Earlier this month, U.S.
District Judge Amul Thapar ruled, in a 77 page Order, that several trucking
companies can proceed with claims they were cheated by Pilot Flying J
truck-stop company owned by Cleveland Browns owner Jimmy Haslam and his brother
Tennessee Governor Bill Haslam. What remains of the lawsuit are approximately
two dozen counts by the trucking companies to proceed against Pilot. They
include claims of breach of contract, fraud and negligent misrepresentation.
However, the ruling was
not a total defeat for the defendant. Judge Thapar granted Pilot Flying J’s
motion to dismiss several other counts against the gas station giant. He
dismissed seven of 11 civil claims against Jimmy Haslam, the company's CEO, and
allowed four others to go forward, including accusations of unjust enrichment
and conspiracy to commit fraud.
National Retail Transportation
and Keystone Freight were among several trucking companies that opted out of a
settlement that resolved most of the lawsuits against Pilot. Previously, Pilot
agreed to pay out nearly $85 million to 5,500 customers as part of the
settlement. The remaining trucking companies claim they were cheated out of
fuel rebates and discounts promised by Knoxville, Tennessee-based Pilot Flying
J, the nation's largest diesel retailer with annual revenues of around $30
billion.
Ten former employees
have pleaded guilty to some form of wire or mail fraud since federal agents
raided Pilot's Tennessee headquarters in April 2013. Jimmy Haslam has not, as
of yet, been charged with any crimes.
Along with the civil
settlement, Pilot agreed to pay $92 million in fines and accept responsibility
for the criminal conduct of its employees while the government agreed not to
prosecute the company. The agreement required Pilot to comply with several
conditions, including cooperation in the investigation of people who may have
been involved in the fraud. It did not protect any individual at Pilot from
prosecution.
The scheme, as detailed
in some of my previous posts, involved sales team members reducing the amount
of money that was due to trucking company customers they deemed too
unsophisticated to notice. The scheme was widely known in the sales department,
according to court documents, with supervisors teaching other employees how to
do it.
Judge
Thapar's Order said the trucking companies "state four facts that
plausibly suggest that some of the individual defendants managed or knowingly
carried out the fraudulent rebate-reduction scheme."
The
plaintiffs first allege that in 2012, Haslam, Brian Mosher, Arnold Ralenkotter,
Mark Hazelwood and John Freeman planned an annual meeting with breakout
sessions for teaching other employees to reduce rebates without detection, the
order says.
"Second,
those individuals planned teaching sessions to train employees --or directly
taught other employees -- how to participate in the rebate-reduction scheme and
avoid detection," Thapur wrote.
"Third,
(the trucking companies) specifically allege Mosher told others to reduce
rebates manually, and that Hazelwood in turn instructed Mosher to do so. And
finally, (the trucking companies) allege that Freeman hosted a meeting at his
lake house to discuss how to perpetuate the fraudulent rebate scheme."
"Together,
these facts at least plausibly suggest that Haslam, Mosher, Ralenkotter,
Hazelwood, and Freeman 'adopt[ed] the goal of furthering or facilitating the
criminal endeavor,'" Judge Thapar wrote.
