Glock v. Glock et al

Filing 159

ORDER denying 134 Motion to Stay; denying 135 Motion to Continue Stay Based on International Abstention. Signed by Judge Thomas W. Thrash, Jr on 12/14/2015. (ss)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
HELGA GLOCK,
Plaintiff,
v.

CIVIL ACTION FILE
NO. 1:14-CV-3249-TWT

GASTON GLOCK, SR., et al.,
Defendants.

OPINION AND ORDER

This is a RICO action. The Plaintiff Helga Glock claims that her ex-husband,
the Defendant Gaston Glock, Sr., orchestrated a scheme to depress the value of certain
assets belonging to the Plaintiff. It is before the Court on the Defendants
Consultinvest, Inc., Glock, Inc., and Karl Walter’s Motion to Continue the Stay Based
on International Abstention [Doc. 134] and the Defendant Hubert William’s Motion
to Continue the Stay Based on International Abstention [Doc. 135]. For the reasons
set forth below, the Defendants’ Motions [Docs. 134, 135] are DENIED.

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I. Background
In 1963, the Plaintiff Helga Glock and the Defendant Gaston Glock, Sr. (“Glock
Sr.”) founded Glock KG, an Austrian limited partnership.1 Eventually, Glock KG
began manufacturing pistols,2 and in 1983 it officially became Glock Ges.m.b.H. (the
“Parent Company”).3 The Parent Company then sought to tap into the U.S. market.
Glock Sr. flew to Atlanta, Georgia to sign incorporation papers for a U.S. subsidiary
company called Glock, Inc.4 Glock, Inc. is based in Smyrna, Georgia and sells pistols
manufactured by the Parent Company in Austria.5 In addition, Glock, Inc. was
originally a wholly-owned subsidiary of the Parent Company.6
Initially, the Plaintiff had a 15% ownership interest in the Parent Company.7
However, in 1999, the Plaintiff and Glock Sr. created a private foundation under
Austrian law called the Glock Privatstiftung (the “Glock Foundation”).8 The Plaintiff
1

First Am. Compl. ¶ 73.

2

Id. ¶¶ 82, 84.

3

Id. ¶ 85.

4

Id. ¶¶ 90-91.

5

Id. ¶ 92.

6

Id. ¶ 160.

7

Id. ¶ 164.

8

Id. ¶¶ 15, 164.

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transferred the vast majority of her Parent Company shares to the Glock Foundation,
leaving her with only a 1% interest in the Parent Company.9 Although the Plaintiff and
Glock Sr. were co-founders of the Glock Foundation, Glock Sr. “retained, for himself
only, the ability to . . . change the terms of the deed that created the foundation.”10
Eventually, Glock Sr. used this power to “remove [the Plaintiff] . . . as [a beneficiary]
of the [foundation]” after their divorce in 2011.11 In addition, Glock Sr. “sought to
force the sale of [the Plaintiff’s] remaining 1% ownership interest in [the Parent
Company].”12
This action arises out of certain business transactions involving the Parent
Company and Glock, Inc. First, the Plaintiff asserts that Glock Sr., with the help of his
co-Defendants, misappropriated assets of the Parent Company. For example, she
alleges that, at Glock Sr.’s direction, the Parent Company “gave away . . . 50% . . . of
the ownership of . . . Glock, Inc.,”13 which was “the most valuable and strategically

9

Id. ¶ 14.

10

Id.

11

Id. ¶ 16.

12

Compl. ¶ 18.

13

First Am. Compl. ¶ 107.

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important asset” of the Parent Company.14 In particular, Glock Sr. ordered that 50%
of the shares of Glock, Inc. be transferred to a company called Unipatent.15 Unipatent
was owned by a company called Reofin, which in turn was wholly-owned by Glock
Sr.16 Second, the Plaintiff also alleges that Glock Sr., with assistance, set up a series
of shell corporations to allow “Glock Sr. and his associates” to “systematically
appropriate virtually all of the income and assets of [Glock, Inc.] for themselves.”17
As the Plaintiff explains:
Defendants plundered hundreds of millions of dollars from Glock, Inc.
by stealing funds from Glock, Inc. and fraudulently transferring them to
entities exclusively owned or controlled by Glock Sr. The illegal
transfers of funds – which often purported to be for services or products
– were, in fact, shams.18
The Plaintiff brought suit against multiple parties, including Glock Sr., the
Parent Company, Glock, Inc., and the Glock Foundation. She asserts that the
Defendants executed a scheme in order to misappropriate assets from the Parent
Company and Glock, Inc., and that this amounted to a violation of the federal

14

Id.

