# Hensiek v. Board of Directors of Casino Queen Holding Company, Inc.

> District Court, S.D. Illinois · March 8, 2023

URL: https://www.frixlaw.com/law-library/cases/10156115

## Case

- **Court:** District Court, S.D. Illinois
- **Decided:** March 8, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS

TOM HENSIEK, et al., )
Plaintiffs, )
vs. ) Case No. 20-cv-377-DWD
)
BD. OF DIRECTORS OF CASINO QUEEN )
HOLDING CO., INC., et. al., )
Defendants. )
_________________________________________ )
BD. OF DIRECTORS OF CASINO QUEEN )
HOLDING CO., INC., et. al., )
Crossclaim/Third-Party Plaintiffs, )
vs. )
)
CHARLES BIDWILL, III, et al., )
Crossclaim/Third-Party Defendants. )
_________________________________________ )
CHARLES BIDWILL, III, )
TIMOTHY J RAND, )
Defendants/Counterclaimants, )
Crossclaim/Third Party Plaintiffs, )
vs. )
)
TOM HENSIEK, et. al., )
Counterclaim/Crossclaim/Third-Party )
Defendants. )
_________________________________________ )
JAMES G. KOMAN, )
Crossclaim Plaintiff, )
vs. )
)
BD. OF DIRECTORS OF CASINO QUEEN )
HOLDING CO., INC., et al. )
Crossclaim Defendants. )
_________________________________________ )

MEMORANDUM AND ORDER

DUGAN, District Judge:

Plaintiffs Tom Hensiek, Jason Gill, and Lillian Wrobel bring this action pursuant
to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001-1461
(“ERISA”), on behalf of a proposed class of participants and beneficiaries in the Casino

Queen Employee Stock Ownership Plan, an ERISA-protected retirement plan.
In April 2022, Plaintiffs filed an amended complaint, adding several new
defendants whom Plaintiffs claim were former shareholders of CQI and “parties in
interest” under 29 U.S.C. § 1002(14) (Doc. 144, ¶¶ 64-66). Plaintiffs allege that these
parties engaged in prohibited transactions in violation of 29 U.S.C. § 1106(a) and received
proceeds from the prohibited transactions which Plaintiffs seek to reclaim (Doc. 144, ¶¶

198-212). Now before the Court are several Motions to dismiss filed by these new parties:
1. Doc. 231: Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6) and 12(b)(7)
brought by Defendant Charles Bidwill, III as Trustee of the Bidwill Succession
Trust;

2. Doc. 234 Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b) brought by
Defendants the William J. Koman Jr. Irrevocable Trust and the William J.
Koman, Sr. Living Trust;

3. Doc. 252: Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6) brought by
Defendants Patricia Bidwill and Brian Bidwill;

4. Doc. 267: Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6) by Defendant
Shauna Valenzuela;

5. Doc. 319: Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(4) and 12(b)(6)
brought by Defendants Janis Koman n/k/a Janis Forsen, Karen Koman, and
Elizabeth Koman as Beneficiaries of the Janis A. Koman Irrevocable Trust,
Karen L. Hamilton Irrevocable Trust, and the Elizabeth S. Koman Irrevocable
Trust;

6. Doc. 327: Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6) brought by
Defendants the James G. Koman Irrevocable Trust, and Gregory Smith, the
Trustee of the James G. Koman Irrevocable Trust;

7. Doc. 362: Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6) brought by
Defendants the Janis A. Koman Irrevocable Trust, Karen L. Hamilton
Irrevocable Trust, the Elizabeth S. Koman Irrevocable Trust, and Peter
Hamilton, as the Trustee of the Janis A. Koman Irrevocable Trust, Karen L.
Hamilton Irrevocable Trust, and the Elizabeth S. Koman Irrevocable Trust; and

8. Doc. 395: Plaintiffs’ Motion to Withdraw Defendants Bidwill Kasino Trust, its
Trustee, and any Beneficiaries of said Trust, and the Beneficiaries of the Bidwill
Succession Trust.

Periodically throughout this Order, the Court will refer to these Defendants collectively
as the “Moving Defendants” or “Selling Shareholders.”
Background
The allegations in Plaintiffs’ Amended Complaint (Doc. 144) are more fully
described in the Court’s Order disposing of the Motion to Dismiss (Doc. 155) and Motion
for Judgment on the Pleadings (Doc. 159) filed by Defendants Charles Bidwill III, Timothy
J. Rand, and James G. Koman. Thus, in this Order, the Court will only highlight those
allegations particularly relevant to the Moving Defendants.
Plaintiffs are former employees of Casino Queen Hotel & Casino, and participants
and beneficiaries of the Casino Queen Employee Stock Ownership Plan (“ESOP”).
Plaintiffs allege that the ESOP’s fiduciaries committed multiple ERISA violations related
to two transactions generally referred to as the 2012 Stock Purchase and 2013 Asset Sale
(Doc. 144).
The Moving Defendants are alleged family members (or trust-related entities set
up to benefit family members) of the five founding family groups of Casino Queen, Inc.
(“CQI”) and its subsequent holding company, Casino Queen Holding Company, Inc.
(“CQH”) (Doc. 144, ¶¶ 2, 72). These groups included persons from the Bidwill family,
the Rand family, the Koman family, the Kenny family, and the Gaughan/Toti group
(Doc. 144, ¶ 2). Prior to the transactions at issue in this case, each of the five family groups

owned an equal portion of CQI (20%) and controlled one of the five director seats on the
CQI Board (Doc. 144, ¶¶ 2, 72). The Moving Defendants are alleged to be connected to
the Koman and Bidwill family groups with James Koman and Charles Bidwill III serving
as their designated CQI Board Member (Doc. 144, ¶ 73). Each of the Moving Defendants
also owned a percentage of CQI, ranging from 0.88% to 10.200% (Doc. 144, ¶ 65).
From 2005 to 2011, the Moving Defendants, along with the other Selling

