Glock v. Glock et al

Filing 212

OPINION AND ORDER GRANTING Gaston Glock Sr., Glock Ges.m.b.H., Glock, Inc., Glock America S.A., Glock (H.K.) Ltd., CON Holding GmbH, Joerg-Andreas Lohr, Lohr + Company GmbH Wirtschaftsprüngsgesellschaft, Rochus GmbH, and Karl Walters' 187 Motion to Dismiss; GRANTING Hubert William's 191 Motion to Dismiss and GRANTING Peter Manown's 192 Motion to Dismiss. Signed by Judge Thomas W. Thrash, Jr. on 3/20/2017. (jkl)

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. It is before the Court on the Defendants Gaston Glock
Sr., Glock Ges.m.b.H., Glock, Inc., Glock America S.A., Glock (H.K.) Ltd., CON
Holding

GmbH,

Joerg-Andreas

Lohr,

Lohr

+

Company

GmbH

Wirtschaftsprüngsgesellschaft, Rochus GmbH, and Karl Walter’s Motion to Dismiss
[Doc. 187], the Defendant Hubert Willam’s Motion to Dismiss [Doc. 191], and the
Defendant Peter Manown’s Motion to Dismiss [Doc. 192]. For the reasons set forth
below, the Defendants’ Motions to Dismiss are GRANTED.

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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 In the beginning, Glock
KG was a small manufacturing business that sold “curtain rods and brass fittings for
doors and windows, as well as machine gun belts and knives for the Austrian army.”2
Later, Glock Sr. developed a pistol with the hopes of winning a gun supplier contract
with the Austrian army.3 His pursuits were eventually successful: Glock Sr. patented
the Glock 17 semi-automatic pistol and signed a contract with the Austrian army to
supply the pistol.4 In 1983, Glock KG became Glock Ges.m.b.H. (the “Parent
Company”).5 While producing pistols for the Austrian army, the Parent Company
discovered it could produce more pistols than could be sold in Austria.6 Thus, in 1985,
Glock Sr. turned his attention to the American gun market, creating a subsidiary –
Glock, Inc. – in Smyrna, Georgia.7 Glock, Inc., which was a wholly-owned subsidiary
1

Second Am. Compl. ¶¶ 123-24.

2

Id. ¶ 124.

3

Id. ¶¶ 128-131.

4

Id. ¶¶ 132-134.

5

Id. ¶ 135.

6

Id. ¶ 139.

7

Id. ¶¶ 140-42.

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of the Parent Company, distributed pistols that were manufactured by the Parent
Company in Austria.8 Glock, Inc. quickly became very successful in the U.S.9 As the
Plaintiff explains, “[i]ts high degree of success in penetrating the world’s largest gun
market, combined with an estimated profit margin per pistol of 68%, made Glock, Inc.
a cash cow and extraordinary wealth-generating machine.”10
Originally, the Plaintiff owned 15% of the Parent Company.11 But, in 1999, the
Plaintiff began transferring her Parent Company shares into a private Austrian
foundation called the Glock Privatstiftung (the “Glock Foundation”).12 After
transferring the vast majority of her shares into the Glock Foundation, the Plaintiff
was left with only a 1% interest in the Parent Company.13 While the Plaintiff and
Glock Sr. were joint founders of the Glock Foundation, “Glock Sr. retained, for
himself only, the ability to . . . change the terms of the deed that created the
foundation.”14 As a result, after the Plaintiff and Glock Sr. divorced in 2011, “Glock
8

Id. ¶¶ 142, 153.

9

Id. ¶ 144.

10

Id. ¶ 145.

11

Id. ¶ 218.

12

Id. ¶¶ 23, 218.

13

Id. ¶ 219.

14

Id. ¶ 23.

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Sr. unilaterally changed the deed for the Glock Foundation so as to remove Ms. Glock
and their children (Brigitte, Gaston Jr., and Robert) as beneficiaries of the
foundations.”15
This action arises out of certain business transactions involving the Parent
Company and Glock, Inc. Specifically, the Plaintiff contends that the Defendants
orchestrated a series of fraudulent transactions involving the Parent Company and
Glock, Inc., which ultimately depressed the value of her 1% ownership interest in the
Parent Company.16 First, the Plaintiff alleges that Glock Sr., with the help of his coDefendants, “hatched the theft of 50% of the ownership of Glock, Inc.,” which was
the Parent Company’s most valuable asset.17 She alleges that, shortly after Glock, Inc.
was incorporated, Glock Sr. ordered that 50% of Glock, Inc. shares be transferred to
a company called Unipatent, which was owned by a company called Reofin.18 “Glock
Sr. owned 100% of the shares of Reofin. Accordingly, Glock Sr. controlled and
indirectly owned 100% of Unipatent.”19 Second, the Plaintiff alleges that the

15

Id. ¶ 24.

16

Id. ¶¶ 221, 230.

17

Id. ¶ 222.

18

Id. ¶ 226.

19

Id. ¶ 228.

