAL, INC.

of the activities giving rise to the underlying

dispute.

Id. at 707 (numbering added). The Humphrey court

concluded that the plaintiff had not alleged a domestic injury

because all the factors pointed to China as the site of injury.

Id. at 707–08. Indeed, the “[p]laintiffs ha[d] not alleged that

they possess offices, assets, or any other property in the

United States.” Id. at 708.

Both the Second and Third Circuit tests differ from the

now abrogated Seventh Circuit test, which imposed a bright-

line “injury-felt” test for intangible property that looked only

to where the plaintiff felt the effects of the alleged injury.

See Armada (Sing.) PTE Ltd. v. Amcol Int’l Corp., 885 F.3d

1090, 1094–95 (7th Cir. 2018), abrogated by Yegiazaryan,

143 S. Ct. 1900. The Armada court distinguished Bascuñán,

noting that it faced a question involving intangible property

rather than tangible property. Id. at 1094. The court held

that the plaintiff “experiences or sustains injuries to its

intangible property at its residence.” Id. There, a

Singaporean carrier that contracted with an Indian mining

company whose largest shareholder was an Illinois

corporation, filed suit under RICO alleging that the Illinois

owner had divested the Indian company’s assets to thwart

their attempt to recover damages for breached contracts. See

id. at 1091. The court concluded that, because the plaintiff

was a foreign corporation, any injury to its intangible

property, even if it were a judgment issued by a U.S. district

court, was not a domestic injury. Id. at 1094–95. The

Supreme Court rejected the “injury-felt” residency test in

Yegiazaryan. 143 S. Ct. at 1909.

GLOBAL MASTER INT’L GROUP, INC. V. ESMOND NATURAL, INC. 13

C

We, along with our sister circuits, previously analyzed

the domestic injury inquiry by considering whether the

property involved was tangible or intangible. See, e.g.,

Armada, 885 F.3d at 1094–95; Bascuñán, 874 F.3d at 820–

21. The Supreme Court’s opinion in Yegiazaryan, however,

does not make such a distinction. We therefore read its

holding and definition of “domestic injury” to apply

uniformly.

We now consider whether the circumstances of GMC’s

alleged injury show it arose in the United States. We find

that GMC suffered a domestic injury.

1

But first, we must determine whether GMC showed (1)

a cognizable injury to property (2) “by reason of” a RICO

violation. See Just Film, Inc., 847 F.3d at 1118–19. First,

the injury analysis. Here, a plaintiff must demonstrate (1)

harm to a specific property interest cognizable under state

law, Diaz v. Gates, 420 F.3d 897, 900 (9th Cir. 2005) (en

banc) (per curiam), and (2) that the injury resulted in

“concrete financial loss,” Canyon County, 519 F.3d at 975

(citation omitted).

The crux of GMC’s claim is that it received fraudulently

non-conforming supplements from Esmond Natural. Thus,

the claim is for an injury to a cognizable property interest—

the supplements. See Reiter v. Sonotone Corp., 442 U.S.

330, 338 (1979) (“[T]he word ‘property’ . . . comprehends

anything of material value owned or possessed.”). Esmond

Natural, however, contends that GMC only alleged financial

harm. It points mostly to a single interrogatory asking GMC

to “Describe the alleged injury to GMC’s business or

14 GLOBAL MASTER INT’L GROUP, INC. V. ESMOND NATURAL, INC.

property as a result of ESMOND NATURAL’s pattern of

racketeering activity,” and GMC’s response that “GMC

alleges that the value of the inferior supplements that it

received from Esmond was less that the value of the

supplements that it ordered.” But this interrogatory response

is not determinative because the interrogatory asked GMC

to describe the injury, not state the object of its injury.

GMC’s interrogatory response directly addresses the

tangible property interest that cause GMC’s financial

losses—the inferior supplements. GMC asserts that Esmond

Natural delivered nonconforming goods to GMC in

California, and that Esmond Natural’s fraud injured GMC’s

tangible property there.

A civil RICO injury also requires “proof of concrete

financial loss,” not “mere injury to a valuable intangible

property interest.” Chaset v. Fleer/Skybox Int’l, LP, 300

F.3d 1083, 1087 (9th Cir. 2002). Our caselaw has

established a low threshold for plaintiffs to show a concrete

RICO injury. We have found that allegations of “a legal

entitlement to business relations unhampered by schemes

prohibited by the RICO predicate statutes” and loss of a

future employment opportunity constitute RICO injuries to

“property.” Mendoza v. Zirkle Fruit Co., 301 F.3d 1163,

1168 n.4 (9th Cir. 2002); see also Diaz, 420 F.3d at 900.

