Case: 2:14-cv ART Doc #: 56 Filed: 11/14/14 Page: 1 of 13 - Page ID#: 1100

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1 Case: 2:14-cv ART Doc #: 56 Filed: 11/14/14 Page: 1 of 13 - Page ID#: 1100 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF KENTUCKY IN RE: PILOT FLYING J REBATE : MDL Docket No LITIGATION : : Judge Amul R. Thapar : HB Logistics, LLC, : : Plaintiff, : Case No. 2:14-cv ART : v. : Judge Amul R. Thapar : Pilot Corporation, : : Defendant. : PLAINTIFF HB LOGISTICS, LLC S CIVIL BILL OF PARTICULARS Per this Court s order of October 31, 2014, Plaintiff HB Logistics, LLC ( HB ) submits the following Civil Bill of Particulars to summarize the claims alleged in HB's Second Amended Complaint, filed on November 14, Per the Court's instruction, since a Second Amended Complaint has been filed by HB, this document is a summary of the allegations supporting HB's Second Amended Complaint and does not constitute an amendment to HB's pleading. See HB's Second Amended Complaint for full details of the allegations, and reasonable inferences, supporting HB's claims. CHOICE OF LAW In general, a federal court sitting in diversity must apply the choice of law rules of the state in which it sits. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). When a case has been transferred from another court, however, the transferee court must apply the

2 Case: 2:14-cv ART Doc #: 56 Filed: 11/14/14 Page: 2 of 13 - Page ID#: 1101 choice-of-law rules of the state in which the action was originally filed. See Ferens v. John Deere Co., 494 U.S. 516, 523 (1990); Van Dusen v. Barrack, 376 U.S. 612, 639 (1964) ( [T]he transferee district court must be obligated to apply the state law that would have been applied if there had been no change of venue. ). HB Logistics s suit was initially filed in Alabama. Accordingly, Alabama s choice-oflaw rules apply to HB Logistics s claims. A. Under Alabama s Choice-of-Law Rules, Alabama s Substantive Law Applies to HB s Claims. Alabama follows the traditional conflict-of-law principles of lex loci contractus and lex loci delicti. Lifestar Response of Ala., Inc. v. Admiral Ins. Co., 17 So. 3d 200, 213 (Ala. 2009). That is, contracts are governed by the law of the jurisdiction within which the contract is made, and tort claims are resolved according to the law of the state where the injury occurred. Id. Under these principles, HB Logistics s claims are governed by Alabama s substantive law. HB Logistics is organized in Alabama, and its principal place of business is located in the state. Moreover, its predecessors in interest, McGriff Transportation, Inc. and McGriff Logistics, Inc., were also based in Alabama. These parties contracts with Defendant were made in Alabama, and Defendant s actions harmed HB Logistics in Alabama. For those reasons, both lex loci contractus and lex loci delicti call for the application of Alabama law to these claims. B. HB's Claims HB has asserted the following claims: (1) Fraudulent Misrepresentation - Count One; (2) Breach of Contract - Count Two; (3) Violation of Tennessee's Consumer Protection Act - Count Three; (4) Unjust Enrichment - Count Four; (5) Negligent Misrepresentation - Count Five; and Suppression - Count Six.

