Yellow Transportation wins twice in federal appeals court

In two consecutive business days, Yellow Transportation prevailed in separate federal appeals court opinions involving arbitration of employee grievances and the scope of Carmack Amendment protections.

In Troy J. Lenz v. Yellow Transportation, the U.S. Court of Appeals for the Eighth Circuit ruled that a Yellow customer service representative is not a “transportation worker” as defined by the Federal Arbitration Act and must, therefore, abide by a dispute resolution agreement he signed with the trucking company.

The Friday, Dec. 16 decision reverses the ruling of a U.S. district court in Iowa that Yellow could not compel Lenz, who had been fired after two months, to resolve his grievances in arbitration rather than court. The district court had determined that Lenz was directly engaged in interstate transportation and so enjoyed an exemption under the Federal Arbitration Act.

In overturning the lower court, the appeals court determined that Lenz had never directly transported goods, operated any vehicle, handled any packages or directly supervised drivers in interstate commerce. Nor was Lenz within a class of workers for which special arbitration already existed when Congress enacted the arbitration law. The appeals court also concluded that a strike by customer service representatives, while inconvenient, would not disrupt interstate commerce or halt trucks from making deliveries.

Lenz’s job did satisfy certain elements of the transportation worker test regarding the coordination of freight flow, but “taking his job duties as a whole, Lenz’s central task was to answer the questions of and provide information to Yellow customers, not to supervise packages moving in interstate commerce.”

In S & H Hardware & Supply v. Yellow Transportation,Yellow’s summary judgment against consignee S & H was upheld Monday, Dec. 19 by the U.S. Court of Appeals for the Third Circuit. Evidence – including an FBI sting operation – showed that S & H suffered more than $1.6 million in losses on Lionel model trains when one of its employees collaborated with at least one Yellow driver to divert shipments to addresses not listed on the bill of lading.

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But the lower court and the appeals court ruled that the consignee failed to give Yellow notice within the time period specified in the bill of lading as required by the Carmack Amendment.

S & H had conceded that it had failed to comply with the notice requirement but argued that Yellow should not be allowed to assert that as a defense since it had actual notice of the diverted deliveries due to its involvement in the criminal investigation and to various communications among S & H, Yellow and Ace Hardware.

Both courts ruled that filing a written claim is a strict condition for the filing of a lawsuit and that S & H had not qualified for the estoppel exception because it had not showed that Yellow had made representations upon which S & H relied in filing to file a written claim.