January 25, 2021
An Illinois federal judge handed a riverboat casino’s former employees a victory in their fight to keep a proposed ERISA class action in court, ruling Monday that the arbitration provision in Casino Queen’s employee stock ownership plan is invalid.
If Casino Queen’s board of directors wanted the arbitration provision they added to the company’s ESOP in 2018 to be valid, they needed to offer some sort of benefit or compromise to the workers being bound by that clause, U.S. District Judge David W. Dugan wrote in his opinion denying the board’s motion to compel arbitration.
Because they didn’t offer such consideration — instead, imposing a clause that solely benefited Casino Queen while harming workers — the provision is invalid, Judge Dugan wrote. In his opinion, the judge cautioned benefit plan sponsors against drafting arbitration clauses without taking workers’ interests into account in this manner.
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Judge Dugan’s decision allows former Casino Queen employees Tom Hensiek and Jason Gill to litigate their proposed ERISA class action, which was filed in April against the board of directors of the casino’s parent company, CQ Holding Co. Inc.
The suit claims that Hensiek, Gill and other Casino Queen employees were cheated out of “tens of millions of dollars” after the ESOP severely overpaid for CQ Holding stock in a $170 million transaction in 2012.
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