3 Case: 2:14-cv ART Doc #: 56 Filed: 11/14/14 Page: 3 of 13 - Page ID#: 1102 Choice of Law: Alabama Fraudulent Misrepresentation (Count I) Elements: "The elements of the tort of fraudulent misrepresentation are (1) a false representation (2) regarding a material existing fact, (3) which the plaintiff relies upon, and (4) damages proximately caused by the misrepresentation. Smith v. J.H. Berry Realty Co., 528 So. 2d 314, 316 (Ala. 1988). Facts: 1. A false representation a. On or around February 2010, John Freeman, working as an agent for Defendant, met with the President of HB, Clay Halla. At this meeting, John Freeman specifically told Mr. Halla that HB would receive cost plus $0.025 per gallon and that this was the discount of McGriff, which was being acquired by HB. Both statements were false. b. Beginning in July 2011, HB was to receive rebates of $0.06 per gallon from Defendant, but HB never received the rebates through January c. Defendant would send HB, and previously McGriff, periodic invoices for the diesel fuel purchased on credit, and the invoices were false. d. The agreed upon discount amounts should have been applied to the invoices sent to HB, and previously McGriff. e. Each and every periodic invoice sent to HB, and previously McGriff, was a separate and distinct false misrepresentation and many, if not all of these invoices, contained multiple false misrepresentations as to the amount of discounts owed to HB. 2. Regarding a material existing fact a. One material existing fact was that HB was going to receive cost plus $0.025 per gallon. However, Defendant and John Freeman never intended to give HB such a cost plus when this statement was made and, in fact, did not give HB cost plus $0.025 per gallon. b. Another material existing fact was that HB was supposed to receive rebate checks of $0.06 per gallon. However, Defendant intentionally and fraudulently withheld those rebates. c. Another material existing fact was that the discounts reflected in the periodic invoices were supposed to be accurate and correct. However, Defendant intentionally and fraudulently misrepresented the amount of the discounts on every single periodic invoice and concealed the fact from HB. d. Another material fact is that Defendant was overcharging HB for additional components that were not agreed to. e. The FBI Affidavit supports the fact that Defendant s had an intent to deceive HB.

4 Case: 2:14-cv ART Doc #: 56 Filed: 11/14/14 Page: 4 of 13 - Page ID#: Reliance by the plaintiff a. HB relied on these misrepresentations to their detriment by purchasing its volume of diesel fuel from Defendant, as opposed to any of its competitors. b. In reliance on Defendant s false misrepresentations, HB agreed to do business with Defendant. c. In reliance on Defendant s false misrepresentations, HB agreed to purchase a large percentage of its diesel fuel from Defendant, instead of purchasing the diesel fuel from Defendant s competitors. 4. Damages proximately caused by misrepresentation a. Defendant s false misrepresentations caused damages to HB in the form of withheld discounts owed to HB, including interest, penalties, punitive damages, lost opportunity, debt obligations incurred and any other damages allowable by law.

5 Case: 2:14-cv ART Doc #: 56 Filed: 11/14/14 Page: 5 of 13 - Page ID#: 1104 Choice of Law: Alabama Breach of Contract (Count Two) Elements: Under Alabama law, a claim for breach of contract has the following elements: (1) a valid contract binding the parties; (2) the plaintiffs performance under the contract; (3) the defendant's nonperformance; and (4) resulting damages. Reynolds Metals Co. v. Hill, 825 So. 2d 100, (Ala. 2002) (citing State Farm Fire & Cas. Co. v. Slade, 747 So.2d 293, 303 (Ala. 1999)). Facts: 1. A valid contract binding the parties a. On or around February 2010, John Freeman, working as an agent for Defendant, met with the President of HB, Clay Halla. At this meeting, John Freeman specifically offered to Mr. Halla pricing for diesel fuel of cost plus $0.025 per gallon and that this was the discount of McGriff, which was being acquired by HB. HB accepted the offer and agreed to purchase diesel fuel from Defendant. b. Beginning in July 2011, HB was offered rebates of $0.06 per gallon from Defendant, but HB never received the rebates through January HB accepted the offer and agreed to purchase diesel fuel from Defendant. c. McGriff had a previous valid and binding agreement with Defendant that also was not honored. 2. Plaintiffs performance under the contract a. Based on the Agreement, HB agreed to do business with the Defendant at their various locations. b. HB performed under the Agreement by purchasing a large percentage of its diesel fuel from Defendant on credit extended by Defendant. 3. Defendant s nonperformance a. Defendant would send HB periodic invoices for the diesel fuel purchased on credit. b. The agreed upon discount amounts should have been applied to the invoices sent to HB. c. The Defendant intentionally and deceptively reduced the discounts owed to HB, per the Agreement. d. Unbeknownst to HB, the Defendant s executives, directors, principles, sales agents, and administrative staff were intentionally breaching the contract. e. Defendant reduced the amount of discounts owed under the Agreement and charged for other components that were not agreed to.

6 Case: 2:14-cv ART Doc #: 56 Filed: 11/14/14 Page: 6 of 13 - Page ID#: Resulting damages a. HB has been damaged as a result of the breach of contract. b. The resulting damages are the amount of discounts owed under the Agreement that were withheld, including interest, penalties, lost opportunities, debt obligations incurred and any other damages allowable by law.

