EAST ST. LOUIS – Defendants in a suit over the collapse of Casino Queen’s pension plan turned on each other in U.S. district court on May 19.
The casino, former president Jeffrey Watson (currently a St. Clair County associate judge), and former vice president James Barrows asserted a cross claim against former owners James Koman, Timothy Rand, and Charles Bidwill.
Rand and Bidwill asserted that to the extent they are found liable, they are entitled to indemnification or contribution from Koman.
Koman asserted a cross claim against all of them.
The casino, Watson, and Barrows also sued eight former shareholders that plaintiffs didn’t sue.
District Judge David Dugan presides.
Former casino employees Tom Hensiek and Jason Gill filed a class action complaint under federal retirement law in 2020, claiming that defendants failed to find a buyer for the casino and arranged to sell it to an employee stock ownership plan in 2012.
Hensiek and Gill allege they received good reports about the plan until 2019, when the value of shares fell 95 percent.
This April, they amended the complaint to add trusts of the Bidwill and Koman families as defendants and add current employee Lillian Wrobel as plaintiff.
Class counsel Michelle Yau of Washington, D.C. claims pension plan participants turned down jobs at nearby casinos because of management’s promises.
She claims the casino used employee ownership “as a selling point to recruit and retain employees despite Casino Queen’s below market wages.”
She claims Watson and Barrows cashed out their shares for millions, and that their disloyal and imprudent actions impaired the value of the stock.
On May 19, the date for responding to the amended complaint, the first response came from the casino, Watson, and Burrows.
Their counsel Joel Rice of Chicago denied all allegations and argued that plaintiffs didn’t suffer any harm.
Rice wrote that to the extent the court finds his clients liable as fiduciaries, they are entitled to contribution from Koman, Rand, and Bidwill.
He also filed a third party complaint claiming former shareholders knowingly participated in breaches of fiduciary duties and prohibited transactions.
He alleges that Michael Gaughan sold stock for $20.5 million in cash and Franklin Toti sold stock for $6.75 million in cash.
He alleges that Philip Kenny, James Kenny, John Kenny Jr., Patrick Kenny, and Joan Kenny Rose each received $2,964,285.72 in cash and a note for $892,857.14.
He alleges Mary Ann Kenny Smith received $5,928,571.40 in cash and a note for $1,785,714.30.
He claims they had full knowledge of the transaction and the circumstances.
He claims that to the extent the court determines the transaction resulted in overpayment, they should make restitution by disgorging it.
For Rand and Bidwill, Ronald Norwood of St. Louis responded to Yau’s complaint by claiming they have no liability under any viable theory.
Norwood argues that to the extent they are found liable there should be apportionment of liability as between them and Koman.
He also deflected liability to the casino, Watson, and Barrows, in a separate motion to dismiss Rand and Bidwill from the action.
He denies that Rand and Bidwill concealed information in governmental filings and states that Watson and Barrows prepared the filings.
He denies that Rand and Bidwill voted to sell the property, made any statements to plan participants, or prepared account statements.
He claims plaintiffs falsely asserted that Rand and Bidwill controlled the plan’s trustees and administrative committee.
He claims a trust agreement appointed Watson and Barrows as trustees.
Koman’s counsel Lars Golumbic of Washington, D.C. responded to Yau’s complaint with a cross claim against the casino, Watson, Barrows, Rand and Bidwill.
Golumbic claims that to the extent the court found Koman had fiduciary obligations the others acted as fiduciaries and are liable for contribution.
Watson resigned from the casino nine months before plan participants learned the value dropped, to take an appointment as associate judge.