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Judge approves Pilot Flying J settlement

Josh Flory, Knoxville News Sentinel • Dec 15, 2015 at 1:49 PM

LITTLE ROCK, Ark. (MCT) — A federal judge Monday gave a major boost to Pilot Flying J’s efforts to get past a financial scandal, even as the Knoxville-based truck stop chain faces legal fights on other fronts.

At a hearing just blocks from the Arkansas State Capitol, U.S. District Judge James M. Moody gave final approval to a nearly $85 million settlement between Pilot and hundreds of trucking companies that allege they were shorted on diesel fuel rebates.

Under terms of the deal Pilot will pay approximately:

* $56.5 million in principal owed to customers;

* $9.75 million interest; and

* $14 million in attorneys’ fees for the settlement class counsel.

Including other items paid by Pilot, such as auditing costs and attorneys’ expenses, the benefit to the class is estimated at $84.9 million.

The rebate controversy erupted in April, after federal officials raided Pilot’s headquarters. An ongoing criminal investigation has netted seven guilty pleas.

At Monday’s hearing, Pilot attorney

Aubrey Harwell and plaintiff’s attorneys Mike Roberts and Don Barrett both argued in favor of the settlement deal.

Roberts, co-lead counsel for the settlement class, praised the settlement terms, comparing them favorably to class-action settlements where consumers get a $2 coupon or $3 off a show ticket.

The settlement, he said, is “real cash money that is important to these trucking companies.”

Barrett, also co-lead counsel for the settlement class, praised Pilot’s actions and cited the fact that no objections were filed to the settlement proposal.

“I think it’s a fact that we have achieved a pretty spectacular result” for the affected businesses, he said.

Harwell, the attorney for Pilot, told Moody that the deal was “a shining example of how the system should work, and how it has worked.”

He gave credit to Barrett, Roberts and plaintiffs’ attorney Thomas Thrash, saying they were “decent, honorable men” and if that wasn’t the case the litigation would have gone on for years.

Harwell also praised Pilot CEO

Jimmy Haslam, saying the executive told his company to ensure that customers received the benefit of the doubt as Pilot conducted its investigation.

Monday’s hearing took less than 30 minutes. Moody described the settlement as fair, reasonable and adequate.

Not everyone is satisfied with Pilot’s response to the situation, though. More than 50 companies opted out of the settlement, and many of those have filed separate legal actions against the company.

Drew McElroy, a Knoxville attorney who represents clients that have sued Pilot in Knox County Circuit Court, said the national settlement “really doesn’t affect us at all.”

McElroy and Georgia attorney Mark Tate have pushed to take depositions of Pilot officials, and McElroy said Monday that “I would hope now that they can give some of their attention to us, and maybe we can move our (case) forward toward getting our clients a full measure of compensation.”

Following Monday’s hearing, Harwell — the attorney for Pilot — spoke to reporters outside the Richard Sheppard Arnold U.S. Courthouse and provided the company’s most detailed response yet to some of the allegations outlined in a federal affidavit that was made public as part of the criminal investigation.

Asked about suggestions that Haslam, the Pilot CEO and owner of the Cleveland Browns, was aware of fraudulent activity at the company, Harwell said: “You know, you can sue the Pope for bastardy. There are those people who’ve made that suggestion. It’s absolutely, completely and totally ill-founded.”

Asked about an allegation in the affidavit that Haslam was present at meetings where fraud was discussed, Harwell said: “He was in meetings. He was in and out of meetings. There were some meetings that apparently took place when he was present in the building or when he would walk by and speak to people, but in terms of his knowing or participating in any of this it absolutely, irrevocably didn’t happen.”

The affidavit also included a transcript of a secretly recorded conversation in which John Freeman, Pilot’s former vice president of sales, described how Nashville trucking firm Western Express had discovered it was being shorted by Pilot.

In that transcript, Freeman said he offered to cut the company a check, but a Western official instead suggested that Pilot buy an airplane from him.

Harwell said Monday that Haslam was aware of the plane deal.

“And let me tell you, we’re not going to get into that story today but that’s a great story, and that story is not as some are trying to make it,” he said. “It does not suggest any inappropriate conduct or any criminal conduct or any wrong act by Mr. Haslam.”

In response to a follow-up question about the deal, he said, “I would really rather not get into that because of the federal grand jury investigation, but I can assure you when it’s all said and done, there’s nothing to it.”

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