Shareholders1, attempted to sell Casino Queen to various third parties but were not
successful. Thus, in 2012 and 2013, the Selling Shareholders sold the Casino Queen and
its assets in four general steps, which are more fully detailed in the Court’s prior orders.
Relevant to the Moving Defendants, in October 2012, they, and the other Selling
Shareholders, created Casino Queen Holding Company, Inc. (“CQH”), a holding

company for CQI (Doc. 144, ¶ 79). The Selling Shareholders then exchanged their CQI
stock for CQH stock and placed three former CQI Board Members on the newly formed
CQH Board (Id.). These board members included James Koman and Charles Bidwill III
(Doc. 144, ¶¶ 41-42).
Then, in December 2012, the Selling Shareholders, acting in coordination with their

1 These Defendants include Timothy Rand, the William J. Koman, Sr. Living Trust, Charles Bidwill, the
James C. Koman Irrevocable Trust, the William J. Koman Irrevocable Trust, the Bidwill Sucession Trust,
the Bidwill Kasino Trust, Mary C. Bidwill, Brian R. Bidwill, Patricia M. Bidwill, Shawna Bidwill-Valenzuela,
the Karen L. Hamilton Irrevocable Trust, the Janis A. Koman Irrevocable Trust, the Elizabeth S. Koman
Irrevocable Trust, and James G. Koman (Doc. 144, ¶¶ 65-66). Defendants Charles Bidwill, Rand, James
Koman, Watson, and Barrows are alleged to be fiduciaries of the ESOP (Doc. 144, ¶ 203).
family’s CQH Board Member, established the Casino Queen Employee Stock Ownership
Plan (the “ESOP”), and facilitated the ESOP’s purchase of their then-outstanding CQH

stock for a sum of $170 million (Doc. 144, ¶ 81). To facilitate the stock purchase, the ESOP
borrowed $130 million in secured debt from Wells Fargo, $15 million from a third party,
and $25 million from the Moving Defendants and the other Selling Shareholders (Id.).
CQH guaranteed the debt which significantly increased its debt load (Doc. 144, ¶¶ 80,
115-116). Plaintiffs allege that the Selling Shareholders’ loans made to the ESOP carried
”draconian interest rates as high as 17.5%.” (Doc. 144, ¶ 6). This transaction is generally

referred to as the “2012 Stock Purchase.”
Finally, in 2013, the ESOP sold Casino Queen’s real property to a third-party,
Gaming and Leisure Properties, Inc. (“GLPI”) for $140 million (Doc. 144, ¶¶ 127-129).
CQH then leased the same property back from GLPI for $210 million, to be paid over 15
years. This transaction is generally referred to as the “2013 Asset Sale.” The asset sale

provided CQH and the ESOP with cash to pay off the ESOP’s outstanding loans owed to
the Selling Shareholders (Doc. 144, ¶¶ 134-135). Plaintiffs maintain that the Selling
Shareholders’ loans were fully repaid in 2014, and shortly thereafter, Defendants Bidwill
and Koman relinquished their CQH Board memberships (Doc. 144, ¶¶ 145-46).
Plaintiffs allege that the 2012 Stock Purchase and 2013 Asset Sale were conducted

in violation of the ESOP’s fiduciaries’ duties under ERISA. Specifically, as to the 2012
Stock Purchase, Plaintiffs allege that the ESOP paid significantly more than fair market
value for the stock, which was the ESOP’s only asset. Plaintiffs maintain that the price
the ESOP paid for the CQH stock was dramatically inflated based on financial projections
of Casino Queen’s future profitability. They further contend that the Board of Directors
knew or should have known this price was unrealistic because the Selling Shareholders

had tried unsuccessfully for years to sell Casino Queen, and because Defendants knew
that Casino Queen’s revenue had dropped significantly due to the decreasing market
share it held as more competitors grew in the area (Doc. 144, ¶¶ 108-111). Further, as for
the 2013 Asset Sale, Plaintiffs claim this sale was based on unfavorable financial terms for
the ESOP, and made, at least in part, to pay off the Selling Shareholder’s loans to the
ESOP (Doc. 144, ¶ 144). Plaintiffs contend this sale “left Casino Queen as a shell of a

company that did not own any real property assets and which did not have sufficient
cash flow to service its remaining debts.” (Doc. 144, ¶ 144).
In Count 1, Plaintiffs seek to reclaim the proceeds the Selling Shareholders
received from the prohibited transactions they engaged in or received benefits from (Doc.
144, ¶¶ 198-212). Here, Plaintiffs allege that at least three ESOP transactions involving

the Selling Shareholders were prohibited transactions in violation of 29 U.S.C. § 1106(a).
This Section prohibits certain kinds of transactions between a plan and a “party in
interest”, including transactions that constitute a “direct or indirect --
(A) sale or exchange, or leasing, of any property between the plan
and a party in interest;

(B) lending of money or other extension of credit between the plan
and a party in interest;

(C) furnishing of goods, services, or facilities between the plan and a
party in interest;

(D) transfer to, or use by or for the benefit of a party in interest of any
assets of the plan; or
(E) acquisition, on behalf of the plan, of any employer security or
employer real property in violation of section 1107(a) of this title.

