pilot's memorandum in support of the joint motion for preliminary approval of class settlement and...

7/28/2019 Pilot's memorandum in support of the Joint Motion for Preliminary Approval of Class Settlement and Approval of N

1/27

UNITED STATES DISTRICT COURTEASTERN DISTRICT OF ARKANSAS

WESTERN DIVISION

NATIONAL TRUCKING FINANCIALRECLAMATION SERVICES, LLC,BRUCE TAYLOR, EDIS TRUCKING,INC., JERRY FLOYD, MIKE CAMPBELL,PAUL OTTO, TOWNES TRUCKING, INC.and R&R TRANSPORTATION, INC.,individually, and on behalf of all otherssimilarly situated,

Plaintiffs,

vs.

PILOT CORPORATION, PILOT TRAVELCENTERS, LLC D/B/A PILOT FLYING J,FJ MANAGEMENT, INC., CVC CAPITALPARTNERS, JAMES A. JIMMYHASLAM, III, MARK HAZELWOOD,MITCH STEENROD, SCOTT WOMBOLD,JOHN FREEMAN, VINCENT GRECO andBRIAN MOSHER,

Defendants.

)

)))))))))))

)))))))))))

))

Case No. 4:13-cv-00250-JMM

DEFENDANTS PILOT CORPORATION AND PILOT TRAVEL CENTERS LLCS

MEMORANDUM IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF

CLASS SETTLEMENT AND APPROVAL OF NOTICE TO SETTLEMENT CLASS

Defendants Pilot Corporation (f/k/a Pilot Oil Corporation) and Pilot Travel Centers LLC

d/b/a Pilot Flying J (collectively, Defendantsor Pilot Flying J) submit this memorandum in

support of the Joint Motion for Preliminary Approval of Class Settlement and Approval of

Notice to Settlement Class Members. Preliminary approval of both is warranted for the reasons

set forth below.

Case 4:13-cv-00250-JMM Document 5 Filed 07/16/13 Page 1 of 27


2/27

2

INTRODUCTION

Plaintiffs National Trucking Financial Reclamation Services, LLC, Bruce Taylor, Edis

Trucking, Jerry Floyd, Mike Campbell, Paul Otto, Townes Trucking, Inc., and R&R

Transportation, Inc.(collectively, Plaintiffs)bring this putative class action against Pilot Flying

Jthe largest operator of travel centers in North America and the top retail seller of over-the-

road diesel fuel in the United Statesand various other corporate and individual defendants. In

the Consolidated Amended Complaint (CAC), Plaintiffs allege that Pilot Flying J, through

certain of its employees, engaged in a fraudulent scheme whereby it entered into diesel fuel

rebate or discount programs with Plaintiffs and other similarly-situated customers for the

purchase of diesel fuel for commercial use but failed to pay the full amounts of rebates or

discounts owed. Plaintiffs seek to recover amounts they claim they were underpaid, as well as

attorneys fees, costs, and punitive damages. Plaintiffs also ask the Court to enter a permanent

injunction preventing Defendants from engaging in the misconduct alleged in the CAC.

Over the past two months, the parties have engaged in arms-length settlement discussions

in an attempt to bring the entire controversy to a close. The Settlement Agreement, which is

attached to the parties Joint Motion for Preliminary Approval of Class Settlement and approval

ofNotice to Settlement Class Members (Joint Motion) as Exhibit 1, is the end result of those

discussions. It provides, among other things, that any class member who was not paid or was

underpaid for diesel fuel rebates or discounts (or both) will be compensated at 100% of what he,

she, or it is owed, plus interest calculated at six percent. Plaintiffs and Defendants now jointly

move for preliminary approval of their proposed settlement.

The Court may approve a class settlement if it is fair, reasonable, and adequate, and not

the product of collusion. Fed. R. Civ. P. 23(e).Several factors guide this inquiry, but the fairness



3/27

3

of the proposed class settlement turns, in large part, on the amount and form of the relief offered

against the plaintiffs likelihood of success. In re Wireless Tel. Fed. Cost Recovery Fees Litig.,

396 F.3d 922, 933 (8th Cir. 2005).As discussed below, it is a near certainty that Plaintiffs and the

settlement class members would not receive any greater benefits than will be provided by the

proposed settlement, given the cost and uncertainty of continued litigation and the consideration

provided to all class members under the proposed settlement. Moreover, the proposed settlement

is fair, adequate, and reasonable for the class and not the product of collusion among the parties.

BACKGROUND

I.

PROCEDURAL HISTORY

Plaintiff National Trucking Financial Reclamation Services filed this putative class-

action lawsuit on April 24, 2013. Over the next two-and-a-half months, the other Plaintiffs filed

nearly-identical actions in federal district courts across the country. On July 16, 2013, Plaintiffs

subsequently filed the CAC in this action seeking recovery for themselves and on behalf of the

following putative class:

All persons and entities in the United States who purchased over the road diesel fuel forcommercial use in Class 7 and Class 8 vehicles (as Class 7 and Class 8 are defined by theUnited States Department of Transportation) from Defendants Pilot Corporation and PilotTravel Centers LLC d/b/a Pilot Flying J, pursuant to a diesel fuel rebate program ordiscount program (which rebate or discount program is defined as a cost-plus and/orretail-minus discount program (not to include discounts for payments made by cash,check, or major credit card at point of sale)), or both, from January 1, 2008 to July 15,2013.