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Defendants siphoned money from the Parent Company and Glock, Inc. to Glock Sr.
through licensing and royalty payments. For instance, she contends that Glock Sr.,
with assistance, charged Glock, Inc. for using the Glock logo.20 But, according to the
Plaintiff, these licensing and royalty payments should have been paid directly to the
Parent Company.21 Third, the Plaintiff alleges that the Defendants set up a series of
shell corporations that allowed them to appropriate funds and assets of Glock, Inc. for
themselves. Specifically, she alleges that the Defendants “set up a multistage,
fraudulent billing program that artificially reduced the stated profits of Glock, Inc.,
and diverted these monies to Glock Sr.”22 Fourth, the Plaintiff asserts that, through
fraudulent loans, the Defendants used Consultinvest to siphon funds from Glock,
Inc.23 Fifth, the Defendants allegedly used monies from Glock, Inc. to set up sham
real-estate holding companies.24
Based on these allegedly fraudulent transactions, the Plaintiff brought suit
against multiple parties, including Glock Sr., the Parent Company, Glock, Inc., and

20

Id. ¶¶ 239-245, 249.

21

Id.

22

Id. ¶ 278.

23

Id. ¶ 367.

24

Id. ¶¶ 402-409.

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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 Racketeer Influenced and Corrupt Organizations
Act (“RICO”). To show that she personally suffered an injury, the Plaintiff states
“Glock Sr. purposefully and improperly reduced the value of assets held by [the
Parent Company], the value of [the Parent Company] and Ms. Glock’s ownership
interests in [the Parent Company] and Glock, Inc. (the cash cow of the “Glock
Group”).”25 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.26 In addition to her federal RICO claim, the Plaintiff
asserts that the Defendants violated the Georgia RICO statute.
Initially, a number of the Defendants filed a Motion to Stay based on certain
judicial proceedings in Austria.27 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. The Court granted the
Defendants’ Motion to Stay this action based on the doctrine of international

25

Id. ¶ 221.

26

Id. ¶ 2.

27

[Doc. 45].

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abstention, but also allowed the Plaintiff to amend her Complaint so to avoid any
potential overlapping issues between the legal actions.28 The Plaintiff amended her
Complaint, and so the Court lifted the stay.29 Later, the Plaintiff amended her
Complaint for a second time.30 The Defendants now move to dismiss.
II. Legal Standard
A complaint should be dismissed under Rule 12(b)(6) only where it appears that
the facts alleged fail to state a “plausible” claim for relief.31 A complaint may survive
a motion to dismiss for failure to state a claim, however, even if it is “improbable” that
a plaintiff would be able to prove those facts; even if the possibility of recovery is
extremely “remote and unlikely.”32 In ruling on a motion to dismiss, the court must
accept the facts pleaded in the complaint as true and construe them in the light most
favorable to the plaintiff.33 Generally, notice pleading is all that is required for a valid

28

[Doc. 117].

29

[Doc. 159].

30

[Doc. 182].

31

Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009); Fed. R. Civ. P. 12(b)(6).

32

Bell Atlantic v. Twombly, 550 U.S. 544, 556 (2007).

33

See Quality Foods de Centro America, S.A. v. Latin American
Agribusiness Dev. Corp., S.A., 711 F.2d 989, 994-95 (11th Cir. 1983); see also
Sanjuan v. American Bd. of Psychiatry & Neurology, Inc., 40 F.3d 247, 251 (7th Cir.
1994) (noting that at the pleading stage, the plaintiff “receives the benefit of
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complaint.34 Under notice pleading, the plaintiff need only give the defendant fair
notice of the plaintiff’s claim and the grounds upon which it rests.35
III. Discussion
A. Shotgun Pleading
In its initial Order granting the Defendants’ Motion to Stay, the Court noted that
the Plaintiff’s Complaint was a typical example of shotgun pleading.36 “[F]or each
Count in the Complaint, the Plaintiff . . . incorporat[ed] each antecedent allegation.”37
In their Motions to Dismiss, the Defendants again raise the issue of shotgun pleading.
Specifically, the Defendants argue that the Second Amended Complaint (“SAC”) fails
to provide a “short and plain statement” for each claim.38 In support of their argument,
the Defendants cite Weiland v. Palm Beach County Sheriff’s Office, in which the

imagination”).
34

See Lombard’s, Inc. v. Prince Mfg., Inc., 753 F.2d 974, 975 (11th Cir.
1985), cert. denied, 474 U.S. 1082 (1986).
35

See Erickson v. Pardus, 551 U.S. 89, 93 (2007) (citing Twombly, 550

U.S. at 555).
36

[Doc. 117], at 8.

37

Id. at 9.

38

Glock Sr., et al.’s Mot. to Dismiss, at 67.

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Eleventh Circuit identified four categories of shotgun pleadings.39 The Eleventh
Circuit characterized the four categories as follows:
The most common type – by a long shot – is a complaint containing
multiple counts where each count adopts the allegations of all preceding
counts . . . . The next most common type . . . is a complaint that does not
commit the mortal sin of re-alleging all preceding counts but is guilty of
the venial sin of being replete with conclusory, vague, and immaterial
facts not obviously connected to any particular cause of action. The third
type of shotgun pleading is one that commits the sin of not separating
into a different count each cause of action or claim for relief. Fourth, and
finally, there is the relative rare sin of asserting multiple claims against
multiple defendants without specifying which of the defendants are
responsible for which acts or omissions, or which of the defendants the
claim is brought against.40
The Defendants state that the SAC appears to fall into all four categories. For
example, they assert that the SAC “repeats, realleges, cross-references and
incorporates hundreds of paragraphs.”41 They point out that numerous paragraphs
incorporate Sections I through V – which comprise 409 numbered paragraphs – in
their entirety.42 Moreover, the Defendants assert that the SAC is full of immaterial,
vague facts that are “untethered to any particular cause of action.”43 As an example,

39

792 F.3d 1313 (11th Cir. 2015).

40

Id. at 1321-23 (footnotes omitted).

