Yellow files $137 million lawsuit against Teamsters union

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Updated Mar 26, 2024

This post was updated Tuesday, June 27 at 10:30 a.m. CT. 

A war of words and press releases has taken a turn for the courtroom. 

Yellow Corporation (CCJ Top 250, No. 6), the nation’s third largest less than truckload (LTL) carrier and fifth largest transportation company, on Tuesday filed a complaint in the U.S. District Court for the District of Kansas against the International Brotherhood of Teamsters (IBT) and its affiliates, alleging that the labor union breached a binding contract with Yellow and caused more than $137 million in damages by "unjustifiably blocking, for over eight months, Yellow’s restructuring plan to modernize its business, which is necessary to compete against non-union carriers that dominate the LTL business today."

Yellow and the Teamsters union have been locked in fierce negotiations since late last year over proposed changes of operations, which would consolidate the YRC Freight, New Penn and Holland linehaul networks and terminal operations as part of the Overland Park, Kansas-based carrier's efforts to create a "super regional carrier."

Yellow is in the second phase of its One Yellow strategy to improve efficiency, speed, choice and value for its customers. Phases 2 and 3 of One Yellow, which include aligning operations in the Northeast, Midwest, Southeast and Central regions, are set to take place this year. Phase 1, integrating the linehaul networks of YRC Freight and Reddaway in the Western region to support both regional and long-haul services, was completed last year with union approval and under the collective bargaining agreement, Yellow charges that the union is not permitted to impede its restructuring.

“We do not take this [lawsuit] lightly, but the union’s leadership has left us with no choice,” Yellow management said via release Tuesday. “For many months, we have made good faith efforts to meet with the IBT to propose a path forward that works for all parties, but they refuse even to meet, let alone engage in honest talks. We have communicated with all stakeholders in Washington, D.C., including the Biden Administration, to apprise it of the imminent loss of tens of thousands of jobs, the significant anti-competitive effects on the American economy and the devastating impact to the supply chain, and to seek their assistance in persuading the IBT to negotiate a mutually acceptable agreement. We are fighting for the livelihood of our 30,000 employees who are good hard-working people. We will do all we can to save these American jobs and to protect our shareholders, including the American taxpayer.”

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In a statement provided to CCJ Tuesday, the union said it "categorically denies the baseless allegations made by Yellow Corporation in its frivolous lawsuit filed (Tuesday)," calling the suit "a blatant attempt to undermine the rights of workers and discredit the Teamsters."

“Yellow Corp.'s claims of breach of contract by the Teamsters are unfounded and without merit,” said Teamsters General President Sean M. O’Brien. “After decades of gross mismanagement, Yellow blew through a $700 million bailout from the federal government, and now it wants workers to foot the bill. For a company that loves to cry poor, Yellow’s executives seem to have no problem paying a team of high-priced lawyers to wage a public relations battle — all in a failed attempt to mask their incompetence.” 

[Related: Trucking secures as much as $12 billion in government-backed PPP loans]

Yellow faces, among other things, the imminent need to refinance $1.3 billion in debt – a $567.4 million term loan maturing on June 30, 2024, and a $729.4 million U.S. Treasury loan maturing on September 30, 2024 – and has maintained that without the makeover of its network, the company will not survive and "30,000 jobs will be lost, including 22,000 union jobs, and its shareholders, including the federal government, which owns 30.1% of Yellow stock, will be severely damaged," the company claims.

In its lawsuit, Yellow says if the union continues to hold up Phase 2 the company will run out of cash as early as next month, and Yellow’s creditors will likely force the company into liquidation.

Yellow claims the union has attempted to use the company's dire financial condition and debt as leverage "and instead has made serial extra-contractual demands on Yellow." The nearly 100-year-old carrier in its complaint claims it "has tried to accommodate the union’s demands each time, with the hope and expectation that such accommodations would result in implementation of the long overdue and critically important Phase 2. But each time Yellow agreed to a union demand, the union changed its demand, exposing its real agenda of leveraging Yellow’s acute need for Phase 2 to extract a wage increase that Yellow cannot afford and that under the [National Master Freight Agreement] the union has no right to require."

IBT had previously endorsed the company’s modernization effort and even approved the first of the three phases before reversing course, taking what O’Brien called a “militant approach."

“The company is misleading our members and the public. We have a contract with Yellow that expires March 31, 2024, and Teamsters are living up to it," said Teamsters General Secretary-Treasurer Fred Zuckerman. "Yellow’s management knows they’ve failed this company and their workforce because they can no longer live up to the terms they once agreed to. This lawsuit is a desperate, last-ditch attempt to save face."

O'Brien has repeatedly said Yellow's union members were tired of bailing out their employer, setting the stage for a protracted battle. O’Brien has also taken his campaign public, taunting the company's claims of pending demise on social media, including a tweet last week that included an image of a tombstone with tYellow's logo on it and calling for Yellow CEO Darren Hawkins to resign. 

June has been an active month for Teamster leadership. Union members at UPS (No. 2) voted by 97% to authorize a strike, allowing the UPS Teamsters National Negotiating Committee to call a strike should UPS fail to come to terms on a strong new contract by July 31, when the union’s current National Master Agreement expires. The Teamsters represent more than 340,000 UPS package delivery drivers and warehouse logistics workers nationwide.

Teamsters at TForce Freight, formerly UPS Freight and now a subsidiary of TFI International (No. 4), which represent more than 7,000 workers nationwide, voted by 91% to authorize a strike if the two sides can’t reach an agreement by the July 31 contract expiration.

Jason Cannon has written about trucking and transportation for more than a decade and serves as Chief Editor of Commercial Carrier Journal. A Class A CDL holder, Jason is a graduate of the Porsche Sport Driving School, an honorary Duckmaster at The Peabody in Memphis, Tennessee, and a purple belt in Brazilian jiu jitsu. Reach him at [email protected].