Friday, November 20, 2015
By Walter F. Roche Jr.
With federal suits dismissed on jurisdictional grounds, two Ohio trucking firms are suing Pilot Flying J in Franklin County Ohio court charging that CEO James A. Haslam knew of and approved a scheme to defraud them of promised rebates.
In a 34-page complaint, attorneys for FST Express and Dick Lavy Trucking have charged that the truck stop firm and its top executives engaged in "massive fraudulent conduct" and purposefully misled their "thousands of trusting customers."
"The scheme was conducted with the knowledge and approval of Pilot CEO James A. 'Jimmy' Haslam," the complaint states.
Haslam, the owner of the Cleveland Browns, has repeatedly denied any knowledge of the scheme.
Aubrey Harwell, a Nashville attorney representing Pilot, said that any suggestion Haslam knew of or approved a rebate scheme was "ludicrous and there is absolutely no evidence to support it."
The two firms charged that while Pilot repeatedly told them the diesel fuel charges were based on Pilot's actual costs, the truck stop firm was actually using an industry benchmark provided by a third party.
According to the complaint when FST raised questions about promised rebates in 2011, Pilot blamed it on a change in personnel.
"This explanation was false and Pilot's representative knew it was false when she made it," the suit states.
The complaint cites an affidavit by an FBI agent filed in U.S. District Court in Knoxville, Tenn. following an April 15, 2013 raid on Pilot's headquarters. The affidavit includes partial transcripts of secretly recorded Pilot sales meetings in which the scheme was discussed.
"At Pilot there was enormous pressure from the top down to defraud customers like FST and DLT (Dick Lavy Trucking)," the suit filed by attorney Shawn Organ states.
The suit details the fact that 10 top Pilot executives already have entered guilty pleas stemming from the federal probe. In addition, Pilot reached a $92 million settlement with the federal government.
The suit charges violations of Tennessee and Ohio consumer protection statutes, breach of contract and unjust enrichment.
In a related development a federal judge in Alabama has dismissed without prejudice a parallel suit filed by Wright Transportation.
U.S. Judge William H. Wright declined to retain jurisdiction in the case noting that the remaining claims involved state laws.
"The court discerns no appreciable negative impact on judicial economy by dismissing this action for refiling in state court," Steele wrote.
Lawyers for Pilot, who opposed the dismissal, have filed notice of appeal.