29 U.S.C. § 1106(a)(1)(B). Plaintiffs contend that the following were prohibited
transactions under Section 1006: the ESOP’s purchase of the Selling Shareholders’ CQH
stock in 2012, the Selling Shareholder’s subsequent loans to the ESOP “at draconian
interest rates”, and the individual payments the Selling Shareholders received in
connection with the repayment of their loans (Doc. 144, ¶¶ 6, 205-207).
Plaintiffs maintain that every Selling Shareholder is a party in interest under
ERISA because each Selling Shareholder was either “a member of the CQH Board of
Directors, a 10% or more shareholder, a family member of a Board member or 10%
shareholder [i.e., Defendant James Komen or Charles Bidwill], a trust in which 50% or

more of the beneficial interest is owned directly or indirectly by such persons, or
otherwise a party in interest” as defined in 29 U.S.C. § 1002(14) (Doc. 144, ¶¶ 65-66, 203-
204). Plaintiffs further allege that each Selling Shareholder “had actual or constructive
knowledge” of the circumstances rendering these transactions unlawful because they
knew:

(a) that CQI had received at least 6 prior offers to purchase the Company
on worse terms than those paid in the ESOP Transaction,

(b) that the valuation supporting the 2012 ESOP Transaction was the
product of improper, incomplete, unconsidered, and misleading
information, and

(c) that the interest rates on the loan the Selling Shareholders made to the
ESOP through the shell Corporation CQH were unreasonably high.

(Doc. 144, ¶ 66). Additionally, Plaintiffs allege that each “non-fiduciary” Selling
Shareholder “participated in the ongoing efforts to actively conceal the details and effects
of the 2012 Transaction from the ESOP participants” by requesting their family

representative to provide inaccurate information regarding the ESOP to participants,
include incomplete information in the Company’s Form 5500s, and prepare and
disseminate inaccurate annual account balance statements to the ESOP participants (Doc.
144, ¶¶ 66, 151, 154, 177).
Legal Standard
To survive a motion to dismiss brought pursuant to Rule 12(b)(6), a complaint

must include enough factual content to give the opposing party notice of what the claim
is and the grounds upon which it rests. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007); Ashcroft v. Iqbal, 556 U.S. 662, 698 (2009). To satisfy the notice-pleading standard
of Rule 8, a complaint must provide a “short and plain statement of the claim showing
that the pleader is entitled to relief” in a manner that provides the defendant with “fair

notice” of the claim and its basis. Erickson v. Pardus, 551 U.S. 89, 93 (2007) (citing Bell
Atlantic Corp., 550 U.S. at 555). The court will accept all well-pleaded allegations as true.
Ashcroft, 556 U.S. at 678. However, the court need not accept legal conclusions as true.
Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009).
In ruling on a motion to dismiss for failure to state a claim, a court must “examine

whether the allegations in the complaint state a ‘plausible’ claim for relief.” Arnett v.
Webster, 658 F.3d 742, 751 (7th Cir. 2011) (citing Ashcroft, 556 U.S. at 677–78). A complaint
“must contain sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face,” rather than providing allegations that do not rise above the
speculative level. Arnett, 658 F.3d at 751–52 (internal quotations and citation omitted).
Discussion

I. Doc. 395: Plaintiffs’ Motion to Withdraw

Before addressing the Moving Defendants’ Motions, Plaintiffs separately moved
to withdraw the following Defendants from this action: the Beneficiaries of the Bidwill
Succession Trust, and the Bidwill Kasino Trust, its Trustee, and any of its beneficiaries
(Doc. 395). To date, no appearances have been made on behalf of any of these Defendants.
In support of their Motion, Plaintiffs represent that their discovery efforts have confirmed
that the Beneficiaries of the Bidwill Succession Trust are deceased, and that the Kasino
Trust was never formed or funded. Thus, Plaintiffs argue that it is appropriate to drop
these improperly joined Defendants pursuant to Fed. R. Civ. P. 21 (Doc. 395). Plaintiffs
also assert that the withdrawal or dismissal of these defendants will not affect the rights

or standing of any Plaintiffs, any members of the proposed class, or any of the
Defendants.
The Court may dismiss improperly joined defendants on just terms “if doing so
will not prevent the plaintiff from timely refiling those claims.” Dorsey v. Varga, 55 F.4th
1094, 1107 (7th Cir. 2022); Fed. R. Civ. P. 21 (“On motion or on its own, the court may at

any time, on just terms, add or drop a party.”). No parties have filed a response or
objection to Plaintiffs’ Motion to Withdraw. Local Rule 7.1 provides that the “[f]ailure to
timely file a response to a motion, may in the Court’s discretion, be considered an
admission of the merits of the motion.” The Court finds it appropriate to exercise its
discretion here, and GRANTS Plaintiffs’ Motion to Withdraw (Doc. 395). Plaintiffs’
claims against Defendants the Beneficiaries of the Bidwill Succession Trust, the Bidwill

Kasino Trust, the Trustee of the Bidwill Kasino Trust, and any Beneficiaries of the Bidwill
Kasino Trust are DISMISSED, without prejudice.
II. Docs. 231, 234, 252, 267, 319, 327, 362: Party-In-Interest Defendants

Plaintiffs maintain that the Moving Defendants are subject to equitable remedies
under 29 U.S.C. § 1132(a)(3) (Doc. 144, ¶ 212), which permits participants to obtain
“appropriate equitable relief” from parties, including nonfiduciaries, who participate in
the ERISA violation. See 29 U.S.C. § 1132(a)(3); Harris Tr. & Sav. Bank v. Salomon Smith
Barney, Inc., 530 U.S. 238, 251 (2000); Godfrey v. Greatbanc Tr. Co., No. 18 C 7918, 2019 WL
4735422, at *7 (N.D. Ill. Sept. 26, 2019). To state a claim under § 1132(a)(3), Plaintiffs must
plausibly allege that “a fiduciary violated a substantive provision of ERISA and the
nonfiduciary knowingly participated in the conduct that caused the violation.” Godfrey,