7 Case: 2:14-cv ART Doc #: 56 Filed: 11/14/14 Page: 7 of 13 - Page ID#: 1106 Violation of Tennessee s Consumer Protection Act (Count Three) Choice of Law: Tennessee. Elements: The following unfair or deceptive acts or practices affecting the conduct of any trade or commerce are declared to be unlawful and in violation of this part:... (5) Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits or quantities that they do not have or that a person has a sponsorship approval, status, affiliation or connection that such person does not have;... (9) Advertising goods or services with intent not to sell them as advertised; [or] (11) Making false or misleading statements of fact concerning the reasons for, existence of, or amounts of price reductions.... Tenn. Code Ann (b). Facts ( (b)(5): 1. Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation or connection that such person does not have a. Defendant represented that the diesel fuel had the benefits of certain discounts that were not provided to HB. b. Defendant stated that the diesel fuel would be sold for cost plus $0.025 per gallon and Plaintiff did not receive this benefit. c. Defendant stated tha the diesel fuel would be sold for retail minus $0.06 per gallon and Plaintiff did not receive this benefit. Facts ( (b)(9): 1. Advertising goods or services with intent not to sell them as advertised Facts ( (b)(11): a. Defendant was offering to sell diesel fuel without an intention of selling it at the discounted prices advertised. b. Defendant did not intend to sell the diesel fuel for cost plus a fixed fee as advertised. Defendant intended to sell the diesel fuel for cost plus additional fees, such as freight charges, without including such components in advertisements. c. An advertis 1. Making false or misleading statements of fact concerning the reasons for, existence of, or amounts of price reductions a. Defendant made false and misleading statements concerning the existence or amounts of price reductions.

8 Case: 2:14-cv ART Doc #: 56 Filed: 11/14/14 Page: 8 of 13 - Page ID#: 1107 b. Defendant stated that the diesel fuel would be sold for cost plus $0.025 per gallon and Plaintiff did not receive this price reduction. It did not exit. c. Defendant stated tha the diesel fuel would be sold for retail minus $0.06 per gallon and Plaintiff did not receive this price reduction. It did not exist.

9 Case: 2:14-cv ART Doc #: 56 Filed: 11/14/14 Page: 9 of 13 - Page ID#: 1108 Unjust Enrichment (Count IV) (Alternative to Breach of Contract Claim) Choice of Law: Alabama law governs this claim. Elements: To prevail on a claim of unjust enrichment under Alabama law, a plaintiff must show that: (1) the defendant knowingly accepted and retained a benefit, (2) provided by another, (3) who has a reasonable expectation of compensation. Portofino Seaport Vill., LLC v. Welch, 4 So. 3d 1095, 1098 (Ala. 2008). Facts: 1. Defendant knowingly accepted and retained a benefit a. Defendant knowingly retained a benefit by not providing discounts and rebates and by charging for components that were never agreed to. 2. Provided by another a. HB overpaid Defendant. 3. Who has reasonable expectation of compensation a. HB's expection of compensation is reasonable. Defendant promised the discounts to facilitate greater fuel purchases from Defendant.

10 Case: 2:14-cv ART Doc #: 56 Filed: 11/14/14 Page: 10 of 13 - Page ID#: 1109 Choice of Law: Alabama Negligent Misrepresentation (HB Logistics Count V) Elements: Under Alabama law, negligent misrepresentation is a subtype of the claim of misrepresentation, the elements of which are: 1) a misrepresentation of material fact, 2) made willfully to deceive, recklessly, without knowledge, or mistakenly, 3) which was justifiably relied on by the plaintiff under the circumstances, and 4) which caused damage as a proximate consequence. Bryant Bank v. Talmage Kirkland & Co., No , So.3d, 2011 WL , at *7 (Ala. May 23, 2014); see also Ala. Code Facts: 1. Misrepresenting a material existing fact a. Defendant misrepresented that HB was going to receive cost plus $0.025 per gallon. However, Defendant and John Freeman never intended to give HB such a cost plus when this statement was made and, in fact, did not give HB cost plus $0.025 per gallon. b. Defendant misrepresented that HB was supposed to receive rebate checks of $0.06 per gallon. However, Defendant intentionally and fraudulently withheld those rebates. c. Defendant's invoices were supposed to be accurate and correct. However, Defendant intentionally and fraudulently misrepresented the amount of the discounts on every single periodic invoice and concealed the fact from HB. 2. Made willfully to deceive, recklessly, without knowledge, or mistakenly a. Discount fraud was a corporate-wide exercise and Defendant was training its employees to conduct the fraud. b. Defendant suggested to employees that complex discount deals not be in writing. 3. Justifiably relied upon by plaintiff a. "Cost plus" discount deals were instituted for an an everchanging market. The information related to costs were in Defendant's possession and not in HB's possession. b. Defendant told its customers to trust them. 4. As a direct and proximate result, Plaintiff was injured a. Plaintiff overpaid for diesel fuel as a proximate result of fraudulent invoices and false promises. b. Plaintiff did not receive discounts as a proximate result of false invoices and false promises.

