Haslam Fights Accusations of Orchestrating Rebate Fraud

KNOXVILLE, Tenn. — Pilot Flying J CEO Jimmy Haslam has asked a court to dismiss the latest lawsuits against him personally in the wake of the company's 2013 fuel rebate problems.

In mid-November, trucking companies National Retail Transportation Inc. and Keystone Freight Corp. accused in court filings that Haslam directly orchestrated the fraud to cheat customers out of promised rebates and discounts, as CSNews Online previously reported.

In response to these claims, Haslam recently filed court documents that argue the plaintiffs have "fail[ed] to state any viable claims" against him.

"The amended complaint…was virtually devoid of any mention of Defendant James A. Haslam III, let alone allegations of actionable conduct on his part," the chief executive's Dec. 1 motion reads.

Since the April 15, 2013 federal raid on Pilot Flying J's Knoxville headquarters, Haslam has maintained that he knew nothing about the fraud associated with the company's diesel fuel rebate program.

This summer, Pilot Flying J reached a $92-million settlement with the U.S. Attorney's Office that allows it to avoid prosecution. The company will not be prosecuted assuming it follows the terms of the agreement, including paying a monetary penalty over the next two years and fully cooperating with the federal government's investigation of fraudulent conduct within the company's diesel fuel sales discount programs.

In addition, under a class-action settlement agreement with several trucking companies, Pilot Flying J agreed to pay $85 million to resolve the subsequent lawsuits brought against the company.

Seven carriers, however, opted out of the class-action settlement in order to pursue their own litigation against the company. National Retail Transportation and Keystone are two of them, and they amended their suits on Nov. 14 to specifically name Haslam and former Pilot President Mark Hazelwood, who has also filed a motion to dismiss the complaints against him, according to a report by Overdrive magazine. 

Citing court precedents, Haslam argues in his motion for dismissal on the grounds that the claims against him are "unsupported by specific facts" and are "insufficient to state a claim," fail to show how he participated in the fraud and fail to show how he allegedly defrauded the carriers, the magazine reported.

The outstanding lawsuits against Pilot Flying J were consolidated in April and transferred to a federal court in Kentucky. Court documents from September show the parties were supposed to meet Nov. 19 to negotiate a settlement. However, no court documents have been filed regarding a settlement, and Pilot Flying J did not return requests for comment made last month, Overdrive noted.

Knoxville-based Pilot Flying J is a family-owned business that operates more than 650 retail locations and is the largest operator of travel centers and travel plazas in North America.