(CAC 57.)

Consistent with each Plaintiffs original complaint, the CAC alleges that Defendants

represented to its commercial customers that it would provide rebates or discounts on diesel fuel

purchased at Pilot and Pilot Flying J truck stops operating throughout the United States, pursuant



4/27

4

to diesel fuel price rebate . . . and discount agreements between Pilot and its commercial

customers, but failed to do so. (CAC 1-2, 26.) Specifically, Plaintiffs allege that Pilot Flying

J employees were intentionally defrauding customers by withholding diesel fuel price rebates

and discounts . . . without the knowledge or approval of the customers, which resulted in Pilot

[Flying J]charging a higher price for diesel fuel than customers had agreed to. (Id. 31-32.)

Defendants allegedly engaged in this scheme for the dual purpose of increasing Pilot [Flying

J]s profitability and the sales commissions of Pilot [Flying J] employees. (Id. 33.) Based on

these and other allegations, Plaintiffs assert seven claims against Defendants:(1) common-law

fraud; (2) violation of the 50 states consumer protection statutes; (3) unjust enrichment; (4)

conversion; (5) breach of contract; (6) violation of the Racketeer Influenced and Corrupt

Organizations Act; and (7) fraudulent concealment. (Id. 67-114.)

As of the date of this Motion, Pilot Flying J is aware of at least 13 other lawsuits pending

in various courts based on substantially similar allegations. One of the plaintiffs in these other

suits, Ohio Auto Delivery, Inc., has filed a motion with the Judicial Panel on Multidistrict

Litigation to transfer all pending federal court cases to the Northern District of Ohio. See In re

Pilot Flying J Fuel Rebate Contract Litig., MDL No. 2468, Dkt. 1. Oral argument on that motion

is set for July 25, 2013. (Id., Dkt. 13.)

II. THE PARTIES SETTLEMENT AGREEMENTIn mid-May 2013, the parties began discussing the possibility of an early resolution of

this lawsuit. On July 13, 2013, following approximately two months of arms-length

negotiationsincluding multiple in-person and telephonic meetings between Defendants

counsel and Plaintiffs counsel and many rounds of offers and counter-offersthe parties agreed

on the essential terms of the settlement, other than the payment of the fees, costs, and expenses



5/27

5

of Plaintiffs counsel.Thereafter, the parties negotiated the amount of attorneys fees and costs to

be requested by Plaintiffs counsel. The parties agreed that the amount of attorneys fees and

expenses to be paid to Plaintiffs counsel shall be determined by the Court and that Plaintiffs

counsel would request the Court to award them fees in an amount not to exceed 33.33 percent of

the Total Principal Amount Owed, or $14,000,000, whichever amount is less, and their costs and

expenses incurred during the litigation, as well as incentive awards to Plaintiffs in an amount not

to exceed $10,000 each.

On July 15, 2013, the parties formally entered into a comprehensive written Settlement

Agreement. The Settlement Agreement provides for a nationwide settlement of Plaintiffs class

claims, with the proposed Settlement Class defined as:

all persons and entities in the United States who purchased over the road dieselfuel for commercial use in Class 7 and Class 8 vehicles (as Class 7 and Class 8are defined by the United States Department of Transportation) from DefendantsPilot Corporation and Pilot Travel Centers LLC d/b/a Pilot Flying J pursuant to adiesel fuel rebate program or discount program (which rebate or discount programis defined as a cost-plus and/or retail-minus discount program (not to includediscounts for payments made by cash, check, or major credit card at point ofsale)), or both, from January 1, 2008, to the Execution Date of this Agreement.

(Ex. 1 3, 32.) The key terms of the proposed settlement are:

Defendants shall pay 100% of the amount owed to each class member(thePrincipal)based on the audited results of Defendants Internal AuditingDepartment (Defendants Internal Auditor or DIA)investigation into thediesel fuel rebate and discount programs, plus in terest calculated at six percentof the Principal multiplied by the number of years (expressed in whole numbersor fractions of years) that have passed from the date that each original rebatepayment was made or discount credit was applied to the date on which thePrincipal is calculated, and minus any amount already paid to that class memberas part of Defendants voluntary payment program (id. 12, 29, 31, 41);

A court-approved independent accounting firm(Independent Accountant) willreview the work performed by members of DIA in calculating the compensationto be paid to class members in order to confirm, to a reasonable degree ofcertainty, that the work performed (1) properly identifies the class members whoare entitled to compensation and (2) accurately quantifies the amount of



6/27

6

compensation due. At the conclusion of its review, the Independent Accountantwill issue a report to the parties and this Court as to whether DIA met theaccuracy criteria specified in the Settlement Agreement (id. 20, 35-38);

Settlement payments will be mailed to class members within 30 days of theirpayments being finally calculated, although Defendants are not required to make

any payment prior to 30 days after the Court enters the Final Approval Order andJudgment (id. 41);

Because the results of the audit may conclude that some class members receivedproper discount or rebate amounts, and thus are not entitled to any settlementpayment, Defendants will inform those class members of the outcome of the auditprocess with an additional notice (see proposed Class Action Settlement Notice,attached to Joint Mot. as Ex. 2);

Any class member who disagrees with the results of DIAs investigation mayrequest that the Independent Accountant review the calculation, and if the classmember is not satisfied with the Independent Accountants determination, the

class member may retain its own accountant, at its sole cost and expense, andsubsequently file a motion with the Court to challenge the IndependentAccountants decision (Joint Mot. Ex. 1 40);