41

Glock Sr., et al.’s Mot. to Dismiss, at 68.

42

Id.

43

Id.

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they note that the Plaintiff made allegations regarding whether loans from the
Plaintiff’s mother that were given to the Plaintiff and Glock Sr. to start Glock KG in
1963 were ever repaid.44 The Plaintiff then “incorporates these allegations about loans
made in the 1960s into every Count of the SAC.”45
The Court agrees with the Defendants. The SAC is “in no sense the ‘short and
plain statement of the claim’ required by Rule 8 of the Federal Rules of Civil
Procedure.”46 It contains 1,810 paragraphs, many of which contain repetitive factual
allegations or factual allegations that are irrelevant to the stated claims. This “force[d]
the [] [C]ourt [to] sift through the facts presented and decide for [itself] which [a]re
material to the particular cause of action asserted.”47 To be sure, in the SAC – unlike
in the Plaintiff’s first Complaint – the Plaintiff does not “incorporate every antecedent
allegation by reference into each subsequent claim.”48 But the Plaintiff does
incorporate hundreds of paragraphs into each count, meaning each count is “is replete

44

Id. at 69.

45

Id.

46

Magluta v. Samples, 256 F.3d 1282, 1284 (11th Cir. 2001) (per curiam).

47

Strategic Income Fund, L.L.C. v. Spear, Leeds & Kellogg Corp., 305
F.3d 1293, 1295 n.9 (11th Cir. 2002) (third and fourth alternations in original).
48

Wagner v. First Horizon Pharm. Corp., 464 F.3d 1273, 1279 (11th Cir.

2006).
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with factual allegations that could not possibly be material to that specific count.”49
As a result, the Court finds that the Plaintiff’s SAC is an impressible shotgun
pleading.50
B. Pleading Based on “Information and Belief”
Next, the Defendants contend that the SAC must be dismissed because it fails
to comply with Federal Rule of Civil Procedure 9(b). Under Rule 9(b), a complaint
must “state[] with particularity . . . the circumstances constituting fraud or mistake.”51
Specifically, the “plaintiff must plead facts as to time, place, and substance of the
defendant’s alleged fraud, specifically the details of the defendants’ allegedly
fraudulent acts, when they occurred, and who engaged in them.”52 The Defendants
argue that because the SAC is largely based on the Plaintiff’s “information and
belief,” the SAC does not provide the necessary particularity. When Rule 9(b) applies,

49

Magluta, 256 F.3d at 1284.

50

Lampkin-Asam v. Volusia Cty. Sch. Bd., 261 F. App’x 274, 277 (11th
Cir. 2008) (per curiam) (“A complaint that fails to articulate claims with sufficient
clarity to allow [] defendant[s] to frame a responsive pleading constitutes a ‘shotgun
pleading.’” (citation omitted)).
51

FED. R. CIV. P. 9(b).

52

Hill v. Morehouse Medical Assocs., Inc., No. 02-14429, 2003 WL
22019936, at *3 (11th Cir. Aug. 15, 2003) (quoting United States ex rel. Clausen v.
Laboratory Corp. of Am., 290 F.3d 1301, 1311 (11th Cir. 2002)).
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“pleadings generally cannot be based on information and belief [.]”53 “However, Rule
9(b)’s heightened pleading standard is applied less stringently when specific factual
information about the details of the fraud are peculiarly within the defendants’
knowledge or control.”54 Still, the plaintiff must support his or her pleading with
“specific facts supporting a strong inference of fraud.”55 “Bald or otherwise
conclusory allegations will not suffice.”56
The Court finds that the SAC does not satisfy Rule 9(b)’s pleading standard. In
the SAC, the Plaintiff alleges facts based on “information and belief” more than 250
times. More importantly, though, the Plaintiff fails on many occasions to provide
specific facts to support her allegations based on information and belief. For example,
a large part of the Defendants’ alleged scheme was the fraudulent sale of shares of
Glock, Inc. to Unipatent. The Plaintiff alleges: “The value of the securities in Glock,
Inc. exceeded $5,000. Unipatent purportedly paid $75,000 for the securities. On
53

Clausen, 290 F.3d at 1310 (quoting United States ex rel. Stinson, Lyons,
Gerlin & Bustamante, P.A. v. Blue Cross Blue Shield of Ga., Inc., 755 F. Supp. 1040,
1052 (S.D. Ga. 1990)).
54

Great Florida Bank v. Countrywide Home Loans, Inc., No. 10-22124CIV, 2011 WL 382588, *5 (S.D. Fla. Feb. 3, 2011) (citing U.S. ex rel. Heater v. Holy
Cross Hosp., Inc., 510 F. Supp. 2d 1027, 1033 (S.D. Fla. 2007)).
55

Stinson, 755 F. Supp. at 1052 (quoting Wexner v. First Manhattan Co.,
902 F. 2d 169, 172 (2d Cir. 1990)).
56

Id.

