AL Pilot Rebate Suit Back in Federal Court

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.