Defendants agree to be permanently enjoined from deliberately and deceptivelywithholding price rebates or discounts from customers in the United States whopurchase over the road diesel fuel for commercial use in Class 7 or Class 8vehicles, without the knowledge or approval of the customers, and which resultsin Pilot Flying J charging its customers a higher price for diesel fuel than theagreed-upon price (id. 46);

As a condition of the nationwide settlement, Defendants also have agreed to pay (1) the

costs of providing notice to the class (id. 45); (2) all fees and costs of the Class Administrator

for services rendered in performing the tasks assigned to the Class Administrator ( id.); (3)

attorneys fees and costs to Settlement Class Counsel in an amount to be approved by the Court,

but not to exceed 33.33 percent of the Total Principal Amount Owed or $14,000,000, whichever

is less (id. 58-59); and (4) incentive awards to the class representatives (id. 61). The

attorneys fees, costs, and expenses and the incentive awards are to be paid over and above any

payments to members of the Settlement Class and will not reduce the amount of any settlement

payments made to class members. (Id. 58.)



7/27

7

In exchange for the consideration described above, Plaintiffs and members of the

Settlement Class will release Defendants of all claims, actions, or causes of actions, whether

known or unknown, that Plaintiffs or class members may have for any act, omission, harm,

matter, cause, or event that has occurred at any time up to the Final Settlement Date(as that term

is defined in the Settlement Agreement) and relates to any error, omission, or act with respect to

Defendants diesel fuel sales or its rebate or discount program. (Id. 23, 72.) Also, upon entry of

a Final Approval Order and Judgment, this action will be dismissed with prejudice, and all

Released Claims (as defined in the Settlement Agreement) would be deemed conclusively settled

and resolved as to Plaintiffs and all Settlement Class members. (Id. 71.)

To be clear, by entering into the Settlement Agreement, Defendants do not make any

admission of wrongdoing or liability or of the truth of any of the claims or allegations contained

in the CAC. (See id. 80.)That being said, the benefits of an early settlement of this dispute are

clear. Defendants, therefore, respectfully request that this Court grant preliminary approval of the

parties proposed settlement and notice plan.

ARGUMENT

I. THE PROPOSED SETTLEMENT IS FAIR, REASONABLE, AND ADEQUATEA. Standards for Preliminary Approval of a Classwide SettlementThe federal judiciary has a strong policy of promoting and encouraging settlements

between litigating parties, and this is especially true in the class action context. See Schoenbaum

v. E.I. Dupont De Nemours & Co., No. 4:05CV01108ERW, 2009 WL 4782082, at *2 (E.D. Mo.

Dec. 8, 2009). A class action, however, may be settled on a class basis only with the Courts

approval. See Fed. R. Civ. P. 23(e) (The claims, issues, or defenses of a certified class may be

settled, voluntarily dismissed, or compromised only with the courts approval.). Approval is



8/27

8

appropriate if the proposed class settlement is fair, reasonable, and adequate, Fed. R. Civ. P.

23(e)(2), and not a product of collusion, Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d

96, 116 (2d Cir. 2005).

Courts consider four factors in determining whether a settlement is fair, reasonable, and

adequate: (1) the merits of the plaintiffs case weighed against the terms of the settlement; (2) the

defendants financial condition; (3) the complexity and expense of further litigation; and (4) the

amount of opposition to the settlement. In re Uponor, Inc., F1807 Plumbing Fitting

Prods.Liab.Litig., Nos. 122761 & 123179, 2013 WL 2450138, at *4 (8th Cir. June 7, 2013)

(citing Van Horn v. Trickey,840 F.2d 604, 607 (8th Cir. 1988)). The first factor is [t]he most

important consideration. Wireless Tel. Fed. Cost Recovery Fees Litig., 396 F.3d at 933.

Approval of a class settlement is a two-step process. SeeDryer v. Natl Football League,

CIV. 09-2182 PAM/AJB, 2013 WL 1408351, at *1 (D. Minn. Apr. 8, 2013). First, the Court

makes a preliminary determination on the fairness, reasonableness, and adequacy of the

settlement terms, and, if preliminarily approved, direct[s] the preparation of notice of the

certification, proposed settlement, and date of the final fairness hearing. Manual for Complex

Litigation (Fourth) 21.632 at 320-21 (2004). Second, after providing notice of the proposed

settlement to the class, the Court conducts a final fairness hearing (during which the parties may

present evidence and any objectors may appear) and enters a final approval order.Id. 21.634 at

322;Dryer, 2013 WL 1408351, at *1.The last of the Van Hornfactorsthe amount of settlement

oppositionis analyzed only at the final approval stage.Dryer, 2013 WL 1408351, at *1.

The fair, reasonable, and adequate standard is lowered at the preliminary approval

stage. Schoenbaum, 2009 WL 4782082, at *3. Preliminary approval is appropriate [i]f the

proposed settlement appears to be the product of serious, informed, non-collusive negotiations,



9/27


10/27

10

was applied.(Id. 41, 29.) Any class member who disputes the calculation may request that the

Independent Accountant review the calculationat Defendants expenseand, if that class

member is not satisfied with the Independent Accountants review, the class member may retain

its own accountant and file a motion to challenge the calculation. (Id. 40.)