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information and belief, Unipatent never actually paid this purchase price for the
securities. Rather, it is believed that the shares were simply transferred from Glock
Ges.m.b.H to Unipatent.”57 The Plaintiff provides no additional facts to support her
conclusion that Unipatent did not actually pay for the shares. This is simply a
conclusory allegation. Thus, the Court has no basis to infer that the transfer was
fraudulent.
The other key part of the Defendants’ alleged scheme was the transfer and
diversion of money from Glock, Inc. But, once again, the Plaintiff fails on many
occasions to support these allegations with specific facts.58 For example, the Plaintiff
alleges that Glock, Inc. made fraudulent payments to Glock America. For one
allegedly fraudulent transfer – “The $1,200,000 Transfer to Taziria” – the Plaintiff
states:
At the direction of Glock Sr., on information and belief, Taziria sent a
sham invoice to Glock America for “consultancy services” that Taziria
allegedly provided to Glock America. . . . On information and belief, the
funds . . . originated from funds earned by Glock, Inc. and wired out of
its accounts in the United States to Glock America accounts held outside
of the United States, in payment on Fraudulent Americas Invoices (and
interest earned thereon, which rightfully belonged to Glock, Inc.).59

57

Second Am. Compl. ¶¶ 231, 420.

58

See, e.g., id. ¶¶ 440-41, 445, 453-53, 462-63, 468-69.

59

Id. ¶¶ 1012, 1017.

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Thus, the Plaintiff, building on multiple levels of speculation, alleges Glock Sr.
ordered the payment and that the payment was made from Glock, Inc. funds.
However, there are no supporting facts to suggest that the money actually came from
“funds earned by Glock, Inc.”60 Nor are there any supporting facts to suggest Glock
Sr. ordered the payment.61 Because these types of conclusory and speculative
allegations are woven throughout the SAC, the Court finds that the SAC fails to
comply with Rule 9(b).62 As a result, the Court finds that the SAC should be
dismissed. Despite the SAC’s insufficiencies, the Court will review the Plaintiff’s
specific clams to determine whether she stated any plausible claims for relief.63
C. RICO Claims
60

Id. ¶ 1017.

61

See, e.g., id. ¶ 1009 (speculating that Glock Sr., Ewert, and Willam “were
aware of and directed the[] transfers” from Glock America); id. ¶¶ 1012-14
(speculating that Glock Sr. ordered the transfer of Glock, Inc. funds).
62

See United States ex rel. Clausen v. Laboratory Corp. of Am., 290 F.3d
1301, 1313 (11th Cir. 2002) (“If Rule 9(b) is to carry any water, it must mean that an
essential allegation and circumstance of fraudulent conduct cannot be alleged in such
conclusory fashion.”).
63

Phillips v. City of Atlanta, No. 1:15-cv-03616-TWT-RGV, 2016 WL
5429668, at *7 (N.D. Ga. July 29, 2016) (“[S]ince the defendants have also argued
that Phillips’ first amended complaint fails to state any plausible claims for relief, the
Court ‘deems it proper to [also] review [defendants’] [m]otion [to dismiss] on the
merits[.]’” (quoting Andela v. University of Miami, 692 F. Supp. 2d 1356, 1370 (S.
D. Fla. 2010)), report and recommendation adopted, No. 1:15-CV-3616-TWT, 2016
WL 5394116 (N.D. Ga. Sept. 16, 2016).
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To state a claim for a violation of the federal RICO Act, “[§] 1964(c) requires
civil RICO plaintiffs to allege and prove a domestic injury to their business or
property.”64 The Defendants argue that the Plaintiff, as an Austrian citizen, whose
claims relate to her ownership of an Austrian company, has not suffered a domestic
injury as required by RICO.
In RJR Nabisco Inc. v. European Community, the U.S. Supreme Court
considered whether RICO’s private right of action has extraterritorial application. In
holding that it does not, the Court stated that 18 U.S.C. § 1964(c) “requires a civil
RICO plaintiff to allege and prove a domestic injury to business or property and does
not allow for recovery for foreign injuries.”65 However, the Supreme Court did not
define a “domestic” and “foreign” injury.66 Since the Supreme Court’s ruling, several
district courts have addressed this issue.67 For example, in Bascuñan v. Daniel Yarur
ELS Amended ComplaintA, the Southern District of New York held that when

64

Tatung Co., Ltd. v. Shu Tze Hsu, No.: SA CV 13-1743 (DOC) (ANx),
2016 WL 6683201, at *5 (C.D. Cal. Nov. 14, 2016) (citing RJR Nabisco, Inc. v.
European Cmty., 136 S. Ct. 2090, 2111 (2016)).
65

RJR Nabisco, 136 S. Ct. at 2111.

66

Id.

