The ABF-YRC legal tangle

In case you did not know this, shortly before Thanksgiving, one LTL heavyweight decided to sue, make that counter-sue, another.

The two parties involved here: ABF Freight Systems and YRC Worldwide.

As reported on this Website, 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 the reason for taking legal action is 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. The agreement is being viewed by several industry experts as core to its survival. Some of the key components of the deal include: resuming pension contributions on June 1, 2011 at a 25 percent contribution rate; revised union work rules, which is comprised of reduced vacation time, a flexible work week, and four-hour work classification; and a renewal of its expiring ABS facility, among others. YRCW expects this deal to save the company $350 million annually during the duration of the agreement.

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

Zollars described that lawsuit as “completely without merit,” adding that ABF is not a party to YRCW’s labor contract and the suit is “in direct contradiction to laws governing labor contracts.”

While YRCW may be on the path back to solid footing with this agreement, ABFS President and Chief Executive Officer