Haslam Family & Berkshire Hathaway Dispute Could Get January Court Date
KNOXVILLE, Tenn. — Berkshire Hathaway and the Haslam family could see a speedy resolution to dueling lawsuits over accounting practices related to the acquisition of the Pilot Flying J brand if Berkshire agrees to certain conditions.
Judge Morgan Zurn, a vice chancellor of the Delaware Court of Chancery, ruled on Dec. 1 that efficiency favors hearing Berkshire's allegations that Pilot founder James "Jimmy" Haslam II attempted to improperly inflate his stake in the company alongside a Jan. 8-9 trial regarding the Haslam's family's claims that Berkshire was deflating Pilot's value, Reuters reported.
[Read more: Haslam Family Sues Berkshire Hathaway Over Pilot Deal]
Berkshire first invested in Knoxville-based Pilot in 2017, taking a 38.6 percent equity stake in the company for $2.758 billion, and has since accumulated a majority share for an additional $8.2 billion, resulting in an 80 percent ownership stake. Jimmy Haslam and his extended family retain control of the remaining 20 percent.
The deal maintained an option for the Haslam family to sell its remaining stake to Berkshire on Jan. 1, 2024, with additional options to sell the shares yearly thereafter, as Convenience Store News reported.
However, both Berkshire and the Haslams have accused the other side of attempting to manipulate Pilot's earnings, which serve as the basis for valuing the stake. The Haslams sued Berkshire in October, accusing it of employing pushdown accounting rules that artificially depreciated the value of relevant assets and unfairly cut the value of both the Haslam shares and Pilot itself.
Berkshire countersued in late November, accusing Jimmy Haslam of attempting to bribe Pilot executives to inflate 2023 earnings.
The Haslam family strongly denied Berkshire's allegations.
"We called Berkshire's allegations wild inventions in our opposition brief," stated Anitha Reddy, an attorney representing the Haslam family. "I don't think we could have been clearer that we dispute them. And if there is any doubt in Berkshire's mind, we think they're false and we intend to defeat them on whatever schedule the court orders."
According to Berkshire, as many as 28 executives were offered bribes in the form of bonuses, reported the Sandusky Register. The company's attorney Craig Lavoie argued that it is necessary to block the Haslams from exercising their option to sell the rest of the company to Berkshire because it is difficult to determine how Pilot's earnings were affected by the alleged bribes and what short-term decisions executives might have made due to the bonuses.
"Mr. Haslam's side promises have forced the company to investigate and interrogate many of the key employees it relies on today to operate the company," Lavoie said.
Berkshire had until 9 a.m. on Dec. 4 to decide whether to accept a January trial. Its agreement would come with the condition that discovery would be limited to what is necessary to defend against the Haslam family's lawsuit.
The Pilot and Flying J travel center network includes more than 750 locations in 44 states and six Canadian provinces with more than 790 restaurants, 77,000 truck parking spaces, 5,500 deluxe showers, 6,300 diesel lanes and truck maintenance and tire service with Southern Tire Mart.
Pilot Co. is No. 11 on the 2023 Convenience Store News Top 100 ranking.