2019 WL 4735422, at *7 (citing Daniels v. Bursey, 313 F. Supp. 2d 790, 808 (N.D. Ill. 2004));
in accord Halperin v. Richards, 7 F.4th 534, 553, n.3 (7th Cir. 2021) (citing favorably to
Daniels’ extension of Harris to § 502(a)(3) participation claims).
“’Knowing’ in this context means ‘actual or constructive knowledge of the
circumstances that rendered the transaction unlawful.’” Godfrey, 2019 WL 4735422, at *7

(citing Harris Trust and Sav. Bank, 530 U.S. at 251). “’Participation’ means assisting or
facilitating the fiduciary’s breach.’” Godfrey, 2019 WL 4735422, at *7 (citing Daniels, 313 F.
Supp. 2d at 808) (“Under Harris a claim under § 502(a)(3) against a nonfiduciary
essentially asserts that the nonfiduciary aided and abetted the fiduciary’s breach.”)).
With minimal exceptions the Moving Defendants all raise overlapping arguments.
They do not, however, specifically dispute the sufficiency of Plaintiffs’ allegations

concerning the substantive ERISA breaches or the alleged involvement of the fiduciaries
in those transactions. Instead, Defendants maintain that Plaintiffs’ claims are barred by
the applicable statute of limitations. Defendants further challenge their alleged statuses
as parties in interest, and their personal knowledge of the alleged unlawful activity.
Before addressing these specific arguments, the Court will first resolve an issue raised by
some of the trust-related defendants concerning Plaintiffs’ naming of both the Trust

Defendants and their respective Trustees as separate Defendants.
A. Trust Defendants
Plaintiffs sue eight trust entities, along with their respective Trustees and
beneficiaries as separate Defendants. Some of the Trustees have objected to this
nomenclature and seek to dismiss the Trust entities on this basis. Indeed, in Illinois, a

trust “possesses a distinct legal existence”, and normally can only “sue or be sued
through its trustee in a representative capacity on behalf of the trust.” Sullivan v. Kodsi,
359 Ill. App. 3d 1005 (2005); see also Trustees of Carpenters' Health & Welfare Tr. Fund of St.
Louis v. Darr, 694 F.3d 803, 811 (7th Cir. 2012) (in Illinois “trustees in their representative
capacity are the same entity as the trust.”).

However, none of the objecting defendants have argued that the relevant trusts
lack capacity to be sued under Fed. R. Civ. P. 17. Further, state law controls whether a
party has the capacity to be sued, see Fed. R. Civ. P. 17(b)(3), and at this stage of the
litigation, the parties have not alleged where the trusts were formed or what state law
applies to them. Nor do capacity issues need to appear on the face of the complaint. See
Swaim v. Moltan Co., 73 F.3d 711, 718 (7th Cir. 1996) (capacity issues can be forfeited if not

raised in a responsive pleading). Therefore, at this juncture, the Court finds that the
naming of both the Trust and Trustee as separate Defendants is, at worst, redundant. But
mere redundancy is not enough to “to trigger the full dismissal of a party from a case.”
See, e.g., Mordi v. Zeigler, No. 11-CV-0193-MJR, 2012 WL 2577488 (S.D. Ill. July 3, 2012)
(redundancy arguments are best presented in a motion under Fed. R. Civ. P. 12(f), which
allows the Court to strike redundant matters from a pleading).

Moreover, Plaintiffs suggest that it is appropriate to keep the named trust entities
as separate parties, in addition to their Trustees, because the Trusts have been sued
“purely as a means of facilitating collection” and will not substantially alter the liability
of the Trustees (Doc. 350) (citing Yount v. Shashek, 472 F. Supp. 2d 1055, 1061 (S.D. Ill.
2006) (reasoning that certain nominal defendants who have “possession of the funds

which are the subject of litigation … must often be joined purely as a means of facilitating
collection” despite having no interest in the subject matter litigated) (internal citations
omitted)). At the motion to dismiss stage, the Court tests only the sufficiency of the
complaint, and does not decide the merits. Hishon v. King & Spalding, 467 U.S. 69, 73
(1984); Ellsworth v. City of Racine, 774 F.2d 182, 184 (7th Cir. 1985). Thus, dismissal is only

appropriate if “it appears beyond doubt that [Plaintiffs] cannot prove any facts that
would support [their] claim for relief.” Hentosh v. Herman M. Finch Univ. of Health
Scis./The Chicago Med. Sch., 167 F.3d 1170, 1173 (7th Cir. 1999); see also Hishon, 467 U.S. at
73; Boeckman v. A.G. Edwards, Inc., 461 F. Supp. 2d 801, 818 (S.D. Ill. 2006) (“[It] need not
appear that the plaintiff can obtain the particular relief prayed for in the complaint, as
long as the district judge can ascertain from what has been alleged that some relief may

be granted by the court.”) (internal citations omitted). Here, the Court cannot say that it
is beyond doubt that Plaintiffs cannot prove any set of facts to support their claims.
Therefore, dismissal on this basis is not appropriate.
The Court turns next to the arguments presented by all Moving Defendants.
B. Statute of Limitations
ERISA does not provide a specific statute of limitations for 29 U.S.C. § 1132(a)(3)

claims, thus courts look to the “most appropriate” limitations period “based upon the
most analogous cause of action under the laws of the forum state.” See Jenkins v. Loc. 705
Int'l Bhd. of Teamsters Pension Plan, 713 F.2d 247, 251 (7th Cir. 1983). Defendants argue
that the most analogous Illinois cause of action to an ERISA prohibited transaction is an
action for conversion, which carries a five-year limitations period from the date of the

alleged unlawful conversion. See 735 Ill. Comp. Stat. Ann. 5/13-205. Therefore,
Defendants contend that Plaintiffs’ prohibited transaction claims accrued on the date of
the 2012 Stock Transfer and expired long before Plaintiffs filed their lawsuit in 2020.
Defendants also maintain that Plaintiffs have failed to allege any facts constituting
concealment so to invoke a tolling exception for fraudulent concealment. See, e.g., 735 Ill.

