Yellow’s Tuesday filing in a Delaware bankruptcy court said claims stemming from its failure to provide 60-day notices to employees ahead of mass layoffs should be thrown out, or at least materially reduced.
Counsel for the company said WARN Act requirements don’t apply as the defunct less-than-truckload carrier’s shutdown was abrupt and the result of the Teamsters union’s refusal to allow a second round of operational changes that were integral to its survival.
The turnaround plan dubbed One Yellow included consolidating its four LTL operating companies, closing redundant terminals and making some drivers work freight on the docks, among other changes. Yellow began pursuing the changes in 2022 and announced in June of last year that it would be out of cash in weeks if the Teamsters didn’t acquiesce. The union contended it had given enough in the past in the form of wage and benefits concessions and that it wasn’t going to keep bailing the company out.
Yellow (OTC: YELLQ) believes the WARN Act doesn’t apply as its closing was unforeseen. It said even in its final days it planned to keep running the business and had a private equity investor lined up to provide it needed capital. It said the union’s denial of the second round of operational changes, and the issuance of a strike notice over missed benefits payments, led to a rapid deterioration in its business.
The strike notice “scared off Yellow’s customers, leading to the sudden, unexpected collapse of Yellow in a matter of days,” the filing stated.
The carrier’s daily shipments declined from 44,550 on July 12 last year to 32,500 on July 19, two days after the strike notice. Shipments fell to 10,450 on July 21 and were nearly zero by July 26. Yellow ceased operations on July 30.
The company said it didn’t have time to plan for mass layoffs and the issuance of WARN Act notices was “neither feasible nor required.” It claims protection from the notification requirement due to the sudden decline in business and argued the requirement’s “faltering company exception” applies as it was still seeking business from customers and capital from investors in its last days. The notices would have scared off both, the filing said.
Of the roughly 1,300 claims referenced in filings, some were made on behalf of employees by pension or health and welfare funds, which “lack standing” to bring the claims, Yellow asserted. Also, some employees released the company from the claims in exchange for severance. A separate filing showed approximately $244 million in claims related to WARN Act violations but noted that many were duplicate claims filed by both employees and their unions or union-related funds.
“The reality is that the Debtors shut down their businesses on an extremely short time frame as the result of completely irrational behavior from the [Teamsters] that neither the Debtors nor any other rational employer would have expected or planned for. No WARN act [provision] provides for liability under these circumstances,” the filing said.
Yellow said it was ready for a hard fight with the union and that “give-and-take” often led to operational changes in the past.
“Based on this historical record, Yellow understood that the [union] would drive a hard bargain but never drive the Company to the brink of failure, which would risk losing 22,000 unionized jobs,” the filing read.
Yellow’s objection asked the court to grant the order with an April 4 deadline for claimants to respond and a hearing date of April 11.
Discovery will continue in Yellow’s $137M suit against Teamsters
A U.S. District Court in Kansas said discovery in Yellow’s $137 million breach-of-contract lawsuit against the Teamsters will continue. The union argued to stay the costly advanced stages of discovery for a case that may ultimately be thrown out. A separate motion from the Teamsters has called on the court to dismiss the case.
An order denying the stay showed that the union had produced less than 1% of its total expected document production. Unsurprisingly, the filing showed Yellow had “substantially completed their document production by the March 1 deadline.”
The suit claims the Teamsters intentionally blocked the proposed change of operations, which it didn’t have the authority to do.
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Brian
I worked for reddaway 20+ years. Yellow came along and brought their disease with them. The union is not blameless…they too are a cancer of whiny laziness and greed. They are right about one thing though, they bailed out this pathetically mismanaged company in the form of wage and benefit cuts. Yellow had already implemented their “one Yellow” plan where I was. Here’s the dirty little secret: it was a complete failure. I wish the thugs at the union had grown a spine before Yellow ruined reddaway with their inept plan. Overnight our excellent reddaway service had been reduced to freight showing up late and damaged. Virtually all our reddaway customers disappeared within weeks. It was no surprise this company failed, the only surprise is that the pathetically incompetent morons that ran it into the ground kept it afloat as long they did. Good riddance to both the teamsters and Yellow…a toxic combination of lies, greed, corruption, laziness, and disease.
Brian
What about the 14 million dollar bonuses?
Michelle
Yellow is blatantly lying. Si ce 2021 it reduced hours and had terminals having to request normal porches like copier paper trash liners pens and yep..toilet paper through a vice President. The bs theater w their attorney on fox news was theater to try to blame the union for what they knew was coming. For a year we watched nightly Bill’s drop from in the 400s per night to 300s 100s and down to 85 per night then they did theater on fox to prompt the union to take action so they could blame game the people they have owed over 9 billion to for years while they had getaways to tropical expensive place and had the balls to post pictures on the company intranet . They are spend thrifts like drunken sailors w money on leave. They owe the employees and if the judge isnt corrupt he will keep the suit in play. Yellows corporate heads and mon union m as management all got great big bonuses within weeks of closing. Just giving the finger to the union employees who factually bring in all the money . Burn in hell yellow exec’s you earned it
Walter J Johnson
The teamster’s did not cause Yrc’s demise. Yrc’s very under qualified management team is solely responsible for the company’s failure. For years the teamster’s membership gave the idiots Billions to keep them in business. We paid this company’s debt off over and over again. What I just don’t understand is where did all our money go and why isn’t there a federal investigation into everyone at yellow and the union probably should be looked at as well with our sacrifice the union got to have our teamster’s leaders on Yrc’s board or atleast to have the right to over see Yrc’s business activities. Which to my knowledge didn’t happen. Yrc should be made to pay everyone who had vacation time and whatever the Warn Act say that the employees should be paid, the rank and file has been paid enough.
Tim Parkkhurst
Ronald Broyles is also a Hawkins plant here. . Freakin Swift driver. LOL. Seriously. And hes telling us we should have accepted what the company offered. Umm…yeah Swifty we did. They withdrew it. Now go play in the highway.
These scabs really make me mad and these Freighwaves guys just let them comment with complete lies and do nothing.
Tim Parkhurst
I’m pretty sure that Sean Caruthers is a Yellow mgt plant. Yeah, we got your number scab. I guarantee you have never been a steward or in a union. But just keep talking that garbage. Tell Hawkins we all said “go jump off a bridge” when you visit him on his horse farm.
Tim Parkhurst
We as union me.bers didnt have standing? LMAO! What kind of lawyers did they hire, Trump lawyers? How about our pay that we are still owed? Where is that at? The company has told the court how much they owe each of us, mine was $7700 (that’s like 2 weeks vacay and some other stuff). I’ ll take that today. They cant claim they dont have it either, as they made more than enough from the sales of the terminals alone. That’s not even including the equipment. Hopefully this court is not dumb enough to let these mgt idiots walk off with more money and not pay us what tgey owe us. BTW, I have yet to recieve a written letter, post card or phone call from the company letting me know I dont have a job and we are headed into 8 months now and I’m still waiting on that. Because of that alone I dont see how they can claim we dont have standing. How many more times is this court gonna let Hawkins and his henchmen continue to RIP us off? Up thru now, it looks to me like they are succeeding on that, but then again who am I? Just nothing more than a stupid ass teamster driver so what do I know, right? Screw you Hawkins!
Daryl Deffry
I worked for terminal 661 and was given an 11 hour notice that I didn’t have a job anymore…there was no notice .I worked over 100 hours that I was never paid for