67

See City of Almaty, Kazakhstan v. Ablyazov, 15-CV-5345 (AJN), 2016
WL 7756629, at *7-9 (S.D.N.Y. Dec. 23, 2016) (describing the different approaches
to the domestic-injury rule).
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presented with an alleged economic injury, the court should focus “upon where the
economic impact of the injury was ultimately felt.”68 Essentially, “(1) who became
poorer, and (2) where did they become poorer.”69 In Tatung Co., Ltd. v. Shu Tze Hsu,
the Central District of California declined to follow Bascuñan, citing concerns that its
approach “amounts to immunity for U.S. corporations who, acting entirely in the
United States, violate civil RICO at the expense of foreign corporations doing
business in this country” and prevents suits by “foreign individual[s] . . . for financial
injuries incurred while they are working, traveling, or doing business in this country
as the result of an American RICO operation.”70 The plaintiff in Tatung was a foreign
corporation that maintained a U.S. “hub” and had allegedly been injured by a
conspiracy to prevent it from collecting on an arbitration award issued in California.71
The court held that the plaintiff suffered a domestic injury because “the ‘defendants
specifically targeted their conduct at California’ with the aim of ‘thwarting Tatung’s
rights in California.’”72

68

No. 15-CV-2009 (GBD), 2016 WL 5475998, at *4 (S.D.N.Y. Sept. 28,

2016).
69

Id.

70

Tatung, 2016 WL 6683201, at *7.

71

Id. at *7.

72

Id. (quoting the plaintiff’s supplemental opposition brief, at 6).

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Here, the Court does not have to choose an approach; the Plaintiff’s alleged
economic injury does not qualify as a domestic injury under either approach. Under
the Bascuñan rule, the Plaintiff’s alleged injury is undoubtedly a foreign injury. The
RICO injury alleged is the reduced value of the Plaintiff’s 1% ownership interest in
the Austrian Parent Company. The Plaintiff, as an Austrian citizen and resident,
suffered her loss in Austria.73 For the Tatung approach, the Plaintiff clearly was not
“working, traveling, or doing business” in the United States when she was injured.74
She has not alleged that she holds any assets or maintains any other presence in the
United States. She stated in the SAC that she suffered an injury by the theft of Glock,
Inc. shares, but that injury was only indirect. Indeed, she admits in the SAC that she
never held a direct interest in Glock, Inc.75 This is unlike the plaintiff in Tatung, a
foreign corporation that maintained a U.S. presence and was doing business in the
United States when it was injured.76
In response, the Plaintiff first contends that this Court should look to antitrust
law and borrow a test that is used to determine whether anticompetitive behavior

73

See Bascuñan, 2016 WL 5475998, at *6.

74

Tatung, 2016 WL 6683201, at *7.

75

Second Am. Compl. ¶ 1642.

76

Tatung, 2016 WL 6683201, at *7.

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occurring outside the U.S. falls under the ambit of U.S. antitrust statutes.77 The
“substantial effects” test asks whether the defendant’s “conduct is intended to or has
produced ‘substantial effects’ in the United States.”78 The Plaintiff notes that the
Foreign Trade Antitrust Improvements Act (“FTAIA”) employs this test in its
domestic-injury provision. The Court, however, “finds reliance on extraterritoriality
jurisprudence from antitrust context to be at odds with the RJR Nabisco Court’s
express ‘reluctance’ to determine the territorial scope of Section 1964(c) by reference
to its past interpretations of the antitrust statutes.”79 While the RJR Nabisco Court did
briefly mention the FTAIA, it did so in the context of explaining why § 1964(c)
should not be read as broadly as the Clayton Act.80 Specifically, the Supreme Court
noted that Congress, through the FTAIA, “define[d] precisely the antitrust laws’
extraterritorial effect and [] exclude[d] from their reach most conduct that ‘causes only
foreign injury.’”81 The Supreme Court then stated that this congressional action

77

Pl.’s Resp. Br., at 73.

78

See Union Comm. Servs. Ltd. v. FCA Int’l Ops. LLC, No. 16-cv-10925,
2016 WL 6650399, at *4 (E.D. Mich. Nov. 10, 2016).
79

City of Almaty, Kazakhstan v. Ablyazov, 15-CV-5345 (AJN), 2016 WL
7756629, at *8 n.9 (S.D.N.Y. Dec. 23, 2016) (citing RJR Nabisco, Inc. v. European
Cmty., 136 S. Ct. 2090, 2109-2111 (2016)).
80

RJR Nabisco, 136 S. Ct. at 2110-2111.

81

Id.

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“counsel[s] against importing into RICO those Clayton Act principles that are at odds
with the Court’s current extraterritoriality doctrine.”82 Thus, the Court is not persuaded
that borrowing the substantial effects test from the FTAIA is proper.83
Next, the Plaintiff asserts that, when determining whether a plaintiff has
suffered a domestic injury, the Court should look to where the bulk of the racketeering
activity took place.84 The Plaintiff points to a variety of cases that she claims support
the conclusion “that the developing rule is to treat the place where plaintiffs ultimately
feel harm as less important than where the racketeering acts take place and cause the
harm.”85 The Court disagrees. This interpretation of the domestic injury requirement
would violate RJR Nabisco’s holding that the RICO statute does not authorize a
private right of action for domestic racketeering activity that results in a foreign

82

Id.

83

See City of Almaty, 2016 WL 7756629, at *8 n.9 (concluding that, in the
RICO context, the court’s reliance on the substantial effects test would not be in
accordance with RJR Nabsico). But see Union Commercial, 2016 WL 6650399, at *4
(employing the substantial effects test to determine whether the plaintiff suffered a
domestic injury).
84

Pl.’s Resp. Br., at 74.

