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ABF not throwing in the towel on lawsuit against Teamsters, YRC, and other entitities

By John D. Schulz, Contributing Editor and Jeff Berman, Group News Editor
September 04, 2012

Late last week, less-than-truckload (LTL) carrier ABF Freight System Inc. said it has filed a notice of appeal in its ongoing lawsuit against the International Brotherhood of Teamsters, YRC Inc. and other related entities. 

This follows an early August decision by a U.S. District Court to dismiss ABF’s lawsuit against those parties. The decision by U.S. District Court Judge for the Western District of Arkansas Susan Webber essentially negates a July 2011 decision by the U.S. District Court of Appeals for the Eighth District, which changed course on a previous dismissal made by a lower court regarding this case. 

In November 2010, ABF signaled its intent to take legal action against the International Brotherhood of Teamsters, various subsidiaries of YRC Worldwide and other entities, following a ratified labor agreement by YRCW Teamsters members.  ABF said at the time that the reason for taking legal action was on the grounds that these organizations are violating the National Master Freight Agreement, which serves as the collective bargaining agreement for the majority of U.S.-based trucking employees.

YRCW’s agreement, which is the third one its Teamster members have ratified going back to 2008, extends its previous agreement with the Teamsters that was slated to expire in 2013 to March 31, 2015.

“We continue to believe in the strength of our case, which concerns repeated violations of the National Master Freight Agreement by the IBT and YRC,” said ABF officials.  “The suit was originally filed in November, 2010, and successfully appealed once already, as the higher court ruled that the district court had erroneously dismissed the case. The timing of this next appeals process is uncertain but is expected to take many months.”

As previously reported by LM, when the original lawsuit was filed in November 2010, ABF sought to have the lower court create an appropriate grievance review committee to resolve the dispute, or to have the contract amendments benefiting only YRC declared null and void by the court, as required by the NMFA, according to the statement, adding that ABF also sought an award of monetary damages estimated to be approximately $750 million.  ABF will continue to seek that relief on remand.

A November 2010 Dow Jones report stated that former YRCW President, Chairman, and CEO Bill Zollars labeled this legal challenge by ABFS as “worthless,” adding that YRCW will likely counter-sue ABFS.

In December 2010, ABF launched a Web site—abflegalaction.com—dedicated to all things pertaining to these legal issues. Included on the site is an interesting list of facts about its stance on these matters.

Some of the highlights include:
-clarifying that YRCW does not have a separate NMFA contract from ABF, stating that “there is only one National Master Freight Agreement, which all Teamster employees working for NMFA companies ratified in 2008. There is no other agreement.”;
-disputing the claim made by the Teamsters National Freight Industry Negotiating Committee that ABF was offered the same deal as YRCW was, with ABF saying it was never offered the same concessions granted to YRCW; and
-“In an effort to avoid filing the lawsuit and grievance, ABF attempted to negotiate industry-wide changes to the NMFA. TNFINC and its representatives responded by pressuring ABF to acquire YRC, indicating that in exchange for committing to an acquisition of YRC, that TNFINC would agree to contract changes which would make such a transaction economically viable. When we communicated our reluctance to pursue such a transaction, TNFINC representatives advised that that IBT would be unwilling to work with us, going forward, after YRC’s deal was ratified by its employees.”

What’s more, ABF stated it is not in any way trying to drive YRCW out of business. It said the company’s goal is to simply enforce the NMFA as it was agreed upon and ratified by NMFA Teamsters, as well as to focus on a level playing field for all signatories of the NMFA.

“The case had been around for nearly two years and never really got off the ground,” wrote Stifel Nicolaus analyst David Ross in a recent research note. “ABF can now focus on negotiating a labor agreement with the Teamsters that is more reflective of market rates (or even other unionized competitors’ rates), as its current labor contract expires March 31, 2013. The company left the possibility of a second appeal open, but we believe the company’s money and energy is better spent getting the best contract rather than trying to shut a competitor down (which is what would have happened if YRC were forced to return to NMFA wage/benefit rates or pay $750mm in penalties as was sought in the suit), even if the disparity in current labor contracts is unfair, which we believe it is.”

Also last month, ABF informed the Teamsters it is pulling out of the National Master Freight Agreement (NMFA) and will negotiate a separate contract.
 
For ABF shippers, this could mean a break in rates if the nation’s sixth-largest LTL carrier can reduce its labor costs which it says are the highest in the industry.
 
In pulling out of the NMFA, a collective bargaining strategy that once covered as many as 600 trucking companies and 500,000 Teamsters back in the regulated era of the 1960s and 1970s, ABF is leaving YRC Worldwide as the only carrier of significant size in the agreement.

About the Author

John D. Schulz, Contributing Editor and Jeff Berman, Group News Editor

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Article Topics

News · LTL · YRC · ABF · Teamsters · ABFS · All topics

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