Tuesday, November 29, 2016
By Walter F. Roche Jr.
A federal appeals court has ruled that one of the two remaining rebate fraud suits against Pilot Flying J must be heard in federal court in Alabama.
In a 15-page ruling the 11th Circuit Court of Appeals overturned the decision of a district court judge who had dismissed the suit, citing a lack of federal jurisdiction. The original suit was filed in federal court by Wright Transportation of Mobile, Ala, in the wake of the disclosure of a federal probe of Pilot Flying J's diesel fuel rebate practices.
The appeals court concluded that the federal court retained jurisdiction even though all federal claims under the Class Action Fairness Act (CAFA) had been dropped or dismissed and only state law claims remained.
Pilot's attorneys had argued the case should remain in federal court, while Wright sought dismissal so the claims could be pursued in state court.
Steve Brody, a Pilot attorney, said the decision puts the case in federal court where it belongs. Charging that Wright apparently thought the litigation would bring a windfall, Brody added, "We hope the 11th Circuit decision dispels that unrealistic belief."
The decision will end the ongoing litigation in Alabama state courts, but will apparently have no effect on separate litigation against Pilot in Franklin County Circuit Court in Ohio.
In that suit brought by FST Express and HG Logistics, Pilot CEO and Cleveland Browns owner James A. "Jimmy" Haslam has been subpoenaed for a Dec. 13 deposition where he is expected to be questioned about his knowledge of the rebate fraud scandal. He has consistently denied any knowledge of the scam.
Knoxville, Tenn. based Pilot already has paid some $175 million to settle claims by other trucking firms and the federal government. Ten former Pilot sales executives have entered guilty pleas to mail and wire fraud charges as a result of a federal grand jury probe of the rebate fraud. Eight others former Pilot staffers have entered not guilty pleas and await trial next year.
As the appeals court recounted in its decision, Pilot has been charged with systematically reducing promised diesel fuel rebates for truckers who sale staffers thought would not notice.
Citing prior decisions on the issue, the appeals court said that even though the class action claims were no longer part of the case, the federal court retained jurisdiction.
"We therefore conclude the CAFA continues to confer original federal jurisdiction over the state law claims in this suit," the ruling states.
"That jurisdiction continues to survive even after later events meant there would be no class action claims," the three judge panel concluded.
Friday, November 18, 2016
By Walter F. Roche Jr.
Cleveland Browns owner James A. "Jimmy" Haslam will be questioned under oath on Dec. 13 on his knowledge of a rebate skimming scheme by sales executives at the Haslam family owned truck stop firm Pilot Flying J.
According to a notice filed in Franklin County Ohio court the deposition will take place in Knoxville, Tenn. and will be videotaped. It will be conducted at the law offices of Ritchie, Dillard, Davies & Johnson beginning at 9:30 a.m.
Haslam has repeatedly denied any knowledge of the multi-million dollar scheme, but he has never been questioned under oath.
Aubrey Harwell, a Nashville, Tenn. attorney who has represented the trucking firm, said in an email response to questions that Haslam would comply with any lawfully executed subpoena. Earlier this week a Pilot spokeswoman acknowledged that negotiations over a Haslam deposition were ongoing.
The deposition comes in a suit by two trucking firms, HB Logistics and FST Express, against Pilot, the largest truck stop firm in the country. They contend they are owed millions of dollars in promised rebates.
Haslam at first refused to agree to a deposition, but later said he would agree only if a series of conditions were met, including a time limit and final action on a related federal lawsuit.
HB and FST are two of the three trucking firms still pursuing the recovery of promised rebates on the purchase of diesel fuel which they claim were never paid. A third is pending in Mobile, Ala.
Ten former Pilot sales executives have entered guilty pleas to charges of mail and wire fraud as a result of a federal probe of the rebate scheme. Eight others have been indicted and are scheduled for trial next year. All eight have entered not guilty pleas.
Pilot already has paid some $175 million to settle claims by truckers and the federal government as a result of the investigation, which first became public when the FBI conducted a raid on Pilot's Knoxville headquarters on April 15, 2013.
