Less-than-truckload carrier Yellow Corp. has asked the U.S. District Court for the District of Kansas to enter a temporary restraining order and preliminary injunction barring the Teamsters union from a work stoppage.
A hearing is scheduled for Friday in Kansas City at 1:30 p.m. local time.
The Thursday request follows a strike notice issued by the Teamsters earlier in the week. The union is threatening to go on strike as soon as Monday in response to Yellow’s missed contribution payments to Central States Funds. The carrier previously asked Central States to defer payments due July 15 and Aug. 15, but the request was denied.
“Absent injunctive relief, Plaintiffs will suffer immediate, substantial, and irreparable harm from Defendants’ unlawful work stoppage, including being forced into a Chapter 7 liquidation bankruptcy proceeding,” the filing read.
The company is calling on the court to direct the union to immediately engage in the grievance procedures outlined in the collective bargaining agreement as talks have broken down between the parties over the carrier’s second phase of a restructuring called “One Yellow.”
That change of operations seeks to make changes similar to a first phase implemented in the western part of Yellow’s (NASDAQ: YELL) network last year. The plan calls for the consolidation of terminals, more flexibility around work rules and increased usage of third-party transportation, all of which Yellow maintains are required for its survival.
As the two parties have been unable to come to terms over the last several months, the carrier’s liquidity position has eroded quickly.
A recent filing with the Securities and Exchange Commission showed the company had in excess of $100 million in cash at the end of June. However, in recent weeks shippers have been diverting freight from Yellow and brokers and intermediaries have removed the carrier as a capacity option from their platforms, moves made to keep shipments from getting stuck in Yellow’s network if the carrier were to shut down.
Health, welfare and pension payments to Central States for the two-month period equal approximately $50 million, of which Yellow is delinquent on presumably half. Without payment, approximately 10,000 Teamsters at YRC Freight and Holland covered under the plan will be without health insurance on Sunday. The company’s participation in the pension plan will also be terminated on that day.
However, the delinquencies will likely extend beyond that.
A series of letters from July 12 to 13 between Yellow CEO Darren Hawkins and Teamsters General President Sean O’Brien show the company would also miss payments to its second and third largest funds as well, affecting more employees and potentially expanding the number of workers that would strike.
“Indeed, the urgency is so acute that, although the Company has made its required contributions to nearly all benefit funds coming due this week, our current cash position will prevent the Company from making contributions to the three largest health, welfare and pension funds in which Yellow participates — Central States, Western Conference and Central Pennsylvania,” Hawkins told O’Brien in a July 13 letter.
A Wednesday letter to the rank and file of the Denver local union representing employees at YRC Freight and Reddaway said if the company fails to pay it will be without coverage after July 31 and that it would also prepare for a strike.
The written exchange between Hawkins and O’Brien also referenced what would equate to an $11 per hour increase in wages and benefits over a five-year contract term, contingent on full implementation of the One Yellow initiatives.
“I fully realize that making such a significant economic proposal before we even sit down at the bargaining table is, to say the least, unorthodox. The Company’s acute liquidity crisis and its absolute need to make progress at the bargaining table, however, require us to approach these negotiations in a fundamentally different way,” Hawkins stated in the offer.
O’Brien asked for precise terms and said Yellow would need to drop its breach of contract lawsuit against the Teamsters. Yellow countered with $2.19 per hour in the first year and said it would drop legal proceedings “upon the successful conclusion of our negotiation.” The company also disclosed that it wouldn’t be making upcoming payments to the aforementioned funds at which point O’Brien deemed the offer a “hypothetical increase” and “conditioned on future events,” likely referring to a previous letter of agreement offered by Yellow.
That letter of agreement offered a 60 cent per hour pay hike, in addition to pulling forward the contractual 40 cent hike that starts Oct. 1. However, the company said it didn’t have the ability to fund the increase and its lenders would need to sign off on it at a later date.
O’Brien also said in his letter that Yellow’s deferral of contributions would permit local union members impacted by the missed payments to “avail themselves of the rights Local Unions have under the existing collective bargaining agreement under such circumstances,” with the inference being a work stoppage. He also said the wage increase needed to be implemented immediately to proceed.
“Simply put, institute the $2.19 per hour increase on July 1, 2023, and then we will discuss potential next steps.”
The back-and-forth appears to have ended there.
“There is no adequate remedy that can compensate Plaintiffs for the Union’s failure to follow the NMFA grievance procedures and Plaintiffs’ resulting loss of customers and termination of operations,” Yellow’s court filing read.
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