Comp. Stat. Ann. 5/13-215 (“If a person liable to an action fraudulently conceals the cause
of such action from the knowledge of the person entitled thereto, the action may be
commenced at any time within 5 years after the person entitled to bring the same
discovers that he or she has such cause of action, and not afterwards.”). Defendants argue
that this exception requires Plaintiffs to plead particular facts akin to those required
under Fed. R. Civ. P. 9(b). See, e.g., Hagney v. Lopeman, 147 Ill. 2d 458 (1992) (plaintiff must

show affirmative acts by the defendant to conceal the cause of action); United States v.
Molina Healthcare of Ill., Inc., 17 F.4th 732, 739 (7th Cir. 2021) (Fed. R. Civ. P. 9(b) generally
requires allegations of the “who, what, when, were, and how” of the fraud).
Plaintiffs dispute that conversion is the most analogous Illinois cause of action
here, and instead argue that Illinois’ “catch-all” limitations period for civil claims should
apply (Docs. 349, 352, 353). This limitations period is also five years. See 735 Ill. Comp.

Stat. Ann. 5/13-205 (“all civil actions not otherwise provided for, shall be commenced
within 5 years next after the cause of action accrued.”). Nevertheless, Plaintiffs argue that
regardless of the applicable state limitations period, federal common law governs when
their claims accrue. In Young v. Verizon's Bell Atl. Cash Balance Plan, 615 F.3d 808 (7th Cir.
2010), the Seventh Circuit instructed that “[a]lthough federal courts borrow state

limitations periods for certain ERISA claims, the accrual of those claims is governed by
federal common law.” Thus, “[o]nce an unlawful action is taken, a claim accrues when
the putative plaintiff discovers the injury that results.” Id.
Plaintiffs allege that they did not discover their injuries until October 2019 after
receiving account statements showing a 95% drop in the value of their Casino Queen

Stock (Doc. 144, ¶¶ 30, 35, 39). Thus, they argue that their claims accrued in October 2019,
and are therefore timely under either state limitations period without needing to invoke
the fraudulent concealment provisions of 735 Ill. Comp. Stat. Ann. 5/13-205.
Alternatively, Plaintiffs maintain that their claims are sufficiently pled under Fed. R. Civ.
P. 9(b) so to invoke the Illinois state theories of equitable tolling or fraudulent
concealment (Doc. 349).

As the Court has previously instructed, the statute of limitations is an affirmative
defense which Plaintiffs are not required to plead around (Doc. 118) (citing Resnick v.
Schwartz, No. 17 C 04944, 2018 WL 4191525, at *6 (N.D. Ill. Sept. 3, 2018), Indep. Tr. Corp.
v. Stewart Info. Servs. Corp., 665 F.3d 930, 935 (7th Cir. 2012), Xechem, Inc. v. Bristol-Myers
Squibb Co., 372 F.3d 899, 901 (7th Cir. 2004)). While Defendants maintain that the statute
of limitations defense is clear on the pleadings, the Court disagrees, particularly with the

conflicting theories concerning Plaintiffs’ knowledge of their claims and Defendants’
involvement in the ESOP Transactions. Indeed, the Amended Complaint plausibly
alleges that Plaintiffs did not learn of their injuries until October 2019, and that
Defendants continued to be involved with the management of Casino Queen and the
fiduciaries’ concealment efforts until at least 2014 when their loans were fully repaid, and

possibly after (Doc. 144, ¶ 145). Thus, applying the Seventh Circuit’s instructions in
Young, it is not clear that Plaintiffs’ claims as pled are barred by the proposed limitations
period regardless of the application of a heightened pleading standard. See, e.g., Brooks,
578 F.3d at 579 (“the statute of limitations may be raised in a motion to dismiss if the
allegations of the complaint itself set forth everything necessary to satisfy the affirmative

defense.”).
Some Defendants also point to various news articles from December 2012 to argue
that Plaintiffs could have reasonably discovered their claims long before 2019 (Doc. 358-
1). However, even if the Court found it appropriate to take judicial notice of these articles
at this stage, the fact that these articles existed in 2012 do not conclusively establish that
Plaintiffs were on notice of the terms of these transactions to defeat the accrual allegations

in the Complaint. Instead, these arguments are more appropriately suited for a motion
under Fed. R. Civ. P. 56.
Nevertheless, even if heightened pleading standards applied, the Court is satisfied
that Plaintiffs have pled fraudulent concealment with enough particularity at this stage
of the litigation. Plaintiffs point to Defendants’ continued participation in the
concealment of the ERISA violations after the ESOP Transaction, by their actions to

coordinate and influence their relatives, Defendant Bidwill, Koman, or Rand, and their
continued management of the Casino Queen. Specifically, Plaintiffs allege that Moving
Defendants coordinated with their family representatives to misrepresent the value of
their stock and not disclose accurate terms of the ESOP Transaction, in part, to allow the
Defendants to expedite the payout of their multi-million-dollar loans from the ESOP