Moreover, class members need not wait to receive their settlement checks until any

appeal of the settlement has been adjudicated; rather, Defendants will send class members their

settlement checks within 30 days ofDIAs calculating those amounts (or, at its discretion, within

30 days of the final settlement approval). (Id. 41.) And if this Court declines to approve the

Settlement Agreement or if the final approval is reversed on appeal, all Settlement Payments

already made will remain the property of the Class Members who received the Settlement

Payments. (Id. 47.) Still further, Defendants agree to be permanently enjoined from

withholding price rebates or discounts from its customers without their knowledge or approval.

(Id. 46.)

In other words, all class members who are entitled to compensation will receive more

than what they are owed, do not have to wait for a lengthy litigation process to receive their

compensation, and can retain the money even if the settlement ultimately falls through. And class

members will receive these benefits without incurring any costs of administration or attorneys

fees. (Joint Mot. Ex. 1 58.) Class members who received the proper rebate or discount amounts

in the ordinary course of business will be notified of this fact (id. Ex. 2 at 2), and they will be

given an opportunity to challenge the auditors decision (id. Ex. 1 40).

This is especially fair in light of the substantial risks that Plaintiffs would face if they

were forced to litigate this class action through trial. If not approved, Defendants intend to

vigorously litigate this case, including filing motions to dismiss and for summary judgment and



11/27

11

opposing class certification. Extensive litigation, including a class certification hearing, trial, and

one or more appeals, would expend significant time and resources for each party and the Court.

The complexities and uncertainties of this type of complex litigation in general, and of this case

in particular, dictate that Plaintiffs settle and compromise in a way that will immediately provide

them and the class with concrete, certain benefits. Cf.Air Line Stewards & Stewardesses Assn v.

Am. Airlines, Inc., 455 F.2d 101, 109 (7th Cir. 1972) ([T]he public interest may indeed be

served by a voluntary settlement in which each side gives ground in the interest of avoiding

litigation.).

Several key facts cast significant doubt on whether this action would be properly

maintainable as a class action for trial purposes and make it unlikely that Plaintiffs would

succeed on the merits of a classwide trial using common, classwide proof. For instance,

according to the CACs allegations, Defendants fraudulent scheme targeted only

unsophisticated customers while Pilot Flying J continued to properly pay its sophisticated

customers the rebates and discounts they were owed. (CAC 38-41, 46.) If Plaintiffs theory is

correct, only those class members who were targeted by the scheme have been injured and

suffered damagesand, thus, have potentially viable claims. Because Rule 23 cannot be used to

alter the nature of a plaintiffs claims, at least a significant portion of the class cannot succeed on

the merits. Plaintiffs also maybe unable to prove fact of injury and damages with common,

classwide evidence, thus making it unlikely that any class-action trial would be manageable,

efficient, and fair, all as required by Federal Rule of Civil Procedure 23(b)(3). See Comcast

Corp. v. Behrend, 133 S. Ct. 1426, 1432-33 (2013).

The CAC also seeks recovery for common-law claims of fraud, fraudulent concealment,

breach of contract, conversion, and unjust enrichment and for violations of the consumer



12/27

12

protection laws of the 50 states and the District of Columbia, on behalf of a nationwide class of

Defendants customers. If this lawsuit were to proceed to trial as a nationwide class action,

however, the Court would be required to instruct the jury on the laws of up to 50 different states.

This would result in a complex, unmanageable trial or, more likely, an inefficient series of state-

by-state trials.

In contrast, the proposed settlement provides immediate compensation to the customers

who did not receive their agreed-upon diesel fuel rebates and discounts, while also permanently

enjoining Defendants from withholding price rebates and discounts in the futurerelief that the

CAC specifically seeks. Importantly, the proposed settlement will relieve the parties and this

Court of the inefficiencies and costs of litigating this putative class action. See DeBoer, 64 F.3d

at 1178 (The parties to a class action are not required to incur immense expense before settling

as a means to justify that settlement.); Telectronics, 137 F. Supp. 2d at 1013 ([A]bsent a

settlement, there would no doubt be substantial time and expense devoted to motion practice,

likely appeals from those motions, multiple trial preparations, trials, and appeals from trials.).

Simply put, this settlement ensures class members are made (more than) whole without the time

and expense of complex litigation. Thus, the Settlement Agreement is objectively fair,

reasonable, and adequate to the class and qualifies for preliminary approval.

B. The Settlement Was Reached Through Good-Faith BargainingAn important factor relevant to the fairness determination is whether the settlement was

reached through good-faith bargaining among the parties. See Wal-Mart Stores, Inc., 396 F.3d at

116 (noting that a presumption of fairness, adequacy, and reasonableness may attach to a class

settlement reached in arms-length negotiations between experienced, capable counsel);In re

Currency Conversion Fee Antitrust Litig., 263 F.R.D. 110, 122 (S.D.N.Y. 2009) (Where a



13/27

13

settlement is the product of arms length negotiations conducted by experienced counsel

knowledgeable in complex class litigation, the negotiation enjoys apresumption of fairness). In

this case, the settlement was reached after substantial good-faith bargaining. Specifically, after

two months of negotiations and multiple rounds of offers and counter-offers, the parties agreed

on the settlements essential terms on July 13, 2013. It was only after this agreement as to the

class members benefits did the parties negotiate a reasonable amount of attorneys fees to be

requested by Settlement Class Counsel.

