Yellow appeals dismissal of lawsuit blaming Teamsters for its collapse

August 14, 2024

Tyson Fisher

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One year after Yellow Corp. filed for bankruptcy, the saga continues as the former mega carrier is asking a federal appeals court to revive a lawsuit claiming the Teamsters sabotaged its attempt to restructure.

On Monday, Aug. 12, Yellow informed a Kansas federal district court that it plans to appeal a March decision dismissing its case against the Teamsters. Seeking at least $137 million, the lawsuit blames, at least in part, the union for its demise.

One Yellow restructuring plan

At the center of the lawsuit was the collective bargaining agreement and Yellow’s attempt to save its business through an overhaul of operations called One Yellow.

The trucking company alleged that the Teamsters breached the agreement by blocking the second phase of the restructuring plan and holding it hostage by demanding higher wages.

In an effort to compete with nonunion competitors and refinance more than $1 billion in debt, the company’s One Yellow plan included merging YRC, Holland, New Penn and Reddaway into a “super-regional carrier.” The restructuring was to occur over three phases.

In September 2022, Yellow completed Phase 1, which consolidated YRC Freight operations with Reddaway operations in the West and accounted for 20% of company’s network. However, problems began in implementing Phase 2, which would consolidate operations with Holland and New Penn in the Northeast, Midwest and Southeast and account for 70% of the entire network.

According to the lawsuit, the Teamsters had no right to impede the One Yellow restructuring. Rather, the collective bargaining agreement obligated the union to resolve employee seniority issues that may come up as a result of the restructuring, which the Teamsters did during Phase 1.

In January 2023, Yellow alleged that Teamsters General President Sean O’Brien used the change of operations process during Phase 2 to demand higher wages for union employees.

The company claimed the Teamsters breached the contract by tying wage increases to the change of operations process and unilaterally canceling contract-required hearings for the process. After failing to reach an agreement, Yellow filed a lawsuit against the union last June.

Case dismissal

Yellow’s lawsuit attempted to bypass the collective bargaining agreement’s grievance procedures, but a federal court rejected that idea.

The company claims that the grievance procedure does not apply because it seeks money damages not available through that procedure. Additionally, Yellow’s issues at hand do not involve a work stoppage. The Teamsters argued that the lawsuit should be dismissed for failure to exhaust the required grievance procedure. The federal court agreed with the Teamsters.

Judge Julie Robinson found that the language of the agreement states that all factual grievances or questions of interpretation must undergo the grievance process. There is no language precluding the grievance committees from awarding damages.

Yellow filed for bankruptcy one month after filing the lawsuit. LL

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