Transaction (Doc. 144, ¶¶ 17, 151, 73, 141, 173). If Defendants wish to argue that these
actions did not in fact conceal Defendants’ breaches, they may pursue their theory in
discovery. However, at this stage, the Court is satisfied with the adequacy of the
allegations of fraud as plead.
C. Parties in Interest and Actual Knowledge

Defendants also argue that Plaintiffs failed to allege that they are parties in interest
under 29 U.S.C. § 1002(14) or that they had actual knowledge of any alleged unlawful
activity. Section 1002(14) defines the term “party in interest” as:
(A) any fiduciary (including, but not limited to, any administrator,
officer, trustee, or custodian), counsel, or employee of such employee
benefit plan;
. . .
(F) a relative (as defined in paragraph (15)) of any individual described
in (A), (B), (C), or (E);

(G) [. . .] a trust or estate of which (or in which) 50 percent or more of—
(i) the combined voting power of all classes of stock entitled to vote
or the total value of shares of all classes of stock of such corporation,

(ii) the capital interest or profits interest of such partnership, or

(iii) the beneficial interest of such trust or estate, is owned directly or
indirectly, or held by persons described in subparagraph (A), (B),
(C), (D), or (E).

As mentioned above, in their complaint, Plaintiffs alleged that that every Moving
Defendant is a party in interest “because they were either a CQH Board Member, a 10%
or more shareholder, a family member of a CQH Board Member or 10% shareholder, a
trust in which 50% or more of the beneficial interest is owned directly or indirectly by
such persons, or otherwise met the definition of party in interest.” (Doc. 144, ¶ 65).
Defendants complain that Plaintiffs did not specifically articulate which subsection of
Section 1102(14) they allegedly fit under. However, in construing the allegations in the
Complaint broadly, the Complaint plausibly alleges that the individual non-fiduciary
defendants are parties in interest under 29 U.S.C. § 1002(14)(F) as relatives of a fiduciary,
and that the trust related defendants are parties in interest under 29 U.S.C. § 1002(14)(G)
(Doc. 144, ¶¶ 65-66). The complaint also plausibly alleges that each Defendant had the
requisite knowledge to survive dismissal.
1. Brian C. Bidwill, Patricia M. Bidwill, and Shauna Bidwill-Valenzuela

Plaintiffs allege that the individual non-fiduciary defendants, Brian C. Bidwill,
Patricia M. Bidwill, and Shauna Bidwill-Valenzuela, each sold a 2.00% ownership interest
to the ESOP and were family members of Defendant Charles Bidwill, a fiduciary of the

ESOP (Doc. 144, ¶¶ 65-66).2 Thus, the Complaint plausibly suggests that Defendants
Brian C. Bidwill, Patricia M. Bidwill, and Shauna Bidwill-Valenzuela are parties in
interest as relatives of a fiduciary under 29 U.S.C. § 1002(14)(F). Apart from a general
familial relationship, the Complaint does not specify the exact relationship Defendants
share with Charles Bidwill. However, in their briefing, the parties represent that
Defendants are Charles Bidwill’s siblings (Docs. 352, 353). Therefore, Defendants argue

that they are not relatives under 29 U.S.C. § 1002(14)(F) because siblings are not
incorporated into the definition of “relatives” in 29 U.S.C. § 1002(15).
Section 1002(15) defines “relative” as “a spouse, ancestor, lineal descendant, or
spouse of a lineal descendant.” Defendants argue that siblings are not considered
ancestors or lineal descendants under the plain language of this section. Plaintiffs,

however, contend that a sibling relationship qualifies under 29 U.S.C. § 1002(14)(F)
because siblings share a common ancestor (Doc. 353). Alternatively, Plaintiffs postulate
that including a sibling relationship in the definition of relative is consistent with
Congress’ intent in defining “party in interest” so it encompasses “those entities that a
fiduciary might be inclined to favor at the expense of the plan’s beneficiaries.” See Harris

Trust and Sav. Bank, 530 U.S. at 242.
The Court acknowledges that the parties do not dispute the specifics of

2 The parties do not dispute, and the allegations in the Complaint support an inference, that Defendant
Charles Bidwill was a fiduciary of the ESOP under 29 U.S.C. § 1002(14)(A).
Defendants’ sibling relationship with Bidwill. However, the parties have not established
how the Court can appropriately consider these representations at this motion to dismiss

stage because that fact is outside the pleadings. See, e.g., Greenberg v. Boettcher & Co., 755
F. Supp. 776, 778 (N.D. Ill. 1991) (“In considering the sufficiency of [Plaintiffs’] complaint
on this motion to dismiss, the court is limited to the pleadings.”). The complaint does not
specify that Defendants are siblings of Defendant Bidwill, it merely alleges that they are
family members of a “him”, a plan fiduciary (Doc. 144, ¶ 66).
While Plaintiffs are granted more flexibility in asserting new facts in their briefing

for illustration purposes, see, e.g., Geinosky v. City of Chicago, 675 F.3d 743, 745 (7th Cir.
2012), even if the Court considered Defendants’ sibling relationship with Charles Bidwill,
the Court finds this allegation sufficient to plausibly allege Defendants are relatives
under 29 U.S.C. § 1102(15) at this stage. The Court is only aware of one district court
opinion resolving this issue. See Spires v. Sch., 271 F. Supp. 3d 795, 806–07 (D.S.C. 2017)

