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.
mark d
What a bunch of deadhead, braindead idiots, Still putting the blame on the company for something the union did. You people won’t admit that the pension fund was mis-managed by the Teamsters. I can guarantee that most of the 22000 Teamsters did not get Teamsters jobs after the closing of Yellow, are working for less money, insurance that is less than desirable and not much of a pension fund. You got what you wanted, no more Yellow. I bet you all are working alot harder for your money to as you sure in the hell did not work that hard at Yellow. Yellow also had the worst claim ratio because all these so called Teamster professionals did not know how to do their job and could of cared less. Now you can learn from the real truckers who don’t need some bs union to protect them. I am living a good life still working at Yellow. Too bad for you…….
Annie
When they brought in the ‘newer and better’ computer system and absolutely demolished the employee’s ability to provide even the simplest amount of Customer Service it was a wide open window to watch the demise. 25+ years of knowledge that left us all sounding like buffoons when trying to answer anything. Yellow and it’s (for lack of a better word) upper management can all pound sand and may they all reap what they sow.
Craig
Yellow had more than enough time to let employees know they are closing. Teamsters are correct when saying enough is enough. Yellow paid the money back to the government and now they need to pay the employees past and present all monies due. Yellow stop crying it’s 100 % management and the boards fault for the closing of the company. Drivers,Mechanics,Dock all took pay cuts and pension cuts which was only to be for 18 months and never got it back. We are owed all back pay.
R. Eggers local 135
The Teamsters did not run yellow out of business. When they bought Roadway and Holland it was a poor business decision it was too much for them. They never paid that loan off. Really all they ever paid was the interest. The Teamsters took a pay cut and a cut in their union retirement benefits in order to keep yellow in business. And the drivers were tired of it. It was a good job. They were wanting to turn us into XPO.