Pilot Flying J's Proposed Class Settlement Draws Criticism
On Tuesday, U.S. District Judge James M. Moody of the Eastern District of Arkansas granted preliminary approval to a proposed agreement that calls for the Knoxville, Tenn.-based company to pay the plaintiffs 100 percent of their losses plus 6-percent interest, and to cover all attorney's fees for customers in the class. Eight plaintiffs signed off on the agreement, but several other lawsuits are pending, according to a report by Knoxnews.com.
In a statement released earlier this week, Pilot Flying J CEO Jimmy Haslam said: "This is an unfortunate time for our customers and our company, but we remain committed to making things 100 percent right with our customers, to put systems in place to help ensure this does not happen again and to re-earn our customers trust."
Not everyone is pleased with the proposed settlement, however. Jeffrey Friedman, an attorney who is representing Alabama-based Shoreline Transportation, said in an e-mail to the news outlet that companies targeted by the fraud are being deprived of a say in the settlement.
"The thing that bothers us the most about this class settlement is that it is like a bank robber who gets caught red-handed stealing money. Offering to return the money with interest in order to avoid prosecution [is not enough]," Friedman said.
Eligible customers would be excluded from the settlement in one of two ways -- either because they had already filed their own suit or they choose to opt out, Donald Beskind, a Duke University law professor, told the news outlet.
A Knoxville attorney representing several plaintiffs in state court was also dismissive of the federal settlement deal announced this week. "I just don't understand why anybody would accept breaking even with somebody that fraudulently took money from you," attorney Drew McElroy said.
A fairness hearing will review the settlement, noted Aubrey Harwell, an attorney representing Pilot Flying J. "While I respect the views of those to the contrary, I don't find them very meaningful," Harwell said.
Harwell estimated the retailer could pay up to $35 million in rebates to all companies who were shorted.
On July 25, a federal judicial panel is slated to consider whether the multiple civil suits that have been filed against Pilot Flying J should be transferred to one district for coordinated pretrial proceedings.
In addition to the civil proceedings, a federal grand jury is currently investigating the allegations of fraud in Pilot Flying J's fuel rebate program. Federal officials launched an investigation into the allegations two years ago -- a move that culminated in an April 15 raid of the company's Knoxville headquarters.
To date, five employees have pleaded guilty to their roles in the alleged scheme.
Pilot Flying J is a family-owned business that was started by Haslam's father in 1958. The company operates more than 650 retail locations and is the largest operator of travel centers and travel plazas in North America.