The agreement also was negotiated between experienced, capable counsel. See, e.g.,

DeBoer, 64 F.3d at 1178 (noting that the settling parties views as to the propriety of the

settlement are entitled to some weight and affirming class settlement where class counsel is

experienced in this type of litigation). For instance, Don Barrett, the lead negotiating attorney

for Plaintiffs, is one of the preeminent trial lawyers in America and has significant experience in

complex, class-action litigation, including as lead counsel for the plaintiffs in Cox v. Shell Oil

Co., a class-action case that resulted in the largest property-damage class settlement in the United

States, and as a principal negotiator for the plaintiff class in In re Inter-Op Hip Prosthesis

Liability Litigation, MDL No. 1401, in which he negotiated a $1.045 billion class settlement with

the defendants. See http://barrettlawgroup.com. Similarly, lead defense counsel Aubrey Harwell

has more than four decades of commercial litigation experience, including in many cases

receiving national attention.Seehttp://www.nealharwell.com/attorneys/aubrey-b-harwell-jr.

Neither the substantive terms of the Settlement Agreement nor its provisions regarding

attorneys fees and costs indicate that the Settlement Agreement is the product of fraud,

collusion, or Plaintiffs ortheir attorneysabandonment of the class interests. Thus, this factor

favors preliminary approval of the proposed settlement.



14/27

14

C. The Settlement Agreement Provides for a Formal Fairness HearingThe Settlement Agreement provides for a formal Fairness Hearing. (Joint Mot. Ex. 1

69.) At the Fairness Hearing, the Court will consider, among other things, whether to grant

final approval of the certification of the Settlement Class and the terms of the Settlement

Agreement, whether to grant Settlement Class Counsels request for attorneys fees and costs and

for an incentive awards to Plaintiffs, as well as any objections to the settlement or Settlement

Class Counsels fee request. (Id. 68.) To ensure that class members may exclude themselves

from the settlement or object to the settlement, the Settlement Agreement provides for mailed

notice to all class members. (Id. 51.) It also requires the Class Administrator to maintain an

Internet website with information about the settlement and requires Pilot Flying J to issue a press

release announcing the settlement through a national news wire service.(Id.)Given the substantial

media interest in and coverage of the putative class actions filed against Defendants to date, the

parties anticipate that the press release will generate substantial media coverage of the

settlement. These settlement notice provisions satisfy [t]he essence of procedural due

process . . . that the parties be given notice and opportunity for a hearing. Jones v. Nuclear

Pharm., Inc., 741 F.2d 322, 325 (10th Cir. 1984);see also Telectronics, 137 F. Supp. 2d at 1027.

II. THE COURT SHOULD CERTIFY THE SETTLEMENT CLASSThe Federal Rules of Civil Procedure allow a case to be certified as a class action only if

the action satisfies all four requirements of Rule 23(a)numerosity, commonality, typicality,

and adequacyand at least one of the three categories in Rule 23(b). These requirements apply

when a class is proposed to be certified for settlement purposes. See Amchem Prods., Inc. v.

Windsor, 521 U.S. 591, 617 (1997) (holding that requests for settlement-only class certification

are subject to Rule 23s certification requirements); Simmons v. Enter. Holdings, Inc., No.



15/27

15

4:10CV00625 AGF, 2012 WL 718640, at *1 (E.D. Mo. March 6, 2012) ([T]his Court may,

upon request of the parties, certify a class solely for purposes of settlement after making a

determination that the proposed class satisfies the criteria set out in Rule 23(a) and at least one of

the subsections of Rule 23(b). (internal quotation marks, citation omitted)).In the context of

settlement, Rules 23(a) and (b) continue to serve the purpose of focus[ing] court attention on

whether a proposed class has sufficient unity so that absent members can fairly be bound by

decisions of class representatives.In re AIG, Inc. Sec. Litig., 689 F.3d 229, 239 (2d Cir. 2012)

(quotingAmchem, 521 U.S. at 621) (alteration in original).

In Amchem, the Supreme Court held that a trial court may consider the settlement in

determining whether Rule 23 is satisfied because [s]ettlement is relevant to class certification.

521 U.S. at 619.A district court [c]onfronted with a request for settlement-only class

certification . . . need not inquire whether the case, if tried, would present intractable

management problems, for the proposal is that there be no trial. Id.at 620;see also Sullivan v.

DB Investments, Inc., 667 F.3d 273, 335 (3d Cir. 2011) (Scirica, concurring) (A key question in

a litigation class action is manageabilityhow the case will or can be tried, and whether there

are questions of fact or law that are capable of common proof. But the settlement class presents

no management problems because the case will not be tried.).

As briefly described above, this action likely could not be properly certified as a national

class action for trial purposes because of the differences in experiences among the class members

and the variations among the state laws at issue. Because the parties are requesting certification

of a settlement class, not a trial class, the proposed settlement, if approved, means that there

would not be a trial and that the many case-management problems that could plague a trial class



16/27

16

would not arise. Thus, Defendants are willing to stipulate, for settlement purposes only, that the

proposed Settlement Class complies with Rule 23(a)s and (b)(3)s certification requirements.

A. Rule 23(a) Is Satisfied for Settlement Purposes1. The Settlement Class Is So Numerous That Joinder of All Members Is

Impracticable

The first prerequisite to class certification is that the class be so numerous that joinder of

all members is impracticable. Fed. R. Civ. P. 23(a)(1). Although . . . no arbitrary rules regarding

the necessary size of classes have been established, the plaintiff bears the burden of establishing

that numerosity does exist.Belles v. Schweiker, 720 F.2d 509, 515 (8th Cir.1983)).Based on the

information available to date, Defendants believe there are more than 4,000 Pilot Flying J

customers who would fall within the Settlement Class. For purposes of effecting the settlement,

Defendants stipulate that the numerosity requirement is satisfied.