Courts have also found that the overpayment of money is a

tangible injury. See Canyon County, 519 F.3d at 976.

Looking to the same interrogatory response that Esmond

Natural highlights, GMC has alleged concrete financial loss.

As such, GMC meets the cognizable injury to property

requirement.

GMC also meets the “by reason of” requirement for

RICO standing. See Just Film, Inc., 847 F.3d at 1118–19.

An injury is “by reason of” a RICO violation if “a RICO

GLOBAL MASTER INT’L GROUP, INC. V. ESMOND NATURAL, INC. 15

predicate offense ‘not only was a “but for” cause of [the]

injury, but was the proximate cause as well.’” Hemi Grp.,

LLC v. City of New York, 559 U.S. 1, 9 (2010) (quoting

Holmes v. Sec. Inv’r Prot. Corp., 503 U.S. 258, 268 (1992)).

Under the but-for standard, “a plaintiff must demonstrate

that, but for the defendant’s unlawful conduct, [his or her]

alleged injury would not have occurred.” Richards v.

County of San Bernardino, 39 F.4th 562, 572 (9th Cir. 2022)

(citation omitted). And when a court evaluates

proximate causation, “the central question it must ask is

whether the alleged violation led directly to the plaintiff’s

injuries.” Anza v. Ideal Steel Supply Corp., 547 U.S. 451,

461 (2006).

GMC satisfies this requirement. It contends that Esmond

Natural fraudulently manufactured and delivered

nonconforming supplements which caused its financial

harm. Put differently, GMC contends that but for Esmond

Natural’s fraudulent filling and distribution of the

supplements, GMC would not have sustained financial

harm, thus Esmond Natural’s U.S. based conduct

proximately led to its injury. See Painters & Allied Trades

Dist. Council 82 Health Care Fund v. Takeda Pharms. Co.,

943 F.3d 1243, 1260 (9th Cir. 2019) (finding allegations

that someone in the chain of causation relied on defendants’

alleged misrepresentations and omissions sufficient to allege

proximate cause). In so doing, GMC proffers evidence of

supplement orders that support its claim of disparities

between what was ordered and what was received. GMC

has met the “injury to property” and “by reason of”

requirements for RICO standing.

16 GLOBAL MASTER INT’L GROUP, INC. V. ESMOND NATURAL, INC.

2

Having determined that this case involves harm to a

cognizable property interest, we lastly conclude that GMC’s

asserted injury is domestic. The circumstances of GMC’s

alleged injury indicate that it arose in the United States. See

Yegiazaryan, 143 S. Ct. at 1909.

GMC contends its injury is domestic because Esmond

Natural’s fraud injured GMC’s property in California. It

asserts that Esmond Natural delivered its nonconforming

supplements to Los Angeles, evidenced by proffered

purchase orders specifying “F.O.B., Los Angeles.” 2 We

agree. Based on the applicable law governing the F.O.B.

clause, GMC’s property injury arose in the United States.

“F.O.B.,” or “free on board,” generally presumes that the

property passes from seller to buyer at the point specified.

See Free on Board, BLACK’S LAW DICTIONARY (11th ed.

2019); CAL. COM. CODE § 2319(1)(a). Esmond Natural

counters that the F.O.B. term was used solely as a basis to

determine the base cost to assess a shipping price and to

lower freight costs. Esmond Natural also asserts that GMC

never owned the supplements in the United States because

they were placed in shipping containers and shipped directly

to China.

This argument, however, fails because “when the terms

of a contract are clear, the intent of the parties must be

ascertained from the contract itself.” Klamath Water Users

Protective Ass’n v. Patterson, 204 F.3d 1206, 1210 (9th Cir.

2000); see Hartford Cas. Ins. Co. v. Swift Distrib., Inc., 59

2

Esmond Natural disputes the evidence that the contracts contained the

F.O.B., Los Angeles clause. But the evidence creates at least a genuine

dispute about the presence of the clause. That is sufficient at this stage.

