Rebate raiders hit Pilot Flying J to intimidate Haslams, local economy

Pilot Flying J service centers such as this one cater to truckers and travelers on America’s highways. (Photo Facebook)

Vagueness may invalidate a criminal law for either of two independent reasons: first, it may fail to provide the kind of notice that will enable ordinary people to understand what conduct it prohibits; second, it may authorize and even encourage arbitrary and discriminatory enforcement.

City of Chicago v. Morales, 527 U.S. 41, 119 S. Ct. 1849, 144 L. Ed. 2d 67, 1999

Conflict stimulates our interest in local economy, that is — the struggle between the local vs. the national economy. We in Chattanooga are national economy’s willing and happy clientele, the consumers who buy its products, engage its people for services, who submit to its purported governing authority in the shape of our dear, bedraggled Uncle in the federal barony.

Its retail stores — CVS, Lowe’s, Burger King, SunTrust — dot the landscape in Hixson, Middle Valley, Ooltewah and other parts of Chattanooga. Its software makers and cellphone carriers crowd the TV airwaves whenever the wife watches one of her shows at night. Its big data sucks up information from our emails and credit card purchases across state lines. Its ads make the glossy mags puffier.

National economy is the success story. It draws local dollars out of local economy and wraps it tightly to its corporate bosom.

Unpaid rebates become a criminal matter

On Monday in Knoxville the chief steward of national economy, the U.S., conducted a raid on the headquarters of a Tennessee company, Pilot Flying J, to execute four search warrants on one of the largest private companies in the U.S. Pilot Flying J runs travel centers along the nation’s highways, and has among its customers trucking companies.

At issue are Pilot rebates to trucking outfits. A rebate is “a return of part of a payment, serving as a discount or reduction,” (Black’s Law Dictionary). A rebate in the trucking field is an inducement for a company such as Schneider or the Maersk to increase its purchases of diesel fuel. A company buying 200,000 gallons pays a lower rate than one buying 100,000. When a company paying the 100,000 rate for fuel reaches 200,000, it is due a rebate for having reached a higher level.

Pilot Flying J is run by the well connected and wealthy Haslam family. Bill Haslam, the son of the founder, Jim Haslam, is the Republican governor of Tennessee, and is a shareholder. The company reportedly had sales of F$29.3 billion in 2011.

The raid Monday by at least 30 IRS and FBI agents wearing white bulletproof vests focused on IT, accounting and customer services officers, the Knoxville News Sentinel reported. Reports in mainstream media failed to indicate important details of the raiders — the extent to which they wore helmets and how their weapons were held. Neither did initial reports suggest the level of violence, shouting, cursing, threats and intimidation applied to people in the offices. Knoxnews.com says a witness described “an orderly but swift effort” by agents to verify 200 staffers’ IDs and job titles, to boot everyone in three buildings not essential to keep the HQ running during the seizure.  “They came in pretty quick — it wasn’t a calm event.”

A national economy subtext

What is the difference between a crime and a tort? A tort would be if Pilot refused to honor contractual obligations to a customer, giving that party grounds to sue for redress. That is, private redress, civil litigation. A crime “is held to constitute an offense against the public pursued by the sovereign,” a legal authority states. How can rebate nonpayment rise to that level? If anything, might that not be a federal civil matter — if that? “No act can be considered a crime unless  it has been previously made a crime, either by statute or by common law. Thus, failure or refusal to perform contractual obligations or the mere neglect of a legal duty standing alone, will not warrant conviction of a crime,” notes American Jurisprudence, the legal encyclopedia.

But Uncle doesn’t have to worry about every pursuing a conviction. He can pick “tax day,” April 15 every year for taxpayers, conduct a high-profile military raid against a corporate citizen for numerous governmental purposes, including bluff. It is bluff and threat that keep the American system of voluntary compliance in federal taxes going, with most people filing tax returns because they love the the U.S.A., and a few people who file 1040s because they are afraid if they don’t they’ll be criminally charged with willful failure to file a U.S. tax return or be civilly harassed.

I suggest the national subtext of the Pilot Flying J story is as follows.

➤ Without making any explicit connection with the state’s governor, the federal raid is a potential means of intimidation against the Haslam family. Gov. Haslam has refused with some vigor to sop up the “free” Obamacare money. An incomprehensible tangle of rules could gurgle forth with the cash elixir, and Mr. Haslam blanches at the tradeoff against the rights of the free people of the state.

➤ Apoplexy at the center, paralysis at the extremities. A military raid against a company with differences of opinion over a marketing and affinity business tool seems almost apoplectic. The raid is the spasm of an epileptic. It is an event ordered, directed, planned by people who have lost their perspective as law enforcement employees. Think of it. A terrorist attack hits Boston, and FBI employees in our district are putting their virility, vigorous professionalism their good faith callings to the service of penalizing a company whose bookkeeping differences with customers hasn’t even reached the point of litigation. I’m not suggesting the raid, probably long in the planning as part of an investigation, should have been called off by booming sounds in Massachusetts. But I ask simply the following: If Swift Enterprises or Covenant Transport have not been reported in litigation with Pilot over rebates, why is Uncle imposing his zeal against the free market with 9mms at the ready? The quote from Lamennais about the perils of centralization on the thinking processes of bureaucracy seems borne out.‡

➤ National supervision remains a necessity, even though federal standards of right and wrong are increasingly incoherent. Congress wrote the statute that is suspected to have been violated (I don’t know which). Is the statute strict liability? In other words, does the statute require mens rea, or guilty mind, to be prosecuted? Or does one simply have to commit an offense, not meaning to, and absent any intent, and be subject to prosecution? Congress knows that the “creation of a crime must be reasonably necessary to the prevention of a manifest or anticipated evil, or must be reasonably related to the protection of the public health, safety, or welfare, and the statute at issue must not be arbitrary or unreasonable in its classification.” What is the public safety interest in Pilot Flying J?

Local economy, here and in Knoxville, remains at the mercy of a most unrepresentative body, the Congress, whose enforcers from the executive branch, the IRS and FBI, conform to its grandiose worldview.

‡ Centralization brings apoplexy at the center and paralysis at the extremities.

Sources: “FBI raid on Pilot Flying J stems from unpaid cash rebates, CEO says,” Memphis Commercial Appeal, April 16, 2013

“Pilot Flying J CEO Jimmy Haslam: Raid part of criminal investigation into rebates to trucking customers,” Knoxnews.com, April 16, 203

Criminal law, American Jurisprudence 2d, vol. 21, West Group, 1998, 2006 suppl.