2. There Are Questions of Law or Fact Common to All Class Membersfor Settlement Purposes

The second prerequisite to class certificationthe commonality requirementis that

there be questions of law or fact common to the class. Fed. R. Civ. P. 23(a)(2).The

commonality requirement is satisfied where the plaintiffs claims depend on a common

contention that is capable of classwide resolutionwhich means that determination of its truth

or falsity will resolve an issue that is central to the validity of each one of the claims in one

stroke. Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011). A single common

question is sufficient to establish Rule 23(a)(2).Id. at 2556.

For purposes of effecting the settlement, Defendants stipulate to the existence of

questions of law or fact common to all members of the proposed Settlement Class, including

whether Defendants withheld agreed-upon rebates and discounts from class members.



17/27

17

3. The Typicality Requirement Is Satisfied for Settlement PurposesThe third prerequisite to class certification is that Plaintiffs claims be typical of the

claims of the class. Fed. R. Civ. P. 23(a)(3). Typicality focuses on whether other class members

have claims similar to the named plaintiff,DeBoer, 64 F.3d at 1174, and is generally considered

to be satisfied if the claims or defenses of the representatives and the members of the class stem

from a single event or are based on the same legal or remedial theory,Ginardi v. Frontier Gas

Servs., LLC, No. 4:11-CV-00420-BRW, 2012 WL 1377052, at *2 (E.D. Ark. Apr. 19, 2012)

(quotingPaxton v. Union Natl Bank, 688 F.2d 552, 561-62 (8th Cir.1982)).

For purposes of effecting the settlement, Defendants stipulate that Plaintiffs claims are

typical of the claims of the Settlement Class. Plaintiffs allege that they have been damaged by

the same conduct that allegedly damaged other members of the Settlement Class: Defendants

alleged scheme to wrongfully withhold or reduce agreed-upon fuel discounts and rebates.

Moreover, the claims of Plaintiffs and other members of the Settlement Class are based upon

corresponding theories, such as fraud, fraudulent concealment, breach of contract, unjust

enrichment, conversion, and violations of RICO and other statutes. For purposes of the

settlement, Plaintiffs claims are not in conflict with or antagonistic to the claims of the

Settlement Class as a whole.

4. Plaintiffs Will Fairly and Adequately Protect the Settlement ClassInterests

The fourth prerequisite is that Plaintiffs and their attorneys be able to fairly and

adequately represent the interests of the class. Fed. R. Civ. P. 23(a)(4). The focus of Rule

23(a)(4) is whether: (1) the class representatives have common interests with the members of the

class, and (2) whether the class representatives will vigorously prosecute the interests of the class



18/27

18

through qualified counsel. Garner v. Butterball, LLC, No. 4:10CV01025 JLH, 2012 WL

570000, at *4 (E.D. Ark. Feb. 22, 2012) (quotingPaxton, 688 F.2d at 562-63).For purposes of

effecting the settlement, Defendants stipulate that Plaintiffs will fairly, fully, and adequately

protect the interests of the Settlement Class. Defendants are not aware of any interests Plaintiffs

or their counsel may have that would conflict with, or be adverse to, those of the class. There

also is no dispute that Settlement Class Counsel is experienced in prosecuting class litigation.

B. The Class Satisfies Rule 23(b)(3) for Settlement PurposesRule 23(b)(3) allows a class action to be maintained if the court finds that the questions

of law or fact common to class members predominate over any questions affecting only

individual members, and that a class action is superior to other available methods for fairly and

efficiently adjudicating the controversy. Fed. R. Civ. P. 23(b)(3). To satisfy the

predominance standard, plaintiffs must show that [various elements] can be proven on a

systematic, class-wide basis. Blades v. Monsanto Co., 400 F.3d 562, 569 (8th Cir. 2005).The

predominance and superiority inquiries will sometimes be easier to satisfy in the settlement

context,AIG Sec. Litig.,689 F.3d at 240, because the court need not inquire whether the case, if

tried, would present intractable management problems,Amchem,521 U.S. at 620.

For purposes of effecting the settlement, Defendants stipulate to the existence of

predominant questions of law and fact common to all members of the proposed Settlement Class

based on Plaintiffs allegations that Defendants engaged in a scheme to withhold or reduce

agreed-upon rebates and discounts from certain class members for the purpose of increasing Pilot

Flying Js profitability and its employees sales commissions.1 Defendants further stipulate, for

1 To the extent Plaintiffs seek certification for settlement purposes under Rule 23(b)(2),Defendants will stipulate, for purposes of effecting the settlement only, that the Settlement Class



19/27

19

the purpose of this settlement, to the superiority of the Settlement Class and the Settlement

Agreement over continued litigation. As described above, the settlement will provide all injured

class members with full, immediate compensation and ensures that Defendants do not engage in

the alleged wrongful conduct in the future. The settlement also relieves class members from

engaging in time consuming, costly litigation.

To be sure, Plaintiffs allege violations of all 50 states deceptive trade practices

statutes, as well as various common-law claims that likely would have to be adjudicated under

the laws of class members respective home states. See Phillips Petrol. Co. v. Shutts, 472 U.S.