(“Siblings are not considered relatives of parties-in-interest”). However, that opinion
provided no specific analysis of its finding, and the Court is not aware of any binding
precedent analyzing this exact issue. Accordingly, the Court finds these arguments more
appropriately for summary judgment. See, e.g. Boeckman, 461 F. Supp. 2d at 818.
Notwithstanding the foregoing, Plaintiffs also argue that Defendants are

appropriate parties to this action as “other persons” under § 1132(a)(3) after Harris Trust.
See Harris Trust and Sav. Bank, 530 U.S. at 248–249 (“a participant . . . may bring suit against
an ‘other person’ under … subsection (a)(3).”); in accord Larson v. United Healthcare Ins.
Co., 723 F.3d 905, 916 (7th Cir. 2013) (Harris Trust concluded that “nonplan defendants
are subject to suit under § 1132(a)(3)”). Thus, at this stage, the Court cannot say that it is
beyond doubt that Plaintiffs cannot prove any facts that would support their claims, and

dismissal is not appropriate on this basis. Hentosh, 167 F.3d at 1173.
Plaintiffs also plausibly allege that Defendants knowingly participated in the
ERISA violations. Plaintiffs allege that Defendants “had knowledge of and participated
in the ongoing efforts to actively conceal the details and effects of the 2012 Transaction
from the ESOP participants” by requesting Bidwill to provide inaccurate information
regarding the ESOP to participants (Doc. 144, ¶¶ 66, 151), coordinating with Bidwill to

participate in the inclusion of inaccurate and incomplete information in the Company’s
Form 5500s (Doc. 144, ¶ 154), and directing Bidwill to prepare and disseminate inaccurate
annual account balance statements to the ESOP participants (Doc. 144, ¶ 177). These
allegations are sufficient to survive dismissal. Whether Plaintiffs can ultimately prevail
under their theory is a separate question not currently before the Court. See, e.g.,

AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011); Brooks v. FedEx Supply Chain,
Inc., No. 319CV00014NJRMAB, 2019 WL 1746264, at *3 (S.D. Ill. Apr. 18, 2019) (“a motion
to dismiss does not test whether a plaintiff will ultimately prevail—it merely tests the
sufficiency of the complaint.”).
2. Charles Bidwill, as Trustee of the Bidwill Succession Trust3

The Amended Complaint also plausibly alleges that the Bidwill Succession Trust,
acting through its Trustee, is a party in interest under 29 U.S.C. § 1102(14)(G) as a trust in

3The Trustee also advanced arguments concerning the beneficiaries of the Bidwill Succession Trust.
However, as those Defendants have been dismissed, the Court will not address those arguments here.
which 50 percent of more of the beneficial interest of the trust is “owned directly or
indirectly, or held by” an ESOP fiduciary. Although Plaintiffs’ allegations are not very

specific, it can be reasonably inferred from the allegations in the Complaint that the
Bidwill Succession Trust is one in which a 50 percent or more beneficial interest is owned
directly, or indirectly, by Charles Bidwill, an alleged fiduciary (Doc. 144, ¶¶ 64-66).
Again, whether Plaintiffs can ultimately prevail under this theory is a separate question
not currently before the Court. But, when construing the facts in the light more favorable
to Plaintiffs, a reasonable inference can be drawn that the Bidwill Succession Trust is a

party in interest under 29 U.S.C. § 1102(14)(G).
The complaint also plausibly alleges that the Bidwill Succession Trust, through its
Trustee had knowledge of the circumstances that rendered the ESOP transactions
unlawful through the Trust’s participation in the ESOP transactions and the Trustee’s
relationship with the ESOP fiduciaries (Doc. 144, ¶¶ 66, 151, 154, 177). Further, Bidwill’s

argument that he only held knowledge of the ERISA violations in his personal capacity,
and not in his capacity as the Trust’s Trustee, is unpersuasive at this stage. See, e.g., In re
Madoff, 542 B.R. 100, 114–115 (Bankr. S.D.N.Y. 2015) (“A trust can be attributed with the
knowledge of the individual or entity by which it is controlled or dominated.”) (internal
citations and markings omitted). Thus, Plaintiffs’ allegations are sufficient to survive

dismissal here.
3. The William J. Koman Jr. Irrevocable Trust, William J. Koman, Sr. Living
Trust, James G. Koman Irrevocable Trust, Gregory Smith as the Trustee
of the James G. Koman Irrevocable Trust, Janis A. Koman Irrevocable
Trust, Karen L. Hamilton Irrevocable Trust, Elizabeth S. Koman
Irrevocable Trust, and Peter Hamilton, as the Trustee of the Koman Sister
Trusts4

The arguments presented by the William J. Koman Jr. Irrevocable Trust, the
William J. Koman Sr. Living Trust, the James G. Koman Irrevocable Trust, and the Koman
Sister Trusts fail for the same reasons as the Bidwill Succession Trust’s arguments.
Indeed, the Amended Complaint plausibly alleges that the these Trusts, acting through
their Trustees, are parties in interest under 29 U.S.C. § 1102(14)(G) as a trust in which 50
percent of more of the beneficial interest of the trust is “owned directly or indirectly, or
held by” an ESOP fiduciary. Again, although Plaintiffs’ allegations are not very specific,
it can be reasonably inferred from the allegations in the Complaint that the Koman family
trusts are trusts in which a 50 percent or more beneficial interest is “owned directly or
indirectly, or held by” James Koman, an alleged fiduciary (Doc. 144, ¶¶ 64-66, n.3).5
Whether Plaintiffs can ultimately prevail under this theory is a separate question not
currently before the Court.
The complaint also plausibly alleges that the Trusts, through their Trustees had
knowledge of the circumstances that rendered the ESOP transactions unlawful through
the Trust’s participation in the ESOP transactions and the Trustee’s relationship with the

4 The parties refer to the Janis A. Koman Irrevocable Trust, Karen L. Hamilton Irrevocable Trust, and the
Elizabeth S. Koman Irrevocable Trust collectively as the “Koman Sister Trusts.”
5 The parties do not specifically dispute, and the allegations in the Complaint support an inference, that
Defendant James Koman was a fiduciary of the ESOP under 29 U.S.C. § 1002(14)(A).
ESOP fiduciaries, namely James Koman (Doc. 144, ¶¶ 66, 151, 154, 177). Thus, Plaintiffs’
allegations are sufficient to survive dismissal here.

