District Court Finds Diminution in Value of Singaporean Company Whose Stock Was Owned by U.S. Parent Cannot be Claimed as a RICO “Injury”

The World in U.S. Courts: Summer and Fall 2016 - Racketeer Influenced and Corrupt Organizations Act (RICO)

Uthe Technology Corp. v. Allen, U.S. District Court for the Northern District of California, August 26, 2016

Uthe Technology, a manufacturer and distributor of semiconductor equipment, sued a competitor and one of the competitor’s employees under the RICO statute, claiming they participated in a conspiracy to divert business away from Uthe’s wholly-owned Singaporean subsidiary.  The case—which involved an arbitration in Singapore that lasted 19 years—finally returned to Court following the Supreme Court’s ruling in RJR Nabisco v. European Union, [discussed above] which among other things held that private RICO claims must be based on injuries to businesses and property in the U.S. 

The District Court in California entered judgment for the defendants.  It concluded that the injury alleged in the complaint occurred in Singapore, and that the U.S. parent’s interest in that injury was indirect and derivative of its status as a shareholder.  The Court found that the injury suffered by the Singaporean subsidiary could be addressed, if at all, through a claim brought by the subsidiary in Singapore.

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