797, 821 (1985). Although adjudication under the laws of up to 50 states would make

certification for trial difficult, state-law differences will not defeat a finding of predominance for

a nationwide settlement class. See In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 530 (3d

Cir. 2004) (the fact that there may be variations in the rights and remedies available to injured

class members under the various laws of the fifty states in this matter does not defeat

commonality and predominance); accord In re Ky. Grilled Chicken Coupon Mktg.& Sales Prac.

Litig., 208 F.R.D. 364, 385 (N.D. Ill. 2011);In re AT&T Mobility Wireless Data Servs. Sales Tax

Litig., 789 F. Supp. 2d 935, 974 (N.D.Ill. 2011)); In re Heartland Payment Sys., Inc. Customer

Data Sec. Breach Litig., 851 F. Supp. 2d 1040, 1059 (S.D. Tex. 2012). This is so because the

same concerns with regards to case manageability that arise with litigation classes are not present

with settlement classes, and thus those [state-law] variations are irrelevant to certification of a

settlement class. Warfarin Sodium, 391 F.3d at 529; see also Gotthelf v. Toyota Motor Sales,

U.S.A., Inc., 2013 WL 2169403, at *6 n. 13 (3d Cir. May 21, 2013).

satisfies Rule 23(b)(2). See DeBoer, 64 F.3d at 1175 (noting that [i]f the Rule 23(a)prerequisites have been met and injunctive or declaratory relief has been requested, the actionusually should be allowed to proceed under subdivision (b)(2)).



20/27

20

Nor does the fact that the individualized questions of injury and damages preclude

certification of the proposed Settlement Class. Although the presentation of individualized proofs

of injury and damages would make a class trial unmanageable and inefficient, that same concern

is not present with settlement classes. See, e.g.,In re Oil Spill by Oil Rig Deepwater Horizon in

Gulf of Mex., on April 20, 2010, 910 F. Supp. 2d 891, 924 (E.D. La. 2012) ([C]ertain causation

issues remain that would have to be decided on an individual basis were the cases not being

settled. . . . These limited individualized issues do not defeat predominance in light of the core

common issues that are appropriate for classwide treatment.). To the contrary, the Settlement

Agreement directly resolves issues of injury and damages: DIA will continue to determine

amounts owed to class members based on non-payments or underpayments, if any; the

Independent Accountant will verify this auditing procedure; and class members may object to

their findings. Because this proposed resolution of injury and damages questions will not pose

any management concerns to the Settlement Class, common issues predominate in this

settlement class. See, e.g.,In re FEMA Trailer Formaldehyde Prod. Liab. Litig., No. 2:07-MD-

1873, 2012 WL 4513344, at *3 (E.D. La. Sept. 27, 2012) (finding predominance where, inter

alia,the Settlement sufficiently addresses issues of product identification, causation, injury and

damages, which otherwise would be considered individual in a litigated class).

Accordingly, the Rule 23(a) and (b) requirements for certification of the proposed

Settlement Class are satisfied, and that class should be certified here.

III. THE NOTICE AND DISTRIBUTION PLAN ARE REASONABLENotice of a class action settlement must be reasonably calculated, under all of the

circumstances, to apprise interested parties of the pendency of the action and afford them an

opportunity to present their objections.Grunin v. Intl House of Pancakes, 513 F.3d 114, 120



21/27

21

(8th Cir. 1975) (quoting Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314

(1950)). In addition, the notice must reasonably . . . convey the required information and

afford a reasonable time for those interested to make their appearance.Id. (citations omitted).

Because Rule 23(e) only provides that notice be given in such manner as the court directs,the

mechanics of the notice process are left to the discretion of the court subject only to the broad

reasonableness standards imposed by due process.Id. at 121. Those standards are met here.

The parties have submitted a proposed Settlement Notice (attached to the Joint Motion as

Exhibit 2) and a plan for its dissemination by direct mail to members of the Settlement Class

following utilization of a National Change of Address database to ensure that the addresses on

file are as accurate as possible. (Joint Mot. Ex. 1 53.) The Class Administrator will send the

Settlement Notice, by first-class United States Mail, to every member of the Settlement Class

whose address is known to Defendants. (Id.) The Class Administrator also will make the

Settlement Notice available on an Internet website that will provide basic information regarding

the Settlement. (Id.)

The proposed Settlement Notice states concisely and in plain language (1) the nature of

the action, (2) the definition of the certified class, (3) the class claims, issues or defenses, (4) that

a class member may enter an appearance through an attorney if the member so desires, (5) that

the Court will exclude from the class any member who requests exclusion, (6) the time and

manner for requesting exclusion, and (7) the binding effect of a class judgment on members

under Rule 23(c)(3) and the terms of the releases. The content of the notice therefore complies

with Rule 23(c)(2)(B).

Due process also requires that a settlement notice contains a description of class

members rights in the litigation and informs class members that they have an opportunity to be



22/27

22

heard and to participate in the litigation, whether in person or through counsel, and an

opportunity to present objections to the settlement. See Shutts, 472 U.S. at 811-12. The parties

proposed Settlement Notice meets these additional due process requirements. (See Ex. 2.)

CONCLUSION

For all these reasons, Defendants Pilot Corporation and Pilot Travel Centers LLC

respectfully request that the Court grant preliminary approval of the parties proposed settlement

and approve the proposed notice to the class. A proposed form of order is submitted as Exhibit 3

to the parties Joint Motion.