Defendant Smith, as Trustee of the James G. Koman Irrevocable Trust, also raises
additional arguments concerning his personal knowledge of the ESOP transactions (Doc.
328). Smith argues that he was not the Trustee at the time of the alleged prohibited
transactions, but that James Koman was the Trustee at the time s (Doc. 328). However,
to the extent the Court can consider these representations on a motion to dismiss, see, e.g.,
Geinosky, 675 F.3d at 745, the claims against the Trust as alleged do not appear dependent

on the status of the Trustee as either original or successor trustees, because the claims
alleged are not directed against Mr. Smith personally, but to him in his capacity as Trustee
(Doc. 144, ¶ 65).
While a successor trustee is not generally liable for breaches of trust committed by
a former trustee, they do retain all powers and duties imposed on the predecessor trustee,

including the duty to defend claims brought against the Trust. See e.g., 760 Ill. Comp.
Stat. Ann. 3/811 (“A trustee shall take reasonable steps to enforce claims of the trust and
to defend claims against the trust.”); Dick v. Peoples Mid-Illinois Corp., 242 Ill. App. 3d 297
(1993) (“A successor trustee shall have all the rights, powers and duties, which are
granted to or imposed on the predecessor.” However, the successor trustee “is not liable

for breaches of trust committed by the former … [unless] he himself is guilty of a violation
of duty to the beneficiaries.”).6 Regardless, even if Smith’s personal knowledge was an

6 The parties do not indicate what state law might apply to the relevant trusts. However, both parties
frequently cite Illinois law, so for the purposes of this Motion, the Court also considers Illinois law. See
Auto-Owners Ins. Co. v. Websolv Computing, Inc., 580 F.3d 543, 547 (7th Cir. 2009) (“Courts do not worry
appropriate consideration for the Court, such argument is more appropriately suited for
a motion under Fed. R. Civ. P. 56.
4. Janis Koman n/k/a Janis Forsen, Karen Koman, and Elizabeth Koman as
Beneficiaries of Koman Sister Trusts

Defendants Janis Koman n/k/a Janis Forsen, Karen Koman, and Elizabeth Koman
as Beneficiaries of their respective Koman Sister Trusts seek to dismiss Plaintiffs’ claims
for the same reasons as the other Moving Defendants. However, as mentioned above,
the Amended Complaint plausibly alleges that the Koman Sister Trusts are parties in
interest under 29 U.S.C. § 1102(14)(G) and had knowledge of the circumstances which
rendered the ESOP transactions unlawful through the Trust’s participation in the ESOP
transactions and the Trustee’s relationship with the ESOP fiduciaries, namely James

Koman (Doc. 144, ¶¶ 66, 151, 154, 177).
However, Defendants also argue that they are not appropriate parties in interest
because they are only beneficiaries of their respective Trusts. Nevertheless, where an
action may affect trust property, beneficiaries of a trust are necessary parties. See Green v.
Green, 218 F.2d 130, 137 (7th Cir. 1954) (“It is the generally established rule in Illinois, and

we think elsewhere, that in all actions concerning trust property the beneficiaries are
necessary parties.”). Thus, at this stage, Defendants’ status as beneficiaries of the Koman
Sister Trusts (which the Court have found to be appropriate defendants at this stage) is
not enough to warrant dismissal at this time. See also, Harris Trust and Sav. Bank, 530 U.S.
at 246 (Section 502(a)(3) “admits no limit … on the universe of possible defendants.

about conflicts of laws unless the parties disagree on which state's law applies”).
Indeed, § 502(a)93) makes no mention at all of which parties may be proper defendants —
the focus, instead, is on redressing the ‘act or practice which violates any provision of”
ERISA) (emphasis in original). Defendants may, however, explore this theory through
discovery.
Disposition
For these reasons, and when construing the facts in the light most favorable to
Plaintiffs and considering the reasonable inferences that can be drawn therefrom,
Plaintiffs have met the minimum standards required to state their claims. Accordingly,
the Motions to Dismiss filed by the Moving Defendants (Docs. 231, 234, 252, 267, 319, 327,
362) are DENIED. Plaintiffs’ Motion to Withdraw (Doc. 395) is also GRANTED.
Defendants, the Bidwill Kasino Trust, its Trustee, and any beneficiaries of the Trust, along
with Defendants the Beneficiaries of the Bidwill Succession Trust are DISMISSED,
without prejudice. The Clerk of Court is DIRECTED to terminate those defendants from
the docket sheet.
Finally, the Court observes that Defendant Mary C. Bidwill has not answered or
otherwise appeared in this matter. Plaintiffs are DIRECTED to SHOW CAUSE by
March 27, 2023, for why Defendant Mary C. Bidwill should not be dismissed for a failure
to prosecute pursuant to Fed. R. Civ. P. 41.
SO ORDERED. Ube UJ ane
Dated: March 8, 2023
DAVIDW.DUGAN
United States District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10156115. Public record. Not legal advice.