11 Case: 2:14-cv ART Doc #: 56 Filed: 11/14/14 Page: 11 of 13 - Page ID#: 1110 Choice of Law: Alabama Suppression (Count VI) Elements: The elements of a cause of action for fraudulent suppression are: (1) a duty on the part of the defendant to disclose facts; (2) concealment or nondisclosure of material facts by the defendant; (3) inducement of the plaintiff to act; (4) action by the plaintiff to his or her injury. Brooks v. Allstate Ins. Co., No. 3:13-CV-798-WKW, 2014 WL , at *2 (M.D. Ala. July 14, 2014) (quoting Lambert v. Mail Handlers Benefit Plan, 682 So. 2d 61, 63 (Ala.1996)). Facts: 1. Duty on the Part of Defendant to Disclose Facts a. Defendant entered into an Agreement with HB, which created a duty for the Defendant to disclose all material facts, including, but not limited to, the amount of the discounts owed under the Agreement. b. John Freeman, as an agent of Defendant, created a duty when he made representations (i.e. false misrepresentations) to HB regarding the discounts that HB would receive if it purchased diesel fuel from Defendant. 2. Concealment or Nondisclosure of Material Facts by Defendant a. See the FBI Affidavit, which details the concealment of Defendant s actions with respect to the Discount Fraud. b. John Freeman concealed the fact that he was going to give HB something hire than cost plus $0.025 per gallon. c. Each and every periodic invoice sent to HB was a separate and distinct concealment and/or nondisclosure of the actual discounts owed to HB. 3. Inducement of Plaintiffs to Act a. John Freeman and Defendant induced HB to do business with Defendant and to purchase a large percentage of its diesel fuel from Defendant, as opposed to purchasing the diesel fuel from Defendant s competitors. 4. Action by Plaintiffs to Its Injury a. Defendant's false misrepresentations and fraudulent suppression caused damages to HB in the form of withheld discounts owed to HB, including interest, penalties, punitive damages, lost opportunity, debt obligations incurred and any other damages allowable by law.

12 Case: 2:14-cv ART Doc #: 56 Filed: 11/14/14 Page: 12 of 13 - Page ID#: 1111 Dated: November 14, 2014 Respectfully submitted, /s/ Erik J. Clark Shawn J. Organ (OH ) Douglas R. Cole (OH ) Erik J. Clark (OH ) ORGAN COLE LLP 1335 Dublin Road, Suite 104 D Columbus, Ohio (f) sjorgan@ocslawfirm.com drcole@ocslawfirm.com ejclark@ocslawfirm.com Charles H. Cooper, Jr. (OH ) Adam E. Crowell (OH ) COOPER & ELLIOTT, LLC 2175 Riverside Drive Columbus, Ohio (f) chipc@cooperelliott.com adamc@cooperelliott.com Stuart Maples (AL MAP004) M. Rebecca Hill (AL HIL061) MAPLES LAW FIRM, P.C. 401 Holmes Avenue, Suite H Huntsville, Alabama (f) smaples@maples-law.com rhill@maples-law.com Attorney for Plaintiff HB Logistics, LLC

13 Case: 2:14-cv ART Doc #: 56 Filed: 11/14/14 Page: 13 of 13 - Page ID#: 1112 CERTIFICATE OF SERVICE The undersigned hereby certifies that on November 14, 2014, the foregoing was filed electronically with the Clerk of this Court via the Court s ECF system, which will cause all counsel of record to be served. /s/ Erik J. Clark One of the Attorneys for HB Logistics, LLC