15

Id. ¶¶ 171-172.

16

Id. ¶ 168.

17

Id. ¶ 114.

18

Id. ¶ 159.

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Racketeer Influenced and Corrupt Organizations Act (“RICO”). To show that she
personally suffered an injury, she argues that the Defendants “reduced the value of the
assets held by [the Parent Company]” which in turn reduced the value of “Ms. Glock’s
ownership interests in [the Parent Company].”19 According to the Plaintiff, although
her divorce from Glock Sr. took place in 2011, and the alleged misappropriation began
in the mid-1980's, she was the intended victim of the scheme.20
A number of parties, including Glock, Inc. (collective the “Defendants”), filed
a Motion to Stay based on certain judicial proceedings that are underway in Austria.21
Since the Plaintiff’s divorce from Glock Sr. in 2011, the Plaintiff has filed a number
of lawsuits in Austria against Glock Sr. and other parties that are also named
Defendants in this action. For example, in July of 2011, the Plaintiff brought an action
in Austria “for judicial determination of her right to distribution of all worldwide
marital assets and marital savings.”22 Later, in December of 2011, the Plaintiff brought

19

Id. ¶ 167.

20

In this Order, the Court is not addressing the issue of whether the
Plaintiff – given the nature of her claims – has standing. The Defendants may raise
this argument at the Motion to Dismiss stage.
21

[Doc. 45].

22

First Enzinger Decl. ¶ 10.

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a second action in Austria “for alimony and spousal support payments.”23 The Plaintiff
has also brought claims unrelated to her divorce. For example, the Plaintiff filed two
lawsuits in Austria – against Glock Sr. and the Glock Foundation – relating to the gift
she made to the Glock Foundation consisting of the vast majority of her Parent
Company shares.24 In addition, she initiated five lawsuits challenging specific
resolutions of the Parent Company’s General Assembly.25
The Court initially granted the Defendants’ Motion to Stay this action.26
Although the Court found that the vast majority of issues in this action are distinct
from those in the Austrian lawsuits, there was one potential overlapping issue:
whether the Plaintiff was fraudulently induced into transferring most of her Parent
Company shares into the Glock Foundation. Thus, the Court invited the Plaintiff to
amend her Complaint to eliminate that issue from this action so as to minimize any
international comity concerns. On July 20, 2015, the Plaintiff filed an Amended
Complaint.27 The Court must now decide whether to continue the stay.

23

Id. ¶ 11.

24

Id. ¶¶ 20-21.

25

Third Enzinger Decl. ¶ 25.

26

[Doc. 117].

27

[Doc. 121].

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II. Discussion
As an initial matter, the Plaintiff contends that Dr. Michael Enzinger’s Third
Declaration, which the Defendants filed in support of their Motion to Continue the
Stay, should be disregarded by this Court as evidence.28 First, the Plaintiff argues that
because Dr. Enzinger only represents the Glock Foundation in one of the Austrian
proceedings, Dr. Enzinger’s statements with regard to the other Austrian proceedings
are not based on sufficient personal knowledge.29 A declaration may “only be
considered to the extent that it is based on personal knowledge.”30 “However, when
an affiant avers that his statements are based on personal knowledge, a district court
is ‘bound to accept [such] statements as true, unless the context demonstrate[s]
otherwise.’”31 Here, the Plaintiff’s argument is without merit. Dr. Enzinger’s
participation in the Austrian litigation and his review of the pleadings and other
documents related to the Austrian cases is sufficient evidence “to support a finding

28

Pl.’s Resp. to Mot. to Continue Stay, at 28.

29

Id. at 30-31.

30

Homebingo Network v. Chayevsky, 428 F. Supp. 2d 1232, 1238 (S.D.
Ala. 2006) (citing FED. R. EVID. 602).
31

Id. (quoting Martin v. Rumsfeld,137 Fed. Appx. 324, 326 (11th Cir.

