Federal Judges Debate Pilot Flying J Lawsuit Consolidation

Company re-launches "rebate education" website for customers, vendors, employees, media

Published in CSP Daily News

PORTLAND, Maine -- In a contentious hearing before the federal Judicial Panel on Multidistrict Litigation considering whether lawsuits filed against Pilot Flying J in various judicial districts should be consolidated, judges appeared sympathetic to the company's arguments to defer consolidation, reported The Knoxville News Sentinel.

Earlier this month, Pilot Flying J reached a settlement with eight plaintiffs in connection with an alleged rebate fraud scheme. The Knoxville, Tenn.-based company and those plaintiffs are seeking to defer any consolidation until after Nov. 25, when an Arkansas judge is slated to hold a fairness hearing on the proposed settlement.

Other plaintiffs have not joined the settlement, though, and they are pushing to consolidate the cases in a different location.

Attorney John Walker, who represents a client outside the deal, described it to the judges as a "surprise settlement" and said many plaintiffs would opt out of it.

Walker also said the settlement gained preliminary approval in Arkansas after a 20-minute hearing, without any prior discovery.

Judge John Heyburn, the panel's chairman, said there was nothing unusual about the sequence of events.

U.S. District Judge Marjorie Rendell asked about the possibility of rescinding the remaining cases to Arkansas, where "that judge can deal with the whole ball of wax."

Walker countered by saying a majority of plaintiffs preferred a consolidation in Mississippi.

Attorneys were given just minutes to make their case before the judges, with the time kept by a stoplight in front of the podium, said the report. But the judicial panel frequently interrupted with questions, which meant the presentations generally exceeded their allotted time.

Glenn Kurtz, a New York attorney who represented Major League Baseball in the Los Angeles Dodgers bankruptcy case, represented Pilot Flying J at the hearing in Portland, Maine. Kurtz portrayed the legal fight as a "dispute among a bunch of plaintiffs' counsels."

"You don't want to let the consolidation process derail the settlement," he told the newspaper, warning that such a move could lead to months of litigation about who would be the lead plaintiff in the case.

Attorney Michael Roberts, who represents a firm that is part of the settlement, cited the detrimental impact on small trucking firms if the consolidation delays implementation of the proposed settlement. "If they don't get those payments, they're going under," he told the paper.

The panel is not expected to issue a ruling for several days.

Click here to read the full News Sentinel report.

The 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. Authorities have accused the truckstop company's sales staff a scheme to defraud trucking-company customers that buy diesel at its more than 650 truckstops by shorting rebate money it owed them. Nearly two-dozen companies have filed lawsuits.

In a revised settlement, Pilot Flying J recently agreed to cover rebate shortfalls extending to Jan. 1, 2005, instead of 2008. It has agreed to pay 100% of losses plus 6% interest and attorney's fees to all class members. Trucking companies that claim they were cheated by Pilot Flying J but wish to opt out of the settlement class must do so by Oct. 15.

Five Pilot employees have pleaded guilty in the case. Six Pilot employees have been fired or resigned and another three are on leave.

Meanwhile, after testing and temporarily pulling it, Pilot Flying J has officially launched its Rebate Education website, www.rebateeducation.pilotflyingj.com, to provide information to its customers, vendors, employees and the media regarding its rebate program and the ongoing federal investigation surrounding its abuse.

"We take this investigation seriously and are taking the appropriate measures to rebuild our customers' trust," said CEO Jimmy Haslam. "One way to do that is to keep the lines of communication open, so we can make information readily available and reaffirm customer confidence in the vast majority of our 23,000 team members."

This new website will serve as a helpful and informational resource addressing both the rebate program and federal investigation, the company said. It will also act as an official Pilot Flying J media channel to highlight news and events related to the investigation as it develops, making updates more easily accessible and providing a repository of all related media statements, videos and other materials.