By Clarissa Kell-Holland, staff writer
Since news of the investigation into Pilot Flying J’s fuel rebate scandal broke in April, more than 20 lawsuits have been filed against the truck stop chain and some of its executives.
As of press time in mid-July, a federal judge in Arkansas had approved a proposed class-action settlement between Pilot and eight plaintiffs.
U.S. District Court Judge James M. Moody approved the agreement to consolidate and oversee class action claims against Pilot on behalf of eight trucking companies that have filed lawsuits since news of a fuel rebate scandal broke in April.
The class settlement involves eight plaintiffs negotiating on behalf of thousands of Pilot Flying J customers. The plaintiffs were National Trucking Financial Reclamation Services; Bruce Taylor; Edis Trucking; Jerry Floyd; Mike Campbell; Paul Otto; Townes Trucking; and R&R Transportation. The settlement was reached with the defendants, which include Pilot Corp., Pilot Flying J, James “Jimmy” Haslam III, and other Pilot employees named in some of the complaints.
According to court documents, more than 4,000 Pilot Flying J customers who purchased diesel fuel for Class 7 and 8 trucks could fall into the settlement class if they had fuel rebate or discount programs from 2008 to July 15, 2013.
“Today in the United States 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 percent of the money they are owed, plus 6 percent interest, as soon as possible and without the need for unnecessary time in court, plaintiff legal fees or out-of-pocket costs,” Haslam said in a statement on July 16.
He added that customers who have already received checks will receive “supplemental checks for any additional interest not included in the original calculation.”
“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.”
Pilot spokesman Tom Ingram told Land Line that the company isn’t releasing specifics about the financial costs that may be incurred as a result of the proposed settlement.
“But we believe at the end of the day, the numbers, while significant, will represent a relatively small percentage of the number of PFJ’s more than 4,000 total customers and total revenues involved,” Ingram said.
The company has also implemented new policies to eliminate manually calculated diesel rebates.
As of press time, at least five employees have pleaded guilty to fraud charges stemming from the alleged fuel rebate scheme since the Federal Bureau of Investigation and Internal Revenue Service raided the company’s headquarters in April.
Ingram said that Haslam and other employees have contacted “in the neighborhood of 400 (trucking companies) personally” as well as many more through written communication.
Since the FBI and IRS raid, questions continue to arise about how high up in the food chain the alleged fuel rebate scam goes.
According to the FBI affidavit, an executive at the center of the scam claims it goes all the way to the top.
Haslam also owns the Cleveland Browns football team. Football fans, as well as the trucking community, are questioning what will happen to the truck stop chain and the Browns if Haslam is indicted. Haslam has denied knowledge of the alleged scam.
“We are staying in close contact with the NFL during the investigation,” Ingram told Land Line in a statement. “We expect no change in Mr. Haslam’s relationship with the NFL and/or his ownership of the Browns. Any other statement is unfounded media guessing.”
A confidential informant, who was also a Pilot Flying J employee, secretly taped conversations with diesel sales staff who knew about the alleged fuel rebate scam, known to insiders as “jacking the discount” or “managing the discount.”
In a taped conversation with John Freeman, then vice president of sales for Pilot, Freeman claims Haslam knew that he was manually reducing the rebate amounts one of his trucking company customers, Western Express, was supposed to receive. When Western Express discovered the discrepancies, Freeman said he personally “called Jimmy and told him I got busted at Western Express,” according to the FBI affidavit.
“I mean, he knew all along that I was cost-plussing this guy,” Freeman said in the taped conversation with the informant. “He knew it all along. Loved it. We were makin’ $450,000 a month on him.”
According to the affidavit, instead of writing Western Express a check for the amount they were owed, Pilot agreed to buy a plane owned by the trucking company for $1 million.
In mid-July, Pilot announced that it had named David Hughes as the company’s new vice president of sales. Hughes previously worked for Covenant Transportation Group in Chattanooga, Tenn.
Three Pilot employees have been placed on administrative leave and another six members have resigned or were terminated, according to a Pilot statement.
“This is an unfortunate time for our customers and our company,” said Haslam, “but we remain committed to making things 100 percent right with our customers, to put systems in place to help ensure this does not happen again, and to re-earn our customers’ trust.” LL