Glock v. Glock

• Decision Date: 20 March 2017
• Docket Number: CIVIL ACTION FILE NO. 1:14–CV–3249–TWT
• Citation: 247 F.Supp.3d 1307
• Parties: Helga GLOCK, Plaintiff, v. Gaston GLOCK, Sr., et al., Defendants.
• Court: U.S. District Court — Northern District of Georgia

247 F.Supp.3d 1307

Helga GLOCK, Plaintiff,

v.Gaston GLOCK, Sr., et al., Defendants.

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

United States District Court, N.D. Georgia, Atlanta Division.

Signed March 20, 2017

John Da Grosa Smith, Kristina Michele Jones, Smith LLC, Atlanta, GA, for Plaintiff.

Amanda Kay Seals Bersinger, John Earl Floyd, Tiana Scogin Mykkeltvedt, Ronan P. Doherty, Bondurant Mixson & Elmore, LLP, Christopher Evan Parker, Michael Paul Kohler, Tate Michael Keenan, Miller & Martin, PLLC, Atlanta, GA, for Defendants.

Peter S. Manown, Dadeville, AL, pro se.

OPINION AND ORDER

THOMAS W. THRASH, JR., United States District Judge

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 William'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.

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 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 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 co-Defendants, "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 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 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 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 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 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, 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...