EAST ST. LOUIS – Casino Queen directors and former owners plan to seek appellate review of an order rejecting individual arbitration of claims that they cheated casino employees out of retirement income.
The defendants filed notice of intent to appeal on Jan. 28, three days after U.S. District Judge David Dugan denied their motion to compel arbitration.
They moved to stay proceedings in Dugan’s court pending resolution of the appeal.
Pension plan participants Tom Hensiek and Jason Gill sued the board of directors and former owners Timothy Rand, James Koman, and Charles Bidwill last April.
They also sued current St. Clair County Associate Judge Jeffrey Watson, president and general counsel of Casino Queen until 2019.
Their suit claims that in 2012, after the owners failed to find a buyer, directors created a buyer by establishing an employee stock ownership plan.
Employees say the plan paid an inflated price and incurred $170 million in debt.
They claim directors sold virtually all the real property to Gaming and Leisure Properties for $140 million, to refinance the debt.
They claim directors entered into an agreement to lease the property back for $210 million over 15 years.
They claim directors reported positive results until 2019, when they told employees the stock price dropped nearly to nothing.
Defendants moved to dismiss the complaint and enforce an individual arbitration clause that directors added to the pension plan by amendment in 2018.
They argue they have authority from the original plan, which provided that directors could amend it prospectively or retroactively at any time.
Dugan found the amendment failed to provide any consideration.
“Consideration exists only if there is a grant of an advantage or the bargained for acceptance of a disadvantage,” Dugan wrote.
He found modification of a contract requires consideration like a new contract.
“Defendants by implementing the amendment took advantages for themselves while imposing corresponding disadvantages on the plaintiffs by stripping from them certain rights they otherwise enjoyed under the plan,” he wrote.