American Wagering v. Racusin

**What Happened** This case involved Robert Racusin, who had won a court judgment against his former employer, American Wagering, Inc., for breach of contract worth $2.3 million. The dispute arose when American Wagering later filed for bankruptcy. During bankruptcy proceedings, the company tried to argue that Racusin's claim should be treated as a low-priority "equity claim" rather than a regular creditor claim, which would have meant he'd get paid much less (or possibly nothing) from the bankruptcy. **What the Court Decided** The Ninth Circuit Court of Appeals ruled in favor of Racusin. The court determined that his $2.3 million breach of contract judgment should be treated as a regular creditor claim, not a subordinated equity claim. This means Racusin has a much better chance of recovering the money owed to him during the bankruptcy process. **Why This Matters for Workers** This ruling protects employees who win breach of contract cases against their employers. When a company goes bankrupt, this decision helps ensure that workers' contract claims maintain their priority status and aren't unfairly downgraded. Workers can feel more confident that court-ordered judgments for employment contract violations will be respected even if their former employer later declares bankruptcy.