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.
Bobby Leighnor, Jr.
Thank you to Sean Abernathy.. you were absolutely correct.. 36 1/2 years at the Holland Akron terminal..
David Shore
I worked for Holland freight from July of 2021 until they close adores July 31st 2023 and those that are blaming Union yellow freight and your CEO walked away from several meetings. I have the actual memos that state. The Times that they were supposed to meet and at the last second it was yellow not to teamsters who walked away so the one there’s actually responsible for the demise of yellow afraid is the 9 executives including the CEO of yellow front not. The teamsters also yellow freight. Stated at the end of May of 2023 that unless they got everything they wanted they got the money that they would run out of money July 30. First 2023.
So who’s responsible for not getting out the 60 days? That would be yellow freight not the teamsters. The teamsters did everything they caught yellow freight was being a bunch of babies.
MD
RIP Teamsters Union, won’t be long and you will be gone too. Look at all the union carriers that went out of business because of the union. What surprises me is how brain washed these union employees are. The union fights with and puts union carriers out of business yet does NOTHING to organize non union carriers. Union carriers cannot compete with non union carriers. Take a look at who got all of the Yellow business, was not ABF and T-Force, it was NON UNION CARRIERS and those employees of those non union carriers want nothing to do with the union. I know many, many people who have been screwed over by the Teamsters pension funds, talk about mismanagement and corruption, that is what you should be complaining about. If Yellow was so bad you all should find it easy to get another job that pays more and has better benefits. The truth is that there is not a lot of jobs that are better and you have no one but Sean O’Brien and his thug union to blame. The company tried and made a good honest offer to its employees and O’Brien that was rejected.
Jeffery Noel Brinkley
As a former YRC clerical worker at a 896, Orange, CA, I remember in July 2023 hearing that the company had not paid the health/ welfare/ benefits. Then the hearing on Friday 7/21/23 in Kansas, the company had to make the delinquent payment, and the teamsters could strike if called. Then following Monday 7/24/23 all drivers at 896 were ordered to only make deliveries and , no pickups until Thursday 7/27/23 and, clear the dock. The contractoral employees received no information from YRC or the teamsters. We were left in the dark. I observed closing trailers .25 or half full, alarming for the last 4 months, due to the high price fuel. Also, the discounts ranged from 65 -91%. The company requested the contract be reopened, and the union agreed. 1 year early, and before the loan repayment. I could not understand why the home office, was moved from Overland Park. Kansas to a lease office in Nashville, TN. There was no indication of repayment , and making this profitable. The last 6 months engineer’s came in, a switch the service areas, so the drivers pickups/ deliveries were further, and impossible in Southern California traffic. I began 4/17/89, with a very strong, and bright future.i saw the decline with the leadership of Bill Zollars, leading to 15% wage cut, cancel pension, and with the hope this could turn the company around. This would lead to consolidation of several companies. I saw a rescue from the Covid loan of 700 million in 2020 only to balloon a debt of over billion dollars 3 years later. I find it strange that the management can be paid over 4 million last fall, but you can’t pay your employees, that made your jobs possible. Jeffery
Dock worker 839 Teamsters Local 70
Yellow trying to get out of it again. They mismanaged, not the Teamsters. They made purchases in an economic bubble that popped leaving them cash strapped. They made how many “change of operations “ that never panned out. The many bonuses given out (12 million) being the latest. No pension, sub-rate wages, couldn’t even pay the medical, and they want to blame it on the Teamsters? Yellow lied, robbed and manipulated all of us workers. We had given everything, while other Union carriers flourished. They got called to the mat and got pinned. It’s time to pay the fiddler. I hope the judges see all the evidence and the lies and makes them pay dearly.
K
It wasn’t just the union members that were caught up in the management lies the non union workers in the GO were used and abused also we were promised our PTO and we expect our management to honor what they promised but it didn’t take long to see that they received bonuses and continues to take payment to screw us all Karma is not just for this life it will travel with all of them
Freight Zippy
This cancer is gone, let it be.
The union’s meme showing the tombstone killed off any remaining customers. The Teamsters should be liable for any WARN $$$
The unions has killed hundreds of LTL carriers since 1980 let them pay for their mistakes.
Michael Middleton
Yellow’s management (BOD) had to be planning for filing for bk long in advance of the actual file date. The plan should have factored in the warn act requirements. This failure is on the BOD and Yellow’s management. I hope the Judge keeps the employees whole before awarding any money to the hedge funds. I believe the hedge fund was working behind the scenes to set themselves up for a big payout.
Hopeful the pension fund lawyers discovery process related to the pension fund owed will bring this to light.