NASHVILLE, Tenn. -- Several of the trucking companies that refused to settle with Pilot Flying J over claims of diesel rebate fraud say they have discovered "an additional aspect of that rebate fraud that has not received the same level of notoriety and press coverage, and yet likely dwarfs in financial size the rebate fraud."
In court documents, plaintiffs FST Express Inc., Columbus, Ohio, HB Logistics LLC, Birmingham, Ala., and Wright Transportation Inc., Mobile, Ala., said that the case has not dealt with "the 'cost' portion of the rebate/discount fraud."
Pilot Flying J offered customers “cost plus” and “cost minus” deals, the plaintiffs said, "but through misrepresentations and carefully orchestrated omissions, Pilot purposefully misled these ... customers."
The plaintiffs allege that Pilot sales personnel "led customers to believe that the 'cost' component of these deals represented Pilot’s actual costof acquiring the diesel fuel sold at its truckstops; however, instead of using Pilot’s actual acquisition cost of diesel fuel in these deals, Pilot used an undisclosed third-party pricing index—Oil Price Information Services (OPIS) contract average. This number chosen by Pilot to determine 'cost' is actually an average of some diesel fuel supplier postings in each OPIS rack market for a given day. Pilot, as the largest retail supplier of diesel fuel, does not pay an average price."
They said, "These plaintiffs understandably believed that when Pilot represented, for example, that the customer would pay 'cost plus 2' for diesel fuel from Pilot, that the customer would be paying Pilot’s cost, plus two cents. It is only through this litigation and the limited … discovery obtained by Plaintiffs to date, that it is being disclosed that what Pilot reallymeant when it said 'cost' didn’t mean cost at all. Rather, according to Pilot, when it says “cost” what it really means is: the OPIS contract average benchmark (a term rarely, if ever, disclosed to most customers and a misnomer), plus a transportation fee, plus state taxes, plus federal taxes, plus a fee for any additives Pilot may elect to add, plus … undisclosed and undescribed 'other fees'."
"Plaintiffs believe (consistent with the FBI Affidavit), that Pilot’s fraudulent conduct (on both the cost and rebate issues) was taught on a national level at Pilot’s corporate-wide sales meetings and would be captured across all customers nationally," they said.
No customers have been reimbursed for cost fraud, the plaintiffs said.
Ten former employees have pleaded guilty to a scheme to defraud customers over diesel fuel rebates since federal agents raided Pilot Flying J's headquarters in Knoxville, Tenn., in April 2013. CEO and Cleveland Browns football team owner Jimmy Haslam has not been charged with any crime.
Pilot Flying J 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 Flying J 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 from prosecution.
Most of the lawsuits against Pilot Flying J were resolved by a class-action settlement, in which the company agreed to pay out nearly $85 million to 5,500 customers.
Knoxville, Tenn.-based Pilot Flying J, the largest operator of travel centers and travel plazas in North America, has more than 650 retail locations.
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