18th Annual Workplace Class Action Report - 2022 Edition

Annual Workplace Class Action Litigation Report: 2022 Edition 321 the agreement did not “extend to non-entities, such as claims on behalf of the Plan.” Id. at *16. Since Defendants offered no evidence of a document binding the Plan to arbitration, the Court held that no valid arbitration agreement existed between the parties. Consequently, the Court denied Defendants’ motion to compel arbitration. Henry, et al. v. Wilmington Trust, N.A., 2021 U.S. Dist. LEXIS 171927 (D. Del. Sept. 10, 2021) . Plaintiff filed a class action alleging breach of fiduciary duty in violation of the ERISA in connection with losses incurred by the BSC Ventures Holdings, Inc. Employee Stock Ownership Plan ("the Plan") and its participants. Defendant filed a motion to compel arbitration pursuant to an agreement in the Plan. Plaintiff did not dispute that his claims were within the scope of the arbitration provision. However, Plaintiff asserted that the provision was invalid because: (i) Plaintiff did not agree to it; and (ii) the provision’s class action waiver was invalid. Plaintiff contended that he did not provide voluntary and knowing consent to the arbitration agreement. The Court ruled that Defendant failed to offer evidence that Plaintiff ever saw, or knew about, the arbitration provision. The Court reasoned that Plaintiff commenced his employment in January 2012, before the Plan was in January 2015, and it was unclear whether notice was provided to any of the Plan participants when the Plan later adopted the arbitration provision in 2017. Id . at *12-13. The Court opined that Plaintiff plausibly asserted that the first time he learned of the arbitration clause was "after he filed this lawsuit." Id . at *13. The Court thus concluded that the facts at this stage of proceedings plausibly supported Plaintiff’s assertion that he did not have notice and therefore did not have the necessary intent to manifest assent. Id . Accordingly, the Court denied Defendant’s motion to compel arbitration. Hensiek, et al. v. Board Of Directors Of Casino Queen Holding Co. , 2021 U.S. Dist. LEXIS 17954 (S.D. Ill. Jan. 25, 2021). Plaintiffs, a group of former employees of the Casino Queen ("CQ") and participants in the Casino Queen ESOP, alleged that Defendants, the Board of Directors of CQ and the individual officers, breached their fiduciary duties in connection with two transactions that they asserted served to benefit the selling shareholders who orchestrated and directed the transactions while acting in their fiduciary capacity. Plaintiffs contended that the transactions were conducted in violation of the Defendants’ fiduciary duties to the participants of the ESOP and that the Plaintiffs were unaware of the events for several years until 2019 when the shares of stock were reported to have suffered a significant loss in value in violation of the ERISA. Defendants filed a motion to compel arbitration of Plaintiffs’ claims pursuant to an arbitration agreement contained in the ESOP. The Court denied the motion. Defendants asserted that Plaintiffs’ breach of fiduciary duties claims clearly arose “out of, relate to or concern" the ESOP and, consequently, fell “squarely within the scope of the arbitration provisions." Id . at *7. The Court looked to the agreement itself to determine whether or not the agreement was enforceable under basic principles of contract law. Plaintiffs argued that there was no valid agreement for arbitration and, even if there was an agreement reached, it was unenforceable as drafted. Plaintiffs contended that they did not sign, give their consent to, nor received consideration for the amendment in the agreement that stated which claims were covered under the agreement. The Court opined that Defendants, by implementing the amendment, took advantages for themselves while imposing corresponding disadvantages on Plaintiffs by stripping from them certain rights they otherwise enjoyed under the Plan. Id . at *17. The Court ruled that if “ERISA-based plans, such as the ESOP here, were to be enforced on common principles of contract law, then an amendment implemented by the Board unilaterally and solely for its benefit would be, at best, without necessary consideration, or at worst, illusory, and, in either case, unenforceable.” Id . at *18. Accordingly, the Court found that the amendment lacked necessary consideration and, therefore, was not a valid and enforceable contract provision. For these reasons, the Court denied Defendant’s motion to compel arbitration. Hursh, et al. v. DST Systems, Inc., 2021 U.S. Dist. LEXIS 190650 (W.D. Mo. Oct. 4, 2021). Plaintiff, a participant in Defendant’s 401k retirement plan, previously filed a class action alleging Defendant breached its fiduciary duties with respect to the plan in violation of the ERISA. Defendant filed a motion to compel arbitration and to dismiss the lawsuit, and the Court granted the motion. Defendant thereafter sent a notice to all Plan participants bound by the agreement explaining that a former employee had initiated an arbitration relating to the Plan and advising each participant that he or she "may initiate an individual arbitration proceeding under the Arbitration Program by submitting a written request" to Defendant. Id . at *9. Subsequently, 554 participants or beneficiaries initiated arbitration proceedings. Thereafter, another Plan participant (“Ferguson”) brought a putative class action in the U.S. District Court for the Southern District of New York alleging breach of fiduciary