Truckstop chain Pilot Flying J has reached a multi-million dollar settlement agreement with some of the trucking companies that filed suit against it alleging the company cheated them out of fuel rebates.
One lawyer, however, is advising his clients not to accept the settlement.
Numerous lawsuits have been filed in recent months following revelations in late April of a federal probe into allegations that the company was shortchanging some customers out of money in the form of fuel rebates to bolster company profits.
According to the published reports, the class action settlement has been reached in federal court in Arkansas and received the judge’s approval around noon Tuesday, calling for Pilot Flying J to pay back money owed to trucking customers, plus 6% interest.
The Tennessean reports that Knoxville attorney Drew McElroy, an attorney for one of the trucking companies suing Pilot Flying J, is advising his clients and others not to join the settlement.
McElroy told the paper that the companies that accepted the offer will be getting little more than what had already been promised by Pilot CEO Jimmy Haslam to all companies that were shorted rebates.
The attorney told the paper that it is “hard to comprehend how breaking even with a company that has perpetrated fraud is a good deal.”
The agreement reportedly covers all of the trucking companies that took part in a fuel rebate or discount program. Pilot Flying J will also pay all of the legal fees and other expenses.
Eight companies are reported to be involved in the settlement. All other companies affected can choose to be a part of it or they can still file a lawsuit separately.
There are around a dozen separate cases still pending against Pilot Flying J in various federal courts across the country. Those that have not filed a lawsuit are eligible to participate in the settlement to recover money plus interest for any funds they believe they are owned by Pilot Flying J but have not received.
The agreement suggests payments to affected trucking companies could total around $40 million, and payments to attorneys may be around another $14 million. The move also likely heads off what was likely to be years of litigation.
Defendants in the settlement include Pilot Flying J; parent company Pilot Travel Centers; CVC Capital Partners, which owns a minority share of the truckstop chain; CEO Jimmy Haslam; and seven Pilot executives or managers, including President Mark Hazelwood and Vice President John Freeman.
Just a few days ago it was discovered Pilot Flying J had been sending money back to trucking companies it owed money to, but there has been no indication as to the amounts of the checks or how many customers received them.
About a month after federal authorities raided the Tennessee headquarters of Pilot Flying J on April 15 in search of evidence about the alleged scheme, Haslam indicated about 250 trucking customers may be owed money. However, he has maintained he knew nothing about possible cheating.
The settlement states, "Defendants have at all times disputed, and continue to dispute, Plaintiffs' allegations in the lawsuit and maintain that they have defenses to the claims asserted."
Since the April 15 raid at least five current or former Pilot Flying J employees has pleaded guilty to criminal charges in federal court. Nine Pilot Flying J employees have been fired or placed on administrative leave.
Pilot Flying J's statement
Haslam released the following statement after the settlement was reached:
"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% of the money they are owed, plus 6% interest, as soon as possible and without the need for unnecessary time in court, plaintiff legal fees or out of pocket costs. 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.
"Customers who already received checks with interest based on our internal field audit team's ongoing review will receive supplemental checks for any additional interest not included in the original calculation. In addition, all of our customers, as defined by the court agreement, may join the class and have a free independent accountant, approved by the court, validate Pilot Flying J's internal audit process of the customer's account.
"In addition, Pilot Flying J will pay all court, administrative, accounting, mailing, processing and legal costs incurred as part of the procedure approved by the court today, ensuring our customers will get every dollar they are owed, with interest, without protracted legal battles, time delays or costly legal expenses.
"Under the court agreement, Pilot Flying J will distribute a statement to all of its customers and to the media as part of notice provision to ensure all of our customers have the opportunity to resolve any concerns they may have in this fashion. We also will make available to attorneys for the class a mailing of all of our customers.
"Customers who are satisfied with their accounts may continue with business as usual, and we assure them our utmost attention, 24-7, 365 days a year, serving them and their drivers. Customers who are concerned about their accounts may join the class by simply doing nothing. Their accounts will be audited free to the customer. Finally, customers have the right to opt out and pursue their own legal objectives at their own expense, which can be significant.
"This is an unfortunate time for our customers and our company, but we remain committed to making things 100% right with our customers, to put systems in place to help ensure this does not happen again, and to re-earn our customers trust."
Jimmy Haslam is the brother of Tennessee Gov. Bill Haslam, who has maintained he has not been involved in the business in more than a decade and interest he still has in the company is controlled in a blind trust.
While Jimmy Haslam has not been charged by authorities as part of its investigation, several reports have surfaced indicating those that pleaded guilty are aiding investigators with indications that more indictments, including of high-ranking Pilot Flying J officials, could be coming later.
Pilot Flying J is the nation’s biggest retailer of fuel with more than 650 locations in both the U.S. and Canada.
[Updated July 18 to add comments from attorney advising clients not to accept the settlement.]