Pilot Flying J to repay trucking companies, settle class-action case

Tuesday, July 16, 2013 at 11:54am
Updated 3:05 p.m.

The truck-stop company owned by Cleveland Browns owner Jimmy Haslam has agreed to pay back the trucking companies that were cheated out of fuel rebates, according to a settlement given preliminary approval Tuesday.

Under the agreement approved by a federal judge in Arkansas, Pilot Flying J would pay the companies what they are owed with interest.

Federal agents raided the Knoxville headquarters of Pilot Flying J earlier this year after an employee claimed the nation's largest diesel retailer was systematically cheating its clients. Five employees have since pleaded guilty to federal charges.

Jimmy Halsam is the brother of Tennessee Gov. Bill Haslam, who has an undisclosed ownership share in the company. Both have denied any wrongdoing, and the company didn't acknowledge wrongdoing in the settlement.

Under the terms of the preliminary settlement, Pilot Flying J would pay all legal fees and other expenses. That includes the cost of auditing the accounts and then auditing the auditors.

Pilot spokesman Tom Ingram said the company expects the total number of customers who are owed money will be a relatively small percentage of Pilot's more-than-4,000 customers. So far, 22 class-action lawsuits have been filed against Pilot Flying J, one of which was dismissed.

Eight of the suits are represented directly by Tuesday's settlement. All other companies that participated in either Pilot's rebate program or its discount program will be sent a notice informing them of the class-action settlement. If they choose to opt out of the settlement, they could still sue separately.

"The advantage to them, if they choose to accept this, is that they get all their money back. They pay no legal fees and no administrative fees," Pilot Flying J attorney Aubrey Harwell said. "It's in keeping with what Jimmy Haslam committed to all along. He said, 'We're going to do this right. They're going to be paid quickly and fairly.'"

Jimmy Haslam said in a statement that the company is working to make things right with its customers.

"This is an unfortunate time for our customers and our company, 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," he said.

The lead attorney for the trucking companies, Don Barrett, said he expects the other companies to be "pleased to death" with the settlement because so many of them don't know whether they are owed money or not. With the settlement, they will find out what they are owed and get that money back with 6 percent interest accrued "from the minute they sent the check and it was less than it should have been," Barrett said.

Barrett said the settlement offers customers the most complete relief he has seen in more than 40 years of practicing law, and he said much of that was due to Jimmy Halsam, "who stepped up to the plate and did the right thing."

In a July 12 letter made public Monday, Haslam said Pilot had sent checks to trucking companies shorted on rebates. He didn't say how large the checks were or how many were being distributed.

Haslam said during a speech in May at an annual conference of truckers in Indianapolis that as many as 250 trucking companies might be owed money.

Pilot attorney Harwell said that it is impossible to know how much is owed until the audit is complete.

Pilot Flying J is the nation's largest diesel retailer with annual revenues of around $30 billion.

Ingram said he expects the total settlement, while significant, to amount to a relatively small percentage of that revenue.


7 Comments on this post:

By: pswindle on 7/16/13 at 10:37

Both of these men, Jimmy and Billy should come clean. You can't operate a business and not know that your company was doing a scam job on their customers. Where did they think that the profits, big profit, was coming from? I'm tired of Gov. Haslam acting as if he had no idea what was going on. He did not even put his interest in a blind-trust. Surely, he doesn't think that TN is that blind and stupid. Well, maybe, since we have gone red, everything that the GOP does is overlooked.

By: La-La on 7/16/13 at 10:57

Of course they settled. Too much money to spend on attorneys' fees and litigation costs. Gov. Haslam had had an "idea" of what has been going on all this time. He is just not man enough to admit it. I agree with pswindle "TN is that blind and stupid."

By: govskeptic on 7/16/13 at 2:30

The two biggest fans of Governor Haslam have now posted their unbiased
statements. Both brilliant businessmen as all can tell. Now, with this settlement
the legitimate claims will probably follow suit, and those fringe ones that are
afraid they won't get paid may carry on with separate suits. We will have to see
if the government still wants to extract blood.

By: Badbob on 7/16/13 at 6:51

Let's see. You get caught stealing. Your buddies all get sentenced to jail for helping you steal. You, being the one who profited from the theft the most, can afford to pay back the money you stole, with some small interest, so now that you have been exposed, try to buy your reputation back.

And the feds look at this from the standpoint of "how can we stop this kind of theft in the future?"... what would be a deterrent to others? Would having zero economic gain be punishment enough? LOL, well, that is more punishment than all the people in the financial crisis had to pay!

By: ancienthighway on 7/17/13 at 12:12

Isn't the next step for Pilot to threaten to declare bankruptcy and con the federal government out of "bail out" money?

By: pswindle on 7/17/13 at 9:12

What are the Haslams hiding? They do not want this to go to trial, because of what could be found out about the good guys of TN. Federal Government go for it and find out what they are hiding.

By: Vuenbelvue on 7/17/13 at 5:26

CNBC's Jim Cramer introduces U.S attorney Preet Bharara at CNBC's "Delivering Alpha." "No company or individual is too big for prosecution and anyone who thinks they are would be making a grave mistake, said U.S. Attorney Preet Bharara ", known as Wall Street's top cop.