GLOBAL MASTER INT’L GROUP, INC. V. ESMOND NATURAL, INC. 17

Cal. 4th 277, 288 (2014) (“The rules governing policy

interpretation require us to look first to the language of the

contract in order to ascertain its plain meaning or the

meaning a layperson would ordinarily attach to it.”) (cleaned

up). Under California law, “[u]nless otherwise explicitly

agreed[,] title passes to the buyer at the time and place at

which the seller completes his performance with reference

to the physical delivery of the goods . . . .” CAL. COM. CODE

§ 2401(2). Additionally, as courts have noted, “[w]hen a

delivery term is F.O.B., the ‘goods are delivered at a

designated location, usually a transportation depot, at which

legal title and thus the risk of loss passes from seller to

buyer.’” Pulse Elecs., Inc. v. U.D. Elec. Corp., 530 F. Supp.

3d 988, 1013 (S.D. Cal. 2021) (citation omitted), aff’d, No.

2021-1856, 2022 WL 1436146 (Fed. Cir. May 6, 2022).

Here the supplements were delivered to a transportation

depot in Los Angeles before being shipped to China. The

purchase orders between GMC and Esmond were “F.O.B.,

Los Angeles U.S.A.” There is no other evidence of a

contrary agreement between the parties other than Esmond

Natural’s legally irrelevant statement that it understood the

clause to assess shipping price. We thus conclude that GMC

legally took all deliveries in California and, because legal

title and risk of loss passed to GMC in Los Angeles, it owned

the injured property in the United States.

Even though the supplements were ultimately shipped to

China, this is not dispositive. Such a finding would be

contrary to the Supreme Court’s abrogation of the Seventh

Circuit’s residency requirement test set forth in Armada. See

Yegiazaryan, 143 S. Ct. at 1909. That GMC owned its

injured property in the United States establishes that its

injury was domestic.

18 GLOBAL MASTER INT’L GROUP, INC. V. ESMOND NATURAL, INC.

Esmond Natural counters that finding the F.O.B. clause

determinative of domestic property ownership would

amount to an unprecedented expansion of RICO. It relies on

Diamond Crystal Brands, Inc. v. Food Movers International,

Inc., for the proposition that in the personal jurisdiction

context, “when the goods are shipped outside of the forum,

an F.O.B. delivery term may not be a sufficient indicator of

the defendant’s purposeful availment of the forum’s laws.”

593 F.3d 1249, 1273 (11th Cir. 2010). Moreover, according

to Esmond Natural, delivery terms (negotiated outside the

forum state) specifying reasonable shipping points along an

international route seem to be the sort of random and

attenuated contacts with which the Due Process Clause is

concerned. See id. at 1268.

But Diamond Crystal Brands is not on point. That case

concerned personal jurisdiction in a removed diversity

action in which the Eleventh Circuit held that the Georgia

state long-arm statute required the nonresident defendant to

prove that it transacted business in the state. Id. at 1264.

Here, we are not dealing with a question of minimum

contacts. There is no question that Esmond Natural, a

California company, has availed itself of U.S. law. For our

analysis, the relevant fact is that it is undisputed that GMC

transacted business in California by ordering the allegedly

nonconforming supplements. This supports our holding that

GMC has suffered a domestic injury because the

circumstances of its alleged harm concern domestically

purchased goods.

Other factors also indicate that GMC’s injury was

domestic. GMC alleges that Esmond Natural sourced the

materials from and made the nonconforming supplements in

the United States before delivering them and before GMC

took title of them there. And GMC claims that their injury

GLOBAL MASTER INT’L GROUP, INC. V. ESMOND NATURAL, INC. 19

stems from a pattern of unlawful domestic racketeering

activity—mail and wire fraud from knowingly producing

and delivering nonconforming supplements in the United

States. Therefore, the alleged racketeering activity “largely

occurred in or was directed from and targeted at” the United

States. Yegiazaryan, 143 S. Ct. at 1912. This along with the

factors outlined above supports our conclusion that GMC

asserts a domestic injury.

V

Under the Supreme Court’s decision in Yegiazaryan, the

district court applied the wrong legal standard in analyzing

whether GMC had suffered a domestic injury under RICO.

We conclude that the circumstances of GMCs alleged injury

indicate that it arose in the United States. We therefore

reverse and remand to the district court for proceedings

consistent with this opinion.

REVERSED AND REMANDED in part.