KNOXVILLE, Tenn. --Pilot Flying J has asked a federal judge to dismiss several lawsuits filed against the company in connection with the alleged diesel fuel rebate scheme, reported The Knoxville News Sentinel. The move had been expected, and it comes as the company and plaintiffs prepare for hearings on the case in November.
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, owner of the Cleveland Brown football team, has denied any knowledge of the rebate scheme.
A federal judge dismissed racketeering and deceptive trade practices charges against the company, and 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.
Pilot Flying J reached an $85 million settlement with hundreds of trucking customers who were affected by the alleged fraud; however, more than a dozen companies are pursuing lawsuits outside of the settlement.
Their cases were consolidated in federal court in Kentucky, where U.S. District Judge Amul Thapar on July 31 ordered the dispute to mediation.
The company will also pay $92 million as part of an agreement with the U.S. Attorney to avoid fraud charges.
According to the report, in a motion filed with the court, Pilot Flying J argued that racketeering claims filed by some plaintiffs failed to adequately allege the elements of a Racketeer Influenced &Corrupt Organizations (RICO) Act conspiracy, and that certain fraud claims failed the "particularity requirements" of the law.
Specifically, Pilot said, the plaintiffs failed to identify the alleged misrepresentations made to them, the person responsible for those misrepresentations and how the plaintiffs were injured.
The company argued that none of the plaintiffs were mentioned in an FBI affidavit released last year, and that "relying on the allegations in the FBI affidavit is not enough to sustain the plaintiffs' fraud-based claims."
Leonard Leicht, a New Jersey attorney who represents two plaintiffs in the case, described the move as a "procedural roadblock," said the report. "We're confident the court will see through it and look forward to presenting our opposition," he said.
A different Kentucky judge is acting as a mediator in the case. A hearing to discuss motions by the company and the plaintiffs is scheduled for Nov. 18 in Covington, Ky., while a settlement conference in the case is scheduled for the following day.
Click here to read the full News Sentinel report.
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