85

Id. at 82.

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injury.86 Moreover, the cases the Plaintiff cites do not stand for the proclamation that
the location of the alleged RICO conduct is the most important factor.87
To be sure, the majority of the RICO conduct alleged by the Plaintiff took place
in the United States, but that does not mean she suffered a domestic injury. The
Plaintiff does not fall into any of the scenarios considered by the Tatung court.88 As
noted above, she has no presence in the United States and any injuries she suffered
occurred in Austria, where she owns her 1% interest of the Parent Company. As a
86

See RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090, 2111 (2016)
(“Section 1964(c) requires a civil RICO plaintiff to allege and prove a domestic injury
to business or property and does not allow recovery for foreign injuries.”).
87

See Tatung Co., Ltd. v. Shu Tze Hsu, No.: SA CV 13-1743 (DOC)
(ANx), 2016 WL 6683201, at *7-8 (C.D. Cal. Nov. 14, 2016) (finding the plaintiff
suffered a domestic injury because the plaintiff maintained a “hub” in the U.S., did
business in the U.S., and was prevented from collecting on a California arbitration
award due to the RICO conspiracy); Union Commercial, 2016 WL 6650399, at *4-5
(finding the plaintiff did not suffer a domestic injury because the foreign plaintiff
contracted to distribute cars in Angola and “the only specific injury of which plaintiff
complains – lost sales and lost profits – occurred entirely outside of the United
States”); Eceed Indust., LLC v. Younis, No. 15 C 14, 2016 WL 6599949 (N.D. Ill.
Nov. 8, 2016) (dismissing RICO claims because the plaintiffs suffered their injuries
in the United Arab Emirates and did not maintain a U.S. presence); Elsevier, Inc. v.
Grossman, 2016 WL 7077109, at * 13-14 (S.D.N.Y. Aug. 4, 2016) (concluding that
neither of the plaintiffs’ alleged injuries occurred on U.S. soil and thus were not
domestic injuries).
88

Tatung, 2016 WL 6683201, at *7 (noting two scenarios a foreign plaintiff
could suffer a domestic injury: (1) a foreign corporation doing business in the U.S.
that sues a U.S. corporation, acting entirely in the U.S., for RICO violations; (2) a
foreign individual who sues under civil RICO for financial injuries that occurred while
living, traveling, or working in the U.S.).
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result, the Court finds that the Plaintiff has not suffered a domestic injury to her
business or property for the purposes of civil RICO’s private right of action.89
For her Georgia RICO claim, the Plaintiff must also prove a domestic injury.
Like their federal counterparts, Georgia statutes have a presumption against
extraterritorial application.90 Thus, absent a clear statement to the contrary, the
Georgia courts refrain from applying statutes extraterritorially.91 The Plaintiff
contends that, in order to state a Georgia RICO claim, she must only allege that some
of the RICO conduct occurred in Georgia.92 She bases her argument on the fact that
Georgia courts have jurisdiction over RICO crimes that are only partially committed
in Georgia.93 However, the Georgia civil RICO provision is patterned after the federal
civil RICO provision.94 Thus, the Court finds that Georgia courts would apply the

89

RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090, 2111 (2016).

90

See Ohio S. Express Co. v. Beeler, 110 Ga. App. 867, 868 (1965) (“It is
not presumed that the statutory law of a foreign state is the same as ours, as our
statutory law has no extra-territorial operation.”).
91

Id.

92

Pl.’s Resp. Br., at 84-88.

93

Id. at 86.

94

See, e.g., Williams v. Mohawk Indus., Inc., 465 F.3d 1277,1294 (11th
Cir. 2006) (“[B]ecause the state RICO act is modeled upon and closely analogous to
the federal RICO statute, Georgia courts look to federal authority in determining
RICO standing.”), abrogated on other grounds as recognized in Simpson v. Sanderson
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domestic injury rule proclaimed in RJR Nabisco to determine whether the Plaintiff has
adequately alleged a domestic injury for a Georgia civil RICO claim.95 As a result –
like the federal RICO claim – the Court concludes that the Plaintiff has not alleged a
domestic injury under the Georgia RICO statute.
Even if the Plaintiff had suffered a domestic injury, she has not established a
direct injury. To establish standing under 18 U.S.C. § 1964(c), the Plaintiff must
demonstrate an “injury[] in his business or property by reason of a violation of section
1962.”96 The Eleventh Circuit “has interpreted [] [§ 1964(c)] to include a requirement
that the party’s injuries be the direct result of the alleged racketeering activity.
Therefore, a plaintiff has RICO standing only if his injuries were proximately caused
by the RICO violation.”97
Applying this principle to the shareholder context, the Eleventh Circuit has held
that “‘losses suffered by a company’s stakeholders as a result of racketeering activity
against the company do not give them standing under RICO’ because ‘[s]uch an injury
Farms, Inc., 744 F.3d 702, 714-15 (11th Cir. 2014).
95

See Absolute Activist Value Master Fund Limited v. Devine, No: 2:15CV-328-FtM-29MRM, 2017 WL 519066, at *21-22 (M.D. Fla. Feb. 8, 2017).
96

