Posted on: March 8, 2023, 02:03h.
Final up to date on: March 8, 2023, 02:09h.
Former employees of On line casino Queen Inc. notched a authorized victory earlier this week when the US District Courtroom for the Southern District of Illinois rejected a movement to dismiss a go well with introduced by the ex-staffers who declare former board members dumped shares of the gaming firm’s fairness into an worker retirement plan at artificially excessive costs.
Defendants Charles Bidwell III and Timothy Rand believed the go well with exhausted the six-year statute of limitations set forth by the Worker Retirement Earnings Safety Act (ERISA). The courtroom didn’t concur, noting it rejected that declare in a previous resolution. James Koman — the opposite defendant — noticed his movement for judgment on the pleadings dismissed as properly. Bidwell, Koman, and Rand are named as “alleged founders” of Illinois-based On line casino Queen.
In October 2012, the aforementioned defendants and others created On line casino Queen Holding Firm (CQHC) for On line casino Queen Inc. Two months later, they established an worker inventory possession plan designed to buy the excellent shares within the holding entity. Later in December 2012, the worker inventory plan borrowed $170 million to buy shares from CQH.
Plaintiffs allege that the 2012 Inventory Buy and 2013 Asset Sale have been performed in violation of the Defendant’s fiduciary duties underneath ERISA. Particularly, as to the 2012 Inventory Buy, Plaintiffs allege that the ESOP paid considerably greater than honest market worth for the inventory, which was the ESOP’s solely asset,” in line with a courtroom submitting.
The plaintiffs assert the value the employees’ inventory plan paid for the fairness was too excessive primarily based on the gaming firm’s future monetary forecasts.
Illinois Competitors Damage On line casino Queen
The authorized grievance notes that whereas On line casino Queen was initially a profitable firm, it was hindered by the speedy enlargement of the Illinois casino-gaming market, which is now one of many largest within the nation exterior of Las Vegas.
The plaintiffs declare that from 2005 by means of 2011, On line casino Queen tried to promote itself on a number of events, however was unsuccessful. In 2012 and 2013, the founders proceeded to interrupt up the corporate, together with the sale of the Illinois riverboat on line casino to Gaming and Leisure Properties (GLPI) for $140 million. On line casino Queen agreed to lease the venue again from GLPI for $210 million over 15 years although the property had an assessed worth of simply $12.1 million on the time.
“This transaction was made on behalf of the Board of Administrators and CQH with out regard to how any of the staff would vote as a result of at the moment, the vast majority of CHQ’s inventory (which was now owned by the ESOP) was unallocated and thus voted on by the Co-Trustees who had the ability to vote unallocated shares underneath the Plan,” in line with the submitting.
GLPI usually owns gaming actual property and leases these properties to operator shoppers. Nevertheless, it additionally owns a small variety of casinos, together with On line casino Queen, which in the present day is operated by an worker administration group.
On line casino Queen Defendants’ Flimsy Argument
The US District Courtroom for the Southern District of Illinois takes subject with Bidwell’s and Rand’s claims the worker possession plan exhausted its ERISA entitlements as a result of six years lapsed. The courtroom factors out that there are exemptions for the time restrict in cases of fraud and concealment.
Moreover, counsel for the defendants tried to argue that the statute of repose is a jurisdictional matter, however different courts beforehand dominated that “statutes of limitations and repose are each non-jurisdictional claims-processing guidelines.”
The Illinois courtroom additionally famous that whereas the plaintiffs didn’t expressly tackle the defendants’ dismissal claims, they’re entitled to extra discovery earlier than the courtroom guidelines on the movement to dismiss. The plaintiffs do argue that fraud and/or concealment are at Play on this case.