2005)).
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that the witness has personal knowledge of the matter.”32 Next, the Plaintiff argues
that the Court should also disregard certain exhibits attached to Dr. Enzinger’s
Declaration. She contends that they have been substantially redacted and thus violate
the rule of completeness.33 The rule of completeness, as expressed in Federal Rule of
Evidence 106, mandates that if a party introduces part of a writing, the opposing party
may move to have any other part of the writing introduced “that in fairness ought to
be considered at the same time.”34 Here, however, the Defendants have submitted to
the Court complete copies of the exhibits that were previously redacted.35 This is
sufficient to cure any problems regarding the rule of completeness. With the
evidentiary objections resolved, the Court now turns to the issue of abstention.
Generally, when a claim falls within a federal court’s jurisdiction, its
“obligation to hear and decide a case is virtually unflagging.”36 But in “some private

32

FED. R. EVID. 602; see also Atlanta Attachment Co. v. Leggett & Platt,
Inc., No. 05-cv-1071, 2007 WL 5011980, at *3-4 (N.D. Ga. Feb. 23, 2007) (allowing
testimony based on an affiant’s experience and perceptions as officer of plaintiff
company).
33

Pl.’s Resp. to Mot. to Continue Stay, at 34.

34

FED. R. EVID. 106.

35

[Doc. 153].

36

Sprint Commc’ns, Inc. v. Jacobs, 134 S. Ct. 584, 591 (2013) (internal
quotation marks omitted).
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international disputes the prudent and just action for a federal court is to abstain from
the exercise of jurisdiction.”37 In deciding whether to abstain based on international
considerations, the Court must consider three factors: (1) judicial efficiency, (2)
international comity, and (3) fairness.38 However, abstention “is the exception instead
of the rule . . . and courts regularly permit parallel proceedings in an American court
and a foreign court.”39 Before proceeding to the abstention analysis, however, it is
worth clarifying the nature of the Plaintiff’s claims in this action.
The Plaintiff’s Amended Complaint presents a narrow legal theory. The
Plaintiff is claiming that the Defendants engaged in an unlawful scheme which
ultimately depressed the value of her 1% ownership interest in the Parent Company.
Specifically, the Plaintiff alleges that the Defendants (1) unlawfully caused the Parent
Company to transfer half of its interest in Glock, Inc. to another entity under Glock
Sr.’s control, and (2) misappropriated assets from Glock, Inc. The Plaintiff claims that
this affected the Parent Company’s value because Glock, Inc. was its most important
37

Turner Entm’t Co. v. Degeto Film GmbH, 25 F.3d 1512, 1518 (11th Cir.

1994).
38

See Belize Telecom, Ltd. v. Government of Belize, 528 F.3d 1298, 1305
(11th Cir. 2008) (The Court must consider three factors in “determining whether
abstention is appropriate: (1) international comity; (2) fairness to litigants; and (3)
efficient use of scarce judicial resources.”).
39

Ortega Trujillo v. Conover & Co. Commc’ns, 221 F.3d 1262, 1265 (11th
Cir. 2000) (internal quotation marks omitted).
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asset. Thus, at least in this lawsuit, the Plaintiff’s claims stem only from the alleged
injuries inflicted upon the Parent Company. This case is not about the Plaintiff’s
divorce from Glock Sr. It is not about her transfer of Parent Company shares to the
Glock Foundation.40 Nor is it about the Parent Company’s attempt to force a buyout
of the Plaintiff’s remaining 1% interest in the Parent Company.
Consequently, the Court’s analysis begins, and ends, with the first international
abstention factor: judicial efficiency. To determine whether abstention will advance
the interest of judicial efficiency, the Court considers, inter alia, whether the actions
involve common issues.41 Generally, the parties must be “litigating substantially the
same issues in both actions.”42 The “question is not whether the suits are formally
symmetrical, but whether there is a substantial likelihood that the foreign litigation
will dispose of all claims presented in the federal case.”43 The “existence of a parallel
40

Pl.’s Resp. to Mot. to Continue Stay, at 22 (“[The Plaintiff] does not
claim that she was fraudulently induced to transfer ownership of a portion of her
shares in Glock Ges.m.b.H. as a result of Defendants’ racketeering scheme.”).
41

See Turner Entm’t, 25 F.3d at 1522 (“Criteria relevant to efficiency
include (1) the inconvenience of the federal forum . . . (2) the desirability of avoiding
piecemeal litigation . . . (3) whether the actions have parties and issues in common .
. . and (4) whether the alternative forum is likely to render a prompt disposition.”).
42

Royal & Sun Alliance Ins. Co. of Canada v. Century Int’l Arms, Inc., 466
F.3d 88, 94 (2d Cir. 2006).
43

AAR Int’l, Inc. v. Nimelias Enters. S.A., 250 F.3d 510, 518 (7th Cir.

