Akhmed Gadzhievich v. Herman Gref

Background

Akhmed Gadzhievich Bilalov alleged that he and his brother jointly owned most of a Russian ski-resort company. He claimed that Herman Gref and Sberbank Russia progressively obtained control of the company, forced its owners to take on debt, diluted Bilalov’s shares, and ultimately used threats and other improper conduct to obtain shares for far less than their alleged value. He also alleged that defendants used a financial network to move related money, threatened him and his family in the United States and elsewhere, arranged for criminal proceedings and an Interpol notice against him, and caused him to be briefly detained in Florida.

Bilalov asserted claims under the Racketeer Influenced and Corrupt Organizations Act (RICO), the Alien Tort Statute (ATS), and state common law for fraud, conspiracy to commit fraud, unjust enrichment, conversion, and abuse of process. Gref and Sberbank Russia moved to dismiss under the Foreign Sovereign Immunities Act (FSIA), for lack of personal jurisdiction, under the doctrine of forum non conveniens, and for failure to state a claim. Sberbank CIB USA, Inc. separately moved to dismiss for failure to state a claim.

Foreign Sovereign Immunities Act

The court held that Sberbank Russia qualified as an instrumentality of the Russian Federation under the FSIA. It rejected Bilalov’s reliance on the FSIA’s commercial-activity exception because the core of his claims was the alleged taking of his shares in Russia, not later threats or transfers of money in the United States. The court also rejected the expropriation exception. It explained that the exception did not apply because the alleged property taking occurred in Russia and involved property belonging to a Russian citizen within Russia.

The court therefore granted the Russian defendants’ motion as to claims against Sberbank Russia arising from the alleged theft of Bilalov’s shares, including the RICO and ATS claims and the common-law claims for fraud, conspiracy to commit fraud, unjust enrichment, and conversion.

The court treated the abuse-of-process claim differently because it concerned Bilalov’s alleged detention in Florida rather than the taking of his shares. It held that the alleged bribery connected to the Interpol notice could qualify as commercial activity and that the alleged detention in the United States supplied a sufficient direct effect for FSIA jurisdiction. The court therefore found that it had jurisdiction over Sberbank Russia for that claim. It did not decide the Russian defendants’ personal-jurisdiction and forum-non-conveniens arguments because it dismissed the claim on another ground.

RICO Claims

The court dismissed the RICO claims for two independent reasons. First, RICO’s four-year limitations period began when Bilalov discovered or reasonably should have discovered the injury. The court found that Bilalov knew of the relevant injury more than four years before filing suit. His allegations that defendants later used threats to conceal the earlier injury or discourage him from pursuing it did not establish a new and independent RICO injury.

Second, the court held that Bilalov had not alleged a domestic injury to business or property. The alleged taking occurred in Russia, and the use of the United States financial system to move or conceal funds did not convert that foreign injury into a domestic one. The alleged detention, reputational harm, employment losses, and threats in the United States also did not qualify as the required RICO injury to business or property or were not sufficiently connected to the alleged racketeering conduct. The court granted defendants’ motions to dismiss the RICO claims.

Common-Law Claims

The court dismissed the fraud, conspiracy-to-commit-fraud, conversion, and unjust-enrichment claims as untimely. Applying New York’s borrowing rule, the court used New York’s limitations periods because Bilalov’s claims arose outside New York. The fraud claims accrued no later than 2013 and were filed after the applicable period. The conversion and unjust-enrichment claims also arose from the alleged 2013 taking and were filed too late. The court granted defendants’ motions to dismiss these claims.

Alien Tort Statute Claims

The court dismissed the ATS claims. It held that the alleged fraud, corporate raiding, bribery, money laundering, abuse of process, brief detention, and extortion did not establish violations of international law for purposes of the ATS. The court concluded that the alleged poisoning could potentially constitute an attempted extrajudicial killing by a state actor and thus might qualify as a violation of international law. But the alleged poisoning occurred in Russia, and Bilalov did not allege that conduct relevant to the poisoning occurred in the United States. The court therefore held that the ATS claim was impermissibly extraterritorial and granted defendants’ motions to dismiss it.

Abuse of Process

The court held that the abuse-of-process claim was timely because New York’s COVID-19 tolling orders extended the limitations period. It applied Florida law because Bilalov was detained there and alleged that his injuries occurred there. Florida law required an act misusing legal process after the process was issued. Bilalov alleged that defendants improperly sought an Interpol notice or diffusion, but he did not allege misuse after issuance. The court also found that using the process for the purpose for which it was designed, even with an ulterior motive, did not satisfy Florida law. The court therefore granted defendants’ motions to dismiss the abuse-of-process claim.

Leave to Amend and Disposition

The court denied Bilalov’s request for leave to amend the RICO and ATS claims and his fraud, unjust-enrichment, and conversion claims. It found that he had already amended his complaint twice and had sufficient notice of the alleged defects. The court allowed him to file a motion seeking leave to amend the abuse-of-process claim within 21 days because defendants had primarily addressed that claim under New York law, while the court dismissed it for failure to satisfy Florida law.

Judge Analisa Torres concluded that defendants’ motions to dismiss were granted. The clerk was directed to terminate the motions.