In Pyrrhic victory, Teamsters win as judge tosses Yellow’s $137 million lawsuit

The International Brotherhood of Teamsters has won what the union calls “a major victory” in a breach of contract lawsuit against Yellow Corp.

Unfortunately for about 24,000 Teamsters who lost their jobs when Yellow ceased operations last August, the victory arrives about nine months too late.

U.S. District Court Judge Julie A. Robinson in Kansas has dismissed Yellow’s $137 million lawsuit against the union. She cited Yellow’s failure to exhaust the grievance process established under the National Master Freight Agreement for closing the case. No award was given.

“The Court is guided by the language of the NMFA [National Master Freight Agreement]. Article 8, Section 1(a) is clear that ‘all’ factual grievances, or questions of interpretation, arising under the NMFA or supplemental agreements must first go through the grievance process of the applicable supplemental agreement. This provision applies to all parties,” the U.S. District Court for the District of Kansas said.

Yellow had alleged the Teamsters union had breached the collective bargaining agreement by not approving a second phase of its operational changes. Those changes of operations, which Yellow said were crucial to the health of the company became stalled when the union objected.

Yellow cited the Teamsters’ approval in authorizing changes at Yellow’s Western unit, formerly known as Reddaway. Yellow had similar changes in mind in the Central States and East regions. But the Teamsters balked, which the company then cited when it announced cessation of operations last Aug. 7.

At the time, Yellow was the third-largest less-than-truckload (LTL) carrier in the country with more than $5 billion in revenue in 2022. Overall, it was the 13^th-largest trucking company in the country.

The Teamsters said Yellow was trying to undermine the rights of workers and discredit the Teamsters. The union vigorously defended its position and challenged what it called “the meritless breach of contract” claims filed by Yellow Corp.

The Teamsters union called the lawsuit “frivolous” and an abuse of the legal system.

“After years of corporate mismanagement, Yellow still never misses an opportunity to embarrass itself or bring further shame to what used to be one of America’s strongest freight carriers. As the Teamsters expected, the court saw right through Yellow’s PR stunt of a lawsuit,” Teamsters General President Sean M. O’Brien said in a statement.

“Yellow’s greedy executives drove this company into the ground despite enormous, selfless sacrifice from its workforce for decades. This lawsuit represented management’s desperate, last-ditch attempt to save face—and they failed yet again,” O’Brien added.

Despite taking $5 billion in wage and benefit concessions from rank-and-file Teamsters since 2019 and $700 million in a federal government bailout, Yellow Corp. filed for bankruptcy last August.

“While Yellow abuses the legal system by filing bogus claims against the Teamsters union, the company’s lawyers are actively working to attack retirees and deny workers what they are legally owed,” said Teamsters General Secretary-Treasurer Fred Zuckerman. “We will continue to fight to ensure that workers are protected and the abuse by Yellow’s executives and their opportunist corporate lawyers is put to a stop.”

Meanwhile, Yellow’s bankruptcy estate has benefited from more than $2 billion in gains from the sale of more than 50 company terminals that Yellow had owned. In addition, there is an ongoing auction of its rolling stock. That auction, run by Ritchie Bros., involves more than 6,000 pieces of equipment and could net Yellow’s estate by another $1 billion or so.