Overdrive Magazine | Trucking Business News & Owner Operator Info
Issue link: http://read.dmtmag.com/i/127433
Logbook Lawsuits follow Pilot scandal At least three class-action lawsuits have been filed against Pilot Flying J in the wake of federal allegations against the national truck stop chain that it systematically and intentionally defrauded trucking fleets out of tens of millions of dollars over nearly 10 years. The allegations stem from a federal affidavit made public April 18. It alleges that Pilot Flying J withheld rebates owed to customers on fuel purchases and that Pilot Chief Executive Officer Jimmy Haslam knew about the scheme. Haslam, majority owner of the NFL's Cleveland Browns, never disputed the accusations in statements following the raid, but said any wrongdoing at Pilot Flying J would not be tolerated. An April 22 statement from Haslam said the company was taking steps to rectify the accusations, including placing members of its diesel sales team on administrative leave, auditing all 3,300 of the company's contracts with customers and ending the "manual rebate calculation" methods that, according to the affidavit, were the source of much of the alleged fraud. The first lawsuit was filed April 20 in a Knox County, Tenn., court by Atlantic Coast Carriers out of Hazlehurst, Ga. The lawsuit is being brought on behalf of "All persons or entities who have sustained economic losses as a result of Defendants' wrongful Pilot Flying J is the largest truck stop chain in the country, with 650 nationwide locations. withholding of rebate funds," saying that the truck stop chain "regularly understated" how much it owed to the carrier and other companies, relative to the original agreements between the two parties. Atlantic says that Pilot would agree to offer them and other carriers (Continued on Page 66) Navistar sued over stock price collapse Even though truck and engine manufacturer Navistar abandoned its exhaust gas recirculationonly quest to meet 2010 U.S. Environmental Protection Agency emissions standards, the company's not out of the woods on dealing with the backlash: Three law firms in March filed separate class-action lawsuits on behalf of shareholders who purchased Navistar International Corp. common stock between Nov. 3, 2010, and Aug. 1, 2012. Moreover, Navistar's former Chief Executive Officer Dan Ustian and the company's current Chief Financial Officer Andrew Cederoth are accused in the lawsuits of violating provisions of the Securities Exchange Act of 1934 and a few state laws. The suits say Ustian and Cederoth made millions of dollars off of artificially inflating the price of Navistar's stock. The complaints allege that throughout the declared timeframe, the company issued false and misleading statements regarding its prospects. Navistar spokesperson Elissa Koc declined comment, citing pending litigation. Navistar reportedly pumped more than $700 million into its EGR program that yielded engines that had to use EPA credits to meet emissions standards. Last August, the company abandoned its EGR program and announced plans to partner with Cummins. Navistar common stock traded as high as $70.17 per share on April 26, 2011. After the company's announcement that it was abandoning its EGR efforts, the price sank to $21.44. During the same period, the lawsuit claims Ustian sold more than 55,000 Navistar's proprietary MaxxForce 15 was discontinued in September after the company announced it would use the Cummins ISX15 as its 15-liter option for International trucks. shares for nearly $3.9 million and Cederoth sold more than 9,500 shares for $642,962, all while the stock price was near record highs. – Jason Cannon 10 | Overdrive | May 2013 Logbook_0513.indd 10 5/1/13 2:52 PM