A motion from the Teamsters union to block Yellow Corp.’s deposition of union head Sean O’Brien was denied in a federal bankruptcy court in Delaware on Tuesday. The union was seeking a stay to provide it more time to challenge the deposition ruling in a U.S. district court. The bankruptcy court did grant a seven-day administrative stay on Tuesday, leaving the Teamsters one week to see if the district court will grant a stay while it considers taking up the appeal.
The bankruptcy court ruled earlier this month that O’Brien could be deposed by Yellow regarding up to $244 million in Worker Adjustment and Retraining Notification Act claims against the estate. Yellow claims correspondence between CEO Darren Hawkins and O’Brien are key to its “good faith” defense, relieving the company of its duty to provide timely layoff notices to employees ahead of its July 2023 shutdown.
“Indeed, given the extremely modest commitment required by the Court’s Order, it appears Mr. O’Brien simply does not want to be questioned, under oath, as to his role in the loss of approximately 22,000 IBT [International Brotherhood of Teamsters] member jobs,” a Friday court filing from Yellow attempting to block the stay read. “But Mr. O’Brien’s role is directly related to the WARN claims filed by the IBT and several Debtor defenses thereto, and Mr. O’Brien does not get to avoid a deposition merely because he would personally prefer not to talk about these subjects under oath.”
Judge Craig Goldblatt said Tuesday that Teamsters counsel hadn’t shown “they will obtain appellate review, let alone prevail” in the attempt to keep O’Brien from testifying. The judge said any harm caused to the Teamsters stemming from O’Brien’s testimony is outweighed by the harm caused to other creditors to Yellow’s estate by delaying the liquidation while the appeal is contemplated.
The union can still pursue an appeal, but O’Brien will have to testify unless the district court intervenes within the next week. Goldblatt invoked a no-use provision on the deposition, meaning O’Brien’s testimony can’t be used in any other legal proceeding. Also, the deposition can be thrown out altogether if the union is successful in overturning the court’s ruling on appeal.
Once the seven days have elapsed, Teamsters counsel is expected to make O’Brien available “reasonably promptly.” However, the Teamsters previously said O’Brien’s calendar is full for the coming months and that the union would be “irreparably injured” if he were forced to testify, although Yellow has said the deposition would take place just eight minutes from O’Brien’s office at the Teamsters’ Washington headquarters.
Goldblatt’s previous ruling limited the deposition to just three hours and advised the parties to agree on a narrow focus for the proceeding.
Yellow (OTC: YELLQ) has asserted in the past that WARN Act notifications to employees were not required as it was “unforeseeable business circumstances” that led to its abrupt closure. It said the union’s denial of the second phase of an operational restructuring called “One Yellow” is the reason it closed and that it thought it was negotiating in good faith with the union and had no reason to believe it couldn’t reach a compromise as it had been able to do in the past.
The company believes O’Brien’s deposition will help bolster its “good faith” and other defenses.
The union has said O’Brien doesn’t possess unique knowledge on the negotiations in the weeks leading up to Yellow going out of business and that John Murphy, Teamsters national freight director, not O’Brien, was the primary negotiator with Yellow at the time. It contends Murphy, who has already been deposed, has equal or better knowledge on the matter.
Goldblatt previously ruled that O’Brien had “direct personal involvement” in the negotiations.
The union has also said Yellow had a path to survival and the liquidity to carry it through February of this year. It points to Yellow’s decision to stop accepting shipments at the end of July 2023 as the reason for its demise. It said the company wasn’t negotiating in good faith as it knew it wasn’t in a position to meet any of the Teamsters’ demands, including an immediate $1.50-per-hour wage increase that the union was requiring in exchange for implementation of the second phase of One Yellow.
The Delaware court recently approved a discovery request on behalf of employees, requiring Yellow to produce communications between its human resources and payroll departments. Yellow has contended that it wasn’t until July 26, 2023, less than a week ahead of its shutdown, that it knew the layoffs were probable. Counsel for the employees say payroll records may show an earlier date, which could put Yellow on the hook for the claims.