Flying J Settlement Proposed, Opposition Growsby Jana Ritter - Published: 7/18/2013
The truck-stop chain owned by Cleveland Browns owner Jimmy Haslam has agreed to pay back the trucking companies that were cheated out of fuel rebates. A federal judge in Arkansas gave preliminary approval on Tuesday to a class-action settlement that would pay the companies what they are owed with interest and legal fees. The proposed settlement also stipulates that Flying J would not have to admit any wrongdoing.
Federal agents raided the Knoxville headquarters of Pilot Flying J earlier this year after an employee claimed the company was systematically cheating its clients. What is curious about the company not admitting wrong doing, is that five of its employees have since pleaded guilty to federal charges.
There is that and many other reasons that despite a proposed settlement by Pilot Flying J, with up to 4,000 trucking companies supposedly encompassed by the deal, there's a chance that up to 3,999 of them will choose to exercise their right to pass on it.
A lawyer representing four of the companies has made his clients' position clear, via a press release. “Pilot rebate fraud occurred on top of the toughest of economic times for the trucking industry. Because of this, it is understandable that some trucking companies will accept these terms simply because of the economic pressure. However, in a case where absolutely no discovery has been conducted, it is hard to reasonably evaluate any proposed settlement. It is also hard to comprehend how breaking even with a company who has perpetrated fraud is a good deal.”
McElroy's statement comes at a time when the proposed deal has received praise and generated much-needed positive P.R. for Pilot Flying J. But McElroy sees it differently, calling it a “sad commentary on class action litigation when pundits declare it a good deal to break even with thieves.”
Though the trucking companies shouldn't unfairly profit from the settlement, allowing Pilot Flying J to pay back the money it should have paid in the first place isn't the best way to ensure that these kinds of activities will be abandoned by unscrupulous corporations.
McElroy point out that the estimated payout of $35 million represents less than 11 hours of Pilot revenues. To discourage Pilot and others from engaging in similar misconduct in the future, much greater liability will be needed.
While the five Pilot Flying J executives (and likely counting) who have faced criminal liability would probably say that the message has been received loud and clear for them, owner, Jimmy Halsam and his brother, Tennessee Gov. Bill Haslam, (who has an undisclosed ownership share in the company), both continue denying any wrongdoing.