Dated: July 16, 2013.



23/27

23

Respectfully submitted,

/s/ Aubrey B. Harwell, Jr.Aubrey B. Harwell, Jr.Aubrey B. Harwell, III

George H. Cate IIINeal & Harwell, PLC150 Fourth Avenue, North, Suite 2000Nashville, TN 37219Telephone: (615) 244-1713Facsimile: (615) 726-0573Email: [email protected] FOR DEFENDANTS PILOT

CORPORATION and PILOT TRAVELCENTERS LLC

/s/ Glenn KurtzGlenn KurtzGreg StarnerJosh WeedmanWhite & Case LLP1155 Avenue of the AmericasNew York, NY 10036Telephone: (212) 819-8200E-mail: [email protected] FOR DEFENDANTS PILOT

CORPORATION and PILOT TRAVELCENTERS LLC

/s/ Michael T. WilliamsJames E. HooperMichael T. WilliamsWheeler Trigg ODonnell LLP370 Seventeenth Street, Suite 4500Denver, CO 80202Telephone: (303) 244-1800Facsimile: (303) 244-1879

E-mail: [email protected] FOR DEFENDANTS PILOTCORPORATION and PILOT TRAVEL

CENTERS LLC

mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


24/27

24

CERTIFICATE OF SERVICE

I hereby certify that on this 16th day of July, 2013, I electronically filed the foregoing

with the Clerk of the Court using the CM/ECF system, which shall serve the following:

Don Barrett (MS Bar No. 2063)Barrett Law Group, P.A.404 Court Square NorthLexington, MS 39095-0927Telephone: (662) 834-9168Facsimile: (662) 834-2628Email: [email protected]

ATTORNEY FOR BRUCE TAYLOR

Michael L. RobertsRoberts Law Firm, P.A.20 Rahling CirclePO Box 241790Little Rock, AR 72223-1790Telephone: (501) 821-5575Facsimile: (501) 821-4474Email: [email protected] FOR NATIONAL TRUCKING FINANCIAL RECLAMATION

SERVICES, LLC

Thomas P. Thrash (AR Bar No. 80147)Thrash Law Firm, P.A.1101 Garland StreetLittle Rock, AR 72201Telephone: (501) 374-1058Facsimile: (501) 374-2222Email: [email protected] FOR NATIONAL TRUCKING FINANCIAL RECLAMATION

SERVICES, LLC

Ben BarnowSharon A. HarrisErich P. SchorkBlake A. StrautinsBarnow & Associates, P.C.1 North LaSalle Street, Suite 4600Chicago, IL 60602

mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


25/27

25

Telephone: (312) 621-2000Email: [email protected] FOR EDIS TRUCKING, INC.

Shpetim Ademi

John D. BlythinAdemi & OReilly, LLP3620 E. Layton AvenueCudahy, WI 53110Telephone: (414) 482-8000Email: [email protected] FOR EDIS TRUCKING, INC.

Richard L. CoffmanThe Coffman Law Firm505 Orleans, Suite 505

Beaumont, TX 77701Telephone: (409) 833-7700Facsimile: (866) 835-8250Email: [email protected] FOR EDIS TRUCKING, INC.

G. Robert Blakey7002 East San Miguel Ave.Paradise Valley, AZ 85253ATTORNEY FOR EDIS TRUCKING, INC.

Dewitt M. LovelaceLovelace Law Firm, P.A.12870 US HWY 98 W STE 200Miramar Beach, FL 32550Telephone: (850) 837-6020Facsimile: (805) 837-4093Email: [email protected] JERRY FLOYD

Richard R. BarrettLaw Office of Richard R. Barrett, PLLC1223 Jackson Ave., Suite 203Oxford, MS 38655Telephone: (662) 307-7000Facsimile: (866) 430-5459Email: [email protected] FOR MIKE CAMPBELL



26/27

26

William E. HoeseKohn, Swift, & Graf, P.C.One S. Broad Street, Suite 2100Philadelphia, PA 19107-3304Telephone: (215) 238-1700

Facsimile: (215) 238-1968Email: [email protected] FOR MIKE CAMPBELL

Elizabeth A. AlexanderMichael W. SobolKenneth S. ByrdLieff, Cabraser, Heimann & Bernstein, LLPOne Nashville Place150 Fourth Avenue, N, Suite 1650Nashville, TN 37219-2423

Telephone: (615) 313-9000Facsimile: (615) 313-9965Email: [email protected] FOR PAUL OTTO

Charles F. BarrettBarrett & Associates, P.A.6518 Highway 100, Suite 210Nashville, TN 37205Telephone: (615) 515-3393Facsimile: (615) 515-3395Email: [email protected] FOR PAUL OTTO

Daniel E. Becnel , Jr.Becnel Law Firm, LLC106 W. Seventh St.P. O. Drawer HReserve, LA 70084Telephone: (985) 536-1186Email: [email protected] FOR TOWNES TRUCKING, INC.



27/27

27

Michael HausfeldHausfeld LLP1700 K Street NW, Suite 650Washington, DC 20006Telephone: (202) 540-7200

Facsimile: (202) 540-7201Email: [email protected] FOR R&R TRANSPORTATION, INC.

/s/ Ronald G. Harris

mailto:[email protected]:[email protected]

pilot's memorandum in support of the joint motion for preliminary approval of class settlement and...

Documents