Berkshire Hathaway has been denied in using the allegations that billionaire Jimmy Haslam tried to bribe Pilot truck stop chain's employees to inflate the company's value, a Delaware judge ruled as the Warren Buffett-led conglomerate defends itself in a dispute over its accounting practice.

In filing the lawsuit, the Associated Press reported that Pilot Corp. claimed that Berkshire Hathaway, which holds 80% of Pilot Travel Centers, utilized accounting changes to artificially reduce Berkshire's price for the Haslam family's remaining 20% stake in the truck-stop chain.

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Shareholders pass an illustration of Warren Buffett, CEO of Berkshire Hathaway, during the 2019 annual shareholders meeting in Omaha, Nebraska, May 3, 2019.

Ongoing Lawsuit Against Warren Buffett-Led Conglomerate Berkshire Hathaway

Berkshire Hathaway responded to the lawsuit by asserting that Jimmy Haslam, the Cleveland Browns owner, attempted to bribe over two dozen Pilot employees to inflate this year's company's profits so the Warren Buffett-led conglomerate would have to pay more for the remaining stake in Pilot held by the Haslam family.

After Wednesday's hearing, Vice Chancellor Morgan Zurn ruled that Berkshire could not use the bribery allegations as part of its defense at the expedited trial in January 2024. 

As she granted Pilot's motions to limit Berkshire's defenses, Zurn also said any related depositions would not be allowed as the bribery allegations are not connected to Pilot's underlying claims. She also hinted at the potential denial of Berkshire's request to change or modify its answers and defenses. 

Berkshire wants to use new allegations, such as Pilot's controller David Clothier using his wife's mobile phone to secretly communicate with Haslam, who offered an illicit payment and attempted to retroactively alter financial statements to change or delete references to the accounting changes.

An attorney for Pilot told Zurn that federal prosecutors have started a probe based on Berkshire's bribery allegations and expressed confidence that this will not impede the progress of the case.

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Berkshire Hathaway Adoption of 'Pushdown Accounting'

At the core of Pilot's grievance is Berkshire Hathaway's adoption of "pushdown accounting" after it took control of the company, which resulted in increased costs and reduced net income. Pilot argued that a 2017 LLC agreement bars such changes without consent.  

Jimmy Haslam and his father, Pilot founder Jim Haslam, presented a resolution to the board in August to resolve the dispute, but five Berkshire members of the board outvoted them.

Berkshire acquired 38.6% of Pilot in 2017 for $2.76 billion before increasing that to 80% this year for an additional $8.2 billion. Based on an investor rights agreement with Berkshire, the Haslams have an annual option to sell their remaining 20% interest in Pilot to Berkshire beginning January 1, 2024, and they have until February 29 to exercise the option.

As the sell option deadline nears, Pilot asserted that Berkshire had already used accounting changes to decrease the price it would have to pay for the remaining stake of the Haslams.

Aside from the truck stops, Berkshire Hathaway owns several other businesses, including Geico insurance and BNSF railroad. It also holds a significant stock portfolio in various big companies.

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