Yellow is taking the Teamsters to court over breach of binding union contract

Nashville-based Yellow Corporation, the third-largest United States less-than-truckload (LTL) carrier, with about 8% of the national market, said today it has filed a lawsuit, for more than $137 million, against the International Brotherhood of Teamsters (IBT).

The lawsuit, which was filed in the U.S. District Court for the District of Kansas, maintains that the Teamsters breached its binding union contract with Yellow. And Yellow officials said that the Teamsters have, for more than eight months, been “unjustifiably blocking” Yellow’s restructuring plan, which the company has stated is needed to modernize its business, in order to compete against non-union carriers that it said “dominate the LTL business.”

“These modernization efforts, known as One Yellow, are essential to the Company’s survival,” the company said. “Without these crucial reforms, which are standard practice in the industry today, Yellow likely will not survive, 30,000 jobs will be lost, including 22,000 union jobs, and its shareholders, including the federal government, which owns 30.1% of Yellow stock, will be severely damaged. Yellow remains a critical part of the domestic supply chain with hundreds of thousands of customers—large and small— relying on the Company to deliver freight coast-to-coast. Driving Yellow out of business will badly damage the supply chain, lessen competition and raise the price of shipped goods in the LTL market and feed inflation.”

What’s more, Yellow said that despite efforts to meet with the Teamsters to work on a path forward, the Teamsters have continually refused to meet. And the company also said in its lawsuit that IBT General President Sean O’Brien is responsible for the Teamsters not meeting with Yellow, adding that IBT previously supported Yellow’s restructuring efforts through its One Yellow plan, for several years, and also signed off on the first of its three phases before taking steps to block it.

The company reiterated that completing One Yellow this year in order for the company to remain operational and survive, for various reasons, including: the imminent need to refinance $1.3 billion in debt—a $567.4 million term loan maturing on June 30, 2024; and a $729.4 million U.S. Treasury loan maturing on September 30, 2024. And with the Teamsters’ actions the company said that it has resulted in triggering grave uncertainty for Yellow employees, investors, and customers, with the intent of causing “economic ruin” for Yellow. Had the Teamsters come to the negotiating table, Yellow said this situation could have been avoided, leaving Yellow to take immediate steps to save itself, the company said. The company also said that it is entitled to the $137.3 million and counting that the Teamsters have caused, and it noted that, in the event of its demise, it is entitled to at least $1.5 billion for Yellow’s loss in enterprise value, resultant of what it called the Teamsters’ breaches.

In a video message posted earlier today, Yellow CEO Darren Hawkins said that that company’s 30,000 jobs, most of which are union jobs, are in serious trouble, because Teamsters leadership refuses to come to the table to discuss the future of Yellow’s employees.

“For the past eight months, we have worked in good faith to come to an agreement with the union to strengthen our employees’ jobs, and the future of our company,” said Hawkins. “Yellow is just one of three major unionized companies remaining in the less-than-truckload business. Six other union companies have gone belly up in the last few decades, in large part because they couldn't compete with non-union carriers. Yellow is trying to stay in the game for our employees and customers. We're working to modernize our company to compete in a way that aligns with the union, but their leadership still refuses to meet.

Surely Teamsters’ leaders don't want their members, our employees, to lose their jobs. Our folks are good, hardworking people. They want to earn a fair wage. At Yellow, we're raising wages twice this year. Our average driver earns more than $65,000 a year. Some make more than 100,000. And we offer full family benefits the best the industry has to offer. Our Yellow employees live in every state across our nation, including here in Tennessee, where we employ nearly 1,500 people. We have filed a lawsuit against the International Brotherhood of Teamsters. We do not take this action lightly, but their leadership has left us with no choice. We are now fighting for the livelihood of our 30,000 employees. We will do all we can to save these American jobs. While union leaders come and go, Yellow has been around a century. Responsible leaders work together to create opportunities and maintain jobs. We are ready and willing to talk even as we remain firm in our resolve. We simply cannot let these jobs in this company go without taking a stand.”

As for the Teamsters, the organization dismissed Yellow’s actions, calling the lawsuit frivolous.

“Yellow Corp.’s claims of breach of contract by the Teamsters are unfounded and without merit,” said Teamsters General President Sean M. O’Brien. “After decades of gross mismanagement, Yellow blew through a $700 million bailout from the federal government, and now it wants workers to foot the bill. For a company that loves to cry poor, Yellow’s executives seem to have no problem paying a team of high-priced lawyers to wage a public relations battle—all in a failed attempt to mask their incompetence.”

The Teamsters called the lawsuit a blatant attempt to undermine the rights of workers and discredit the Teamsters.

“The Teamsters are fully prepared to defend the union’s position vigorously and utilize all available legal resources to challenge the meritless accusations put forth by Yellow Corp.,” it said.

Teamsters General Secretary-Treasurer Fred Zuckerman said that Yellow is misleading Teamsters’ members and the public.

“We have a contract with Yellow that expires March 31, 2024, and Teamsters are living up to it,” he said. “Yellow’s management knows they’ve failed this company and their workforce because they can no longer live up to the terms they once agreed to. This lawsuit is a desperate, last-ditch attempt to save face.”