According to a lengthy FBI affidavit filed in U.S. District Court in Knoxville, Pilot routinely cheated truckers out of promised rebates. Details of the scheme were learned from informants who secretly tape recorded sales meetings where the scheme was openly discussed.
Wednesday, November 16, 2016
By Walter F. Roche Jr.
Cleveland Browns owner James A. Haslam will be deposed before the end of the year in an Ohio suit brought by trucking firms who are charging that the Haslam family owned Pilot Travel Centers cheated them out of millions of dollars in promised rebates.
In a statement issued Wednesday in response to questions, Pilot spokeswoman Rachel Albright said Haslam's lawyers were currently negotiating with the trucking firms to set final details for the deposition to be conducted in Knoxville, Tenn.
While noting that Haslam has asserted that his deposition was not necessary, Albright said he had agreed several months ago to be questioned under oath.
"As a result, we have been working with plaintiffs' counsel and expect Mr. Haslam's deposition to occur before the end of the year," the Pilot spokeswoman wrote.
Shawn Organ, an attorney for the plaintiff trucking companies, said that details of the deposition scheduling would be filed soon in the Franklin County court.
The disclosure comes on the eve of a key hearing in the case scheduled for Thursday before Franklin County Judge David C. Young.
Haslam has insisted that he had no knowledge of a scheme by Pilot sales executives to cheat trucking firms out of promised rebates.
His testimony is being sought in an Ohio suit brought by two truckers, FST Express and HB Logistics.
His testimony is also being sought in an Alabama suit brought by Wright Transportation. That firm also has charged that it was cheated out of promised rebates.
Court records in the Ohio suit show HB and FST also have issued a subpoena for records of Comdata, a fuel card company that acts as an intermediary between trucking companies and fuel suppliers.
The rebate cheating scandal already has proven costly for Pilot, the largest truck stop firm in the country.
The firm has paid some $175 million to settle charges in an Arkansas class action and claims by the federal government.
Ten former Pilot executives have entered guilty pleas to mail and wire fraud charges while another eight are scheduled to go on trial next year.
Thursday, November 3, 2016
By Walter F. Roche Jr.
With a key hearing date approaching, Pilot Travel and two of its one time trucking customers are continuing to debate and they can't even agree when the debate should end.
Franklin County Ohio Judge David C. Young has set Nov. 17 as the date for a hearing on whether the two trucking firms, HB Logistics and FST Express, can get access to Pilot's SalesForce database.
The judge will also hear arguments on whether Pilot can file another response to the trucking firm's latest filings in support of its motion for access to SalesForce.
The arguments over arguments is but the latest development in two of the three remaining civil suits stemming from the charges that the Knoxville, Tenn. based truck stop firm routinely cheated diesel fuel customers out of promised rebates.
In the latest filing, lawyers for Pilot are charging that the truckers recent filing included a document that is confidential under a protective order issued in a federal court suit. In fact the document contains information from the SalesForce database on a company called Wright Transportation, an Alabama trucking firm.
Wright is the third firm still suing Pilot in an ongoing suit in Mobile, Ala.
In fact Pilot lawyers argue, the document proves their point: that truckers new that when Pilot told truckers they would be getting a discount based on the cost of fuel, those truckers knew that the cost wasn't Pilot's actual cost, but a cost based on an industry standard.
"Plaintiffs continue to contort the facts and law in an effort to justify their request to dig through the interactions with thousands of other customers," the filing states.
Pilot contends that the database contains confidential business information about the firm's dealings with hundreds of trucking firms that have nothing to do with the FST and HB transactions.
In earlier filings the FST and HB attorneys said the database is the key piece of evidence needed to prove that the Pilot rebate scheme went much deeper than has been revealed and totaled some $4 billion.
Pilot, however, charged the truckers "completely mis-characterize" the evidence, which actually supports Pilot's contention.
The rebate scheme already has cost Pilot some $175 million to settle claims from other truckers and the federal government. Ten former Pilot sales staffers have entered guilty pleas to mail and wire fraud charges. Eight more, including the former president, face a 2017 trial on similar charges. They have all pleaded not guilty.