KNOXVILLE, Tenn. -- Trucking companies whose complaints against Pilot Flying J Inc. have been consolidated in federal court in Kentucky have lost a pretrial attempt to push forward with discovery in their diesel fuel rebate fraud lawsuit before Pilot Flying J has a chance to try to get the case dismissed, reported The Plain Dealer.
On April 15, 2013, the FBI and IRS raided Pilot Flying J's Knoxville headquarters, beginning an investigation into an alleged scheme perpetrated by some members of the company's sales staff to withhold rebates owed to trucking company customers for contacted diesel fuel purchases.
About a dozen participants have pleaded guilty to fraud and are cooperating with the authorities. Several executives have been fired.
CEO Jimmy Haslam has denied any knowledge of the rebate scheme.
Pilot Flying J reached an $85 million settlement with hundreds of trucking customers who were affected by the alleged fraud. The company has agreed to repay any amounts owed plus 6% interest; however, more than a dozen companies are pursuing lawsuits outside of the settlement, and Pilot Flying J is seeking to consolidate the pretrial proceedings in several cases.
A federal judge dismissed racketeering and deceptive trade practices charges against the company. And earlier this month, Pilot Flying J has reached an understanding with the U.S. Attorney's office, Eastern District of Tennessee, and the U. S. Department of Justice, that the company will not be prosecuted for fraud.
U.S. District Judge Amul Thapar said that Shoreline Transportation and a half-dozen other trucking companies need a plausible claim in order to conduct discovery--which involves compelling Pilot Flying J to turn over relevant documents in the case. To determine whether their complaints against the company are plausible, the court "must allow the defendants to test them with motions to dismiss," Thapar ruled Monday.
Thapar, in a 10-page opinion and order, also noted that an FBI affidavit that outlined allegations against Pilot Flying J did not mention Shoreline or the other plaintiffs in the federal cases consolidated in his court.
Matt Conn, a lawyer for Shoreline Transportation, referenced the enforcement agreement Thursday in responding to Thapar's decision, said the report.
"We agree with and respect the court's ruling," Conn said. "However, the court's ruling does not change the fact that Pilot has already admitted liability for the fraud that it perpetuated on Shoreline Transportation and the other trucking companies involved."
Conn added that the plaintiffs expect Pilot Flying J to file a motion to dismiss, but that they expect to survive it.
In an earlier pleading, Pilot Flying J said the plaintiffs were trying to use discovery "as a fishing expedition to develop claims that cannot otherwise be adequately pleaded." The plaintiffs responded that the allegation of a fishing expedition was unjustified given that 10 people have pleaded guilty.
Click here to read the full Plain Dealer report.
Knoxville, Tenn.-based Pilot Flying J, which overall has 23,000 employees and 650 retail locations nationwide, is the largest operator of travel centers and travel plazas in North America. Haslam also owns the Cleveland Brown football team.
Click here to view previous CSP Daily News coverage of the case.
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