18 U.S.C. § 1964(c).

97

Bivens Gardens Office Bldg., Inc. v. Barnett Banks of Fla., Inc., 140 F.3d
898, 906 (11th Cir. 1998) (citing Pelletier v. Zweifel, 921 F.2d 1465, 1499 (11th Cir.
1991)).
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is too indirect or “derivative” to confer RICO standing.’”98 But “[a] plaintiff’s status
as a creditor or stockholder . . . does not preclude standing for RICO violations if the
plaintiff has alleged an injury proximately caused by the defendants’ acts of
racketeering that target the plaintiff.”99 As a result, “[t]he critical question in
determining whether a shareholder has standing to file a RICO action is whether or
not the plaintiff suffered a harm that stands separate and distinct from the harm
suffered by the corporation.”100 Additionally, as the Court noted above, if a party lacks
standing to assert a federal RICO claim, she also lacks standing to assert a Georgia
RICO claim.101
Here, it is clear that the Plaintiff’s alleged injury is not separate and distinct
from the Parent Company’s alleged injury. The Parent Company’s alleged injury is
that it was deprived of its funds and most valuable asset through the Defendants’
purported complex scheme of fraudulent transactions. The Plaintiff’s only alleged

98

Harris v. Orange S.A., 636 F. App’x 476, 481 (11th Cir. 2015) (per
curiam) (quoting Bivens, 140 F.3d at 906).
99

Beck v. Prupis, 162 F.3d 1090, 1096 n.10 (11th Cir. 1998).

100

Harris, 636 F. App’x at 481.

101

See Mohawk Indus., Inc., 465 F.3d 1277, 1294 (11th Cir. 2006)
(“[B]ecause the state RICO act is modeled upon and closely analogous to the federal
RICO statute, Georgia courts look to federal authority in determining RICO
standing.”).
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injury is the depreciation of her 1% share in the Parent Company. As the Eleventh
Circuit has made clear, “losses suffered by a company’s stakeholders as a result of
racketeering activity against the company do not give them standing under RICO.”102
Thus, the Plaintiff has alleged a harm that is “‘purely contingent’ on the harm suffered
by the corporation.”103
Nevertheless, the Plaintiff raises additional arguments with regard to RICO
standing in her piercing the corporate veil count. In Count I104 of her SAC, the
Plaintiff contends that the Court should pierce the corporate veil of the Parent

102

Bivens Gardens, 140 F.3d at 906; cf. United States v. Palmer, 578 F.2d
144, 145-46 (5th Cir. 1978) (“The law is clear that only a corporation and not its
shareholders, not even a sole shareholder, can complain of an injury sustained by, or
a wrong done to, the corporation.”); Stevens v. Lowder, 643 F.2d 1078, 1080 (5th Cir.
1981) (“[D]iminution in value of the corporate assets is insufficient direct harm to
give the shareholder standing to sue in his own right.”).
103

Harris, 636 F. App’x at 481 (quoting Holmes v. Securities Investor Prot.
Corp., 503 U.S. 258, 271 (1992)).
104

It should be noted that the Plaintiff’s Count I, entitled “Piercing the
Corporate Veil,” is not an independent legal claim. See Second Am. Compl. ¶ 1553.
Rather, veil piercing is a method by which a plaintiff seeks to hold a defendant liable
for the obligations of a corporation. See GEBAM, Inc. v. Investment Realty Series I,
LLC, 15 F. Supp. 3d 1311, 1326 n.21 (N.D. Ga. 2013) (“Piercing the corporate veil
is not itself an independent cause of action, but rather is a means of imposing liability
on an underlying cause of action.”) (quoting Peacock v. Thomas, 516 U.S. 349, 354
(1996)). As a result, it was improper for the Plaintiff to assert this as a separate count
in her SAC. Nonetheless, the Court will still consider whether it is appropriate to
pierce the corporate veil.
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Company, Glock, Inc., Consultinvest, Glock Hong Kong, and Glock America.105 She
alleges that Glock Sr. used the Glock corporations as his alter ego to further his
criminal enterprise. According to the Plaintiff, once the corporate veil is pierced, “all
that remain are (1) the business partnership between Gaston and Helga and (2) that
partnership’s assets.”106 And because she made contributions to the partnership, she
is entitled to “[a] portion of the proceeds of their joint efforts.”107 In addition, she
argues that piercing the Glock corporations’ veils will provide her with standing to
assert her RICO claims.108 She contends that she suffered a domestic injury because
Glock, Inc. was part of the partnership’s assets. Moreover, she alleges her injury
would be direct because the Defendants specifically targeted her by wasting the
partnership’s assets.
It appears that the Plaintiff is attempting to use the veil piercing doctrine to
ignore the corporate form and to reach the corporations’ assets, which she claims
105

The Court also notes that the Plaintiff fails to provide a choice of law
analysis. The Court may have to apply foreign law to “pierce the corporate veil” of the
foreign Glock corporations, specifically the Parent Company, Glock Hong Kong, and
Glock America. See Fish & Neave v. Perovetz, No. 91 CIV. 7047 (CSH), 1993 WL
7572, at *4 (S.D.N.Y. Jan. 7, 1993) (“[W]hether to pierce the corporate veil of a
foreign corporation is determined by the law of the incorporating state.”).
106

Pl.’s Resp. Br., at 48.