2001).
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action in an adequate foreign jurisdiction must be the beginning . . . of a district
court’s determination of whether abstention is appropriate,”44 and “any doubt
regarding the parallel nature of the foreign suit should be resolved in favor of
exercising jurisdiction.”45 Here, this action and the Austrian lawsuits cited by the
Defendants no longer involve “substantially the same issues.” Those cases largely
concern (1) assets and alimony that the Plaintiff may be entitled to as a consequence
of her divorce,46 (2) the Plaintiff’s transfer of Parent Company shares to the Glock
Foundation,47 and (3) specific business resolutions passed by the Parent Company’s
General Assembly.48 Based on the Defendants’ evidentiary submissions, none of the
cases speak to the transactions at issue in the Amended Complaint: the Parent
Company’s transfer of 50% of its Glock, Inc. ownership interest to another entity, and
the allegedly fraudulent Glock, Inc. business transactions. Thus, the Defendants have

44

Royal & Sun Alliance, Inc., 466 F.3d at 95 (emphasis added); see also
AAR Int’l, Inc., 250 F.3d at 518 (“In evaluating the propriety of the district court’s
decision to abstain . . . we must first determine whether the federal and foreign
proceedings are parallel . . . [i]f the actions are not parallel, the Colorado River
[abstention] doctrine does not apply.”).
45

AAR Int’l, Inc., 250 F.3d at 520.

46

Third Enzinger Decl. ¶¶ 30-35.

47

First Enzinger Decl. ¶¶ 20-21.

48

Third Enzinger Decl. ¶¶ 22-29.

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failed to establish that the domestic and foreign lawsuits involve substantially the
same issues, and so abstention is inappropriate.
To be sure, in several of the cases cited by the Defendants in their initial Motion
to Stay, the courts granted a stay based on international abstention because the
domestic and foreign cases involved nearly identical issues. For example, in Turner
Entertainment Co. v. Degeto Film GmbH,49 the parties were disputing how to properly
interpret a television broadcast license agreement.50 In particular, the defendants –
German public broadcasters – had purchased the right to broadcast certain licensed
works to the German public.51 The license agreement allowed the defendants “to
telecast the licensed works for reception within the licensed territory ‘by all means
and methods now or hereafter known including but not limited to . . . [direct
broadcasting satellite] and/or communication satellite for purposes of so-called home
television reception.’”52 Because “the reception area . . . of satellite broadcasts does
not easily conform to the . . . boundaries that comprise the licensed territory, the

49

25 F.3d 1512 (11th Cir. 1994).

50

See id. at 1514.

51

See id.

52

Id. (emphasis added).

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parties included an exception to the strict definition . . . of the licensed territory.”53
Thus, the license agreement stated that “[t]he telecast can originate any place in the
universe for reception only in the [licensed territory] . . . inclusive of legitimate
overspill . . . .”54 The defendants wished to use an ASTRA 1B satellite to broadcast
a television program which incorporated certain works licensed from the plaintiff. The
ASTRA 1B satellite, however, had “a footprint over five times the size of the licensed
territory.”55 The parties disagreed as to whether the incidental broadcast to
non-licensed territories would constitute “legitimate overspill” under the license
agreement. The defendants filed a declaratory judgment action in Germany,56 and a
week later, the plaintiff filed a breach of contract action in the U.S.57 Both actions
involved the same legal question: whether the defendants, under the license
agreement, were allowed to broadcast a program incorporating licensed works using
the ASTRA 1B satellite. Due to this factor, in addition to several others, the Eleventh

53

Id. at 1514-15 (emphasis added).

54

Id. at 1515 (emphasis added).

55

Id. at 1516.

56

See id. at 1516.

57

See id. at 1517.

