Court Consolidates Pilot Flying J Lawsuits
Haslam says "unusual" settlement will ensure customers get paid sooner rather than later
Published in CSP Daily News
KNOXVILLE, Tenn. -- Although he makes no admission of liability, Pilot Flying J Inc. CEO Jimmy Haslam has agreed to settle the class-action lawsuits filed by trucking companies that said Pilot Flying J sales executives cheated them out of promised diesel fuel rebates.
As reported in a Raymond James/CSP Daily News Flash, U.S. District Judge James M. Moody in federal court for the Eastern District of Arkansas in Little Rock gave initial approval to the settlement on Tuesday.
The Knoxville, Tenn.-based truckstop company has been the subject of intense scrutiny since April 15, when agents of the FBI and the IRS raided its headquarters, and seized documents, emails and computer files related to the alleged scheme to defraud trucking-company customers at its more than 650 truckstops.
In a press release issued by Pilot Flying J, Haslam commended company and class-action lawyers for the agreement, which will expedite legal process by:
- Auditing accounts of all customers who received a rebate and/or discount from Pilot Flying J from 2008 forward.
- Paying all customers 100% of any monies owed, with 6% interest, as soon as discrepancies are verified.
- Allowing for an independent accountant, approved by the court and paid for by Pilot Flying J, to validate Pilot Flying J's internal audit process.
- Offering a right to dispute audit results.
- Offering customers the opportunity to opt out, because they do not like the agreement or because they do not want to participate in the class action.
Pilot Flying J will pay all costs related to the process of the customer claims and the litigation, which includes audit costs (both internal and external), administrative costs and legal fees, saving customers significant time and money.
"Based on the information available to date, more than 4,000 customers of defendants Pilot Corp. and Pilot Travel Centers LLC d/b/a Pilot Flying J fall into the settlement class," the class settlement preliminary approval order states.
On April 22, 2013, one week after federal agents raided Pilot Flying J's headquarters, Haslam announced five steps the company had initiated to deal with allegations that some members of the company's sales team had paid some customers less rebates than they were owed.
The first of those steps was to direct Pilot Flying J's entire internal field audit team (more than 25 employees) to report to Knoxville to review all of the company's rebate and discount diesel fuel accounts with nearly 5,000 customers and to write checks for any discrepancies found in the customers' favor.
On July 12, Haslam said in a letter to customers that the internal field audit team had completed its initial review of all manual rebate customers, who are a focus of the federal investigation, written checks to those manual rebate customers where potential discrepancies in the customer's favor were found and begun its review of all other customer accounts.
Haslam said this "somewhat unusual" court agreement is an additional step to "doing the right thing" and making certain all customers whose accounts may include a potential discrepancy are made whole as soon as possible, with interest, with external verification and without the customer incurring extraordinary legal or investigation expenses.
The agreement is unusual, according to the company, in that it ensures that all of Pilot Flying J's customers with validated discrepancies in their accounts are paid 100% of what they are potentially owed, plus interest, within the next few months, rather than years later after a long, expensive and drawn out lawsuit.
The settlement is not an admission of wrongdoing or liability on the part of Flying J.
"The parties entered into the settlement agreement solely for the purpose of compromising and settling disputed claims," said the court document. "Nothing contained in this order, the settlement agreement, or any documents relating to the settlement agreement or the settlement shall be construed, deemed or offered as an admission by any party, or by any member of the settlement class, for any purpose in any judicial or administrative action or proceeding."
"Today in the U.S. District Court, Western Division of the Eastern District of Arkansas, our attorneys, working together with attorneys for eight of the companies that have filed class action lawsuits against Pilot Flying J, agreed to a plan to pay all customers who join the class 100% of the money they are owed, plus 6% interest, as soon as possible and without the need for unnecessary time in court, plaintiff legal fees or out of pocket costs. I commend all of these individuals for their hard work and dedication to ensuring our customers are paid back quickly and fairly for any potential discrepancies found in their accounts.
"Customers who already received checks with interest based on our internal field audit team's ongoing review will receive supplemental checks for any additional interest not included in the original calculation. In addition, all of our customers, as defined by the court agreement, may join the class and have a free independent accountant, approved by the court, validate Pilot Flying J's internal audit process of the customer's account.
"In addition, Pilot Flying J will pay all court, administrative, accounting, mailing, processing and legal costs incurred as part of the procedure approved by the court today, ensuring our customers will get every dollar they are owed, with interest, without protracted legal battles, time delays or costly legal expenses.
"Under the court agreement, Pilot Flying J will distribute a statement to all of its customers and to the media as part of notice provision to ensure all of our customers have the opportunity to resolve any concerns they may have in this fashion. We also will make available to attorneys for the class a mailing of all of our customers.
"Customers who are satisfied with their accounts may continue with business as usual, and we assure them our utmost attention, 24/7, 365 days a year, serving them and their drivers. Customers who are concerned about their accounts may join the class by simply doing nothing. Their accounts will be audited free to the customer. Finally, customers have the right to opt out and pursue their own legal objectives at their own expense, which can be significant.
"This is an unfortunate time for our customers and our company, but we remain committed to making things 100% right with our customers, to put systems in place to help ensure this does not happen again, and to re-earn our customers trust."
The court has scheduled the next hearing for Nov. 25, "to determine whether the certification of the settlement class, the designation of plaintiffs as class representative, the appointment of class counsel, the settlement agreement and the settlement should receive final approval. At that time, the court also will consider any request that may be made by class counsel for an award of attorneys’ fees and costs to class counsel and for an incentive award to plaintiffs, all in accordance with the terms of the settlement agreement.
Pilot Flying J is the largest operator of travel centers and travel plazas in North America. Its network provides customers with access to more than 60,000 parking spaces for trucks, more than 4,400 showers and more than 4,000 diesel lanes. Pilot Logistics Services is one of the largest independent energy logistics companies in North America, selling and distributing more than 1.3 billion gallons of refined petroleum products and serving more than 15,000 customers. Together, Pilot Flying J and Pilot Logistics Services generate sales of approximately nine billion gallons of petroleum annually.