107

Id.

108

Id. at 48-49, 83-84.

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belong to her “partnership” with Glock Sr.109 This is no more than a veiled request for
a division of assets that allegedly belong to the Plaintiff’s and Glock Sr.’s marital
estate. If the Court granted this unique request for equitable relief, it would offend the
international abstention doctrine. As the Court discussed in its abstention Order, it
cannot rule on any claims related to the Plaintiff’s divorce proceedings or her transfer
of Parent Company shares to the Glock Foundation.110 As a result, the Court will not
consider the Plaintiff’s veil piercing claim.
Even if the Court could reach the Plaintiff’s veil piercing claim, it would not
provide the Plaintiff with RICO standing. The veil piercing/alter ego “doctrine is
generally used for the purpose of piercing the corporate veil to hold an individual
stockholder liable for debts incurred by the corporation.”111 But the Plaintiff is not
employing the doctrine to hold Glock Sr. liable for the Parent Company’s debts.
Instead, she asks the Court to ignore the corporate form in order to claim the Glock
corporations’ assets as of her own. This argument is simply a means to circumvent the
RICO standing rule regarding shareholders. As the Court noted above, any harm the

109

The Plaintiff has failed to alleged any facts that prove a legal partnership

existed.
110

See [Doc. 117], at 7.

111

Gwinnett Prop., N.V. v. G+H Montage GmbH, 215 Ga. App. 889, 893

(1994).
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Plaintiff suffered as a result of the Defendants’ alleged corporate waste was only
indirect.112 She may have motivated the Defendants’ actions but that does not make
her injury direct. If the Plaintiff wishes to bring a claim based upon the Defendants’
alleged corporate waste, the appropriate avenue would be a derivative claim in the
Austrian courts.
The Plaintiff primarily relies on Stooksbury v. Ross in support of her argument
that piercing the corporate veil will create RICO standing.113 However, that case is
unhelpful. In Stooksbury, the plaintiff, who was a minority shareholder at a company
called Tellico Landing, LLC, brought a RICO claim that included a request to pierce
the corporate veil of Tellico.114 The court found that it was appropriate to pierce the
corporate veil of Tellico because the defendant had used numerous sham entities,
including Tellico, to further a fraudulent real-estate enterprise.115 The court then
concluded that the plaintiff had RICO standing. The court stated that:
[s]eparate and apart from just depleted value in investment, Plaintiff
established that Ross used Tellico as his alter ego to further the Ross
112

See Harris v. Orange S.A., 636 F. App’x 476, 484 (11th Cir. 2015)
(finding that a shareholder did not have RICO standing because she failed to allege
an injury that was separate and distinct from the corporation’s injuries).
113

528 F. App’x 547 (6th Cir. 2013).

114

Id. at 557.

115

Id. at 549-50, 557.

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Defendants’ criminal enterprise of materially misrepresenting and
artificially inflating property values and caused Plaintiff to unknowingly
contribute capital and resources to the enterprise’s scheme, resulting in
the misappropriation of Plaintiff’s funds and profits.116
Thus, the court found that the plaintiff “sufficiently pleaded that he, independent of
Tellico, was injured by the conspiracy.”117 By contrast, here, the Plaintiff has not
alleged that Glock Sr., by using the Glock corporations as his alter ego to further the
Defendants’ criminal enterprise, caused her to contribute assets or capital to the Glock
enterprise.118 Rather, the Plaintiff is alleging the Defendants used the scheme to take
assets and capital from the Parent Company and Glock, Inc. Therefore, unlike the
defendants’ scheme in Stooksbury, which was partially directed at the plaintiff, here,
the Defendants’ alleged scheme was directed solely at the corporations and not the
Plaintiff as an individual.
The Court therefore finds that the Plaintiff cannot create RICO standing by
disregarding the corporate formalities of the Glock corporations. Accordingly, the

116

Id. at 557 (emphasis added).

117

Id. Notably, Georgia law does not allow the “reverse veil-piercing”
which the Plaintiff seeks. See Acree v. McMahan, 276 Ga. 880 (2003).
118

The Plaintiff contends in her response brief that the Defendants’ actions
did, in fact, cause her to involuntarily contribute capital and resources to the
racketeering scheme. See Pl.’s Resp. Br., at 51-52. But the Plaintiff does not cite any
allegations in her SAC supporting her claim. She only cites case law. Id.
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Plaintiff lacks standing to assert her federal and state RICO claims, and so the
Defendants’ Motions to Dismiss should be granted.

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IV. Conclusion
For these reasons, the Court GRANTS the Defendants Gaston Glock Sr., Glock
Ges.m.b.H., Glock, Inc., Glock America S.A., Glock (H.K.) Ltd., CON Holding
GmbH, Joerg-Andreas Lohr, Lohr + Company GmbH Wirtschaftsprüngsgesellschaft,
Rochus GmbH, and Karl Walter’s Motion to Dismiss [Doc. 187], the Defendant
Hubert Willam’s Motion to Dismiss [Doc. 191], and the Defendant Peter Manown’s
Motion to Dismiss [Doc. 192].
SO ORDERED, this 20 day of March, 2017.

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

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