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Circuit ultimately concluded that a stay was appropriate based on international
considerations.58
The Defendants also cited to the Seventh Circuit case of Ingersoll Mill. Mach.
Co. v. Granger.59 There, the plaintiff Ingersoll Milling Machine Co. and the defendant
John Granger were involved in a dispute concerning the latter’s termination benefits.
From 1971 to 1977, Granger was employed with a Belgian subsidiary of Ingersoll.60
When his employment was terminated, he filed suit in Belgium and argued that “he
was entitled, under Belgian law, to certain compensation and termination benefits
from both Ingersoll and [the Belgian subsidiary].”61 Over a year later, Ingersoll
brought suit in the U.S.62 It sought “a declaratory judgment that Mr. Granger was
entitled to no further benefits from Ingersoll.”63 After the Belgian trial court ruled in
favor of Granger on his claim, the district court “stayed further proceedings pending

58

See id. at 1522-23.

59

833 F.2d 680 (7th Cir. 1987).

60

See id. at 682.

61

Id.

62

See id.

63

Id. Ingersoll also asserted certain claims for reimbursement that were
similar to counterclaims that it had filed in the Belgian action brought by Granger. See
id.
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the outcome of the Belgian appellate process,”64 and the Seventh Circuit affirmed the
district court’s decision to stay the case.65 Again, although the specific claims were not
identical, the domestic and foreign lawsuits involved the same issue: whether, and to
what extent, Granger was entitled to termination benefits. By contrast, here – as the
Court explained earlier – the Defendants point to no Austrian lawsuit that involves the
central issues of this litigation.
In response, the Defendants first contend that the Plaintiff’s Amended
Complaint continues to assert factual allegations with regard to the Glock
Foundation.66 While it is true that the Amended Complaint contains several allegations
concerning the Glock Foundation, the allegations center around the Defendant Glock
Sr. placing proceeds from the Defendants’ racketeering scheme into the Foundation,67
not around the Plaintiff’s transfer of 14% of her ownership of the Parent Company to
the Foundation. Next, the Defendants argue that the Plaintiff filed several lawsuits in

64

Id. at 683.

65

Id. at 685 (“[I]t is manifestly clear that the district court did not abuse its
discretion in staying proceedings after the rendition of the Belgian trial court’s
judgment.”).
66

Defs.’ Mot. to Continue Stay, at 5.

67

First Am. Compl. ¶¶ 3, 14, 1446, 1491.

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Austria in which she is suing in her capacity as a Parent Company shareholder.68 But
there is no indication that, in those lawsuits, she is challenging the Parent Company
and Glock, Inc. transactions at issue in this case. Indeed, in the Austrian lawsuits, she
appears to be challenging unrelated Parent Company resolutions, such as the Parent
Company’s decision to re-elect Glock Sr. to be its General Manager.69 The Defendants
also argue that both the Plaintiff’s Austrian lawsuit concerning division of marital
assets as well as her case here contain a number of similar allegations. For example,
in both, the Plaintiff alleges that Glock Sr. diverted money into certain entities that are
under his control.70 That certain allegations are found in both lawsuits, however, does
not mean that the issues in both are the same. In the Austrian lawsuit, the Plaintiff is
seeking an accounting of Glock Sr.’s assets for the purpose of calculating the division
of assets.71 Thus, the Plaintiff is seeking to establish the existence of certain
unreported assets within Glock Sr.’s possession. This case, by contrast, concerns the
origin of those assets and the lawfulness of the means by which Glock Sr. came into

68

Defs.’ Mot. to Continue Stay, at 10.

69

First Enzinger Decl. ¶ 26.

70

Defs.’ Mot. to Continue Stay, at 22.

71

Pl.’s Resp. to Mot. to Continue Stay, at 13, 17.

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possession of them. Consequently, despite the presence of certain common
allegations, the two cases are not sufficiently related.
Accordingly, the Plaintiff’s lawsuit here is sufficiently distinct from her
Austrian lawsuits so as to avoid any international comity concerns. Indeed, resolution
of the Austrian litigation will not resolve most of the material issues in this litigation.
Thus, the stay should be lifted.
III. Conclusion
For these reasons, the Court DENIES the Defendants Consultinvest, Inc.,
Glock, Inc., and Karl Walter’s Motion to Continue the Stay Based on International
Abstention [Doc. 134] and the Defendant Hubert William’s Motion to Continue the
Stay Based on International Abstention [Doc. 135].
SO ORDERED, this 14 day of December, 2015.

/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge

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