Comdata Inc. Agrees to Pay $100 Million as Part of Settlement With Truck Stops

Posted in: Business Factoring News, Freight Bill Financing News, Freight Factoring News, Freight Hauling Financing, Freight Hauling News, Staffing Company Finance News, Staffing Faqctoring News, Trucking Finance News, Trucking Financing News- Jan 29, 2014 No Comments

Fuel-card provider Comdata Inc. and three major truck-stop chains announced they have agreed to settle a class-action lawsuit alleging anticompetitive practices that resulted in higher processing fees for smaller truck-stop businesses.

Comdata will pay $100 million, while TravelCenters of America, Pilot Travel Centers and Love’s Travel Stops & Country Stores Inc. will each pay $10 million, according to Jan. 21 statements. The settlement must still be approved by the U.S. District Court for the Eastern District of Pennsylvania.

“The settlements with the defendants commit them to pay $130 million for the benefit of over 4,000 independent merchants across the country and will provide significant changes to Comdata’s merchant agreements that we believe will help level the economic playing field for the independents,” Eric Cramer, a co-lead counsel for the class of independent truck stops, said in a statement.

In a lawsuit filed in 2007, the plaintiffs alleged that Comdata put provisions in its merchant agreements that forced independent truck stops to pay more to process payments by assessing fees of 1% to 3% of total transaction cost.

Large truck-stop operators, by contrast, were charged a flat fee between 40 cents and $1 per transaction. In exchange for the lower transaction fees, the three truck-stop chains agreed not to compete with Comdata, the lawsuit claimed.

Stuart Harvey Jr., chairman and CEO of Comdata, based in Brentwood, Tenn., said while the company believes the lawsuit lacked merit, it decided to settle “so that we can continue to focus our full attention on strengthening and growing our relationships with our merchant and fleet customers.”

TravelCenters, based in Westlake, Ohio, said it agreed to the settlement to end the “expense and distraction” of litigation and because certain other defendants decided to settle separately, increasing the company’s cost of continuing litigation. The company said it would record the $10 million settlement as a charge against earnings in the fourth quarter of 2013.

Officials at Pilot Flying J, the nation’s largest operator of highway travel centers with more than 650 locations, said while it also does not agree with the allegations in the lawsuit, the agreement to settle “is in the company’s best interest, as well as its customers’ best interest.”

A spokeswoman for Love’s Travel Stops in Oklahoma City said the decision to settle “is not reflective of wrongdoing on our part.”

“It is simply in the best interest of our customers to move on from this and invest our time, hard work and finances into providing the excellent products and services Love’s is known for,” said Jenny Love Meyer, vice president of communications.

Dean Harvey, another attorney for the plaintiffs in the case, said the terms of a final settlement agreement are expected to lower costs of processing transactions and make it easier for independent truck stops to do business with other fuel-card providers.

He declined to provide details, however, until the final documents are submitted to the court for approval Feb. 28.

Among the plaintiffs are Bear Mountain Travel Stop, Krachey’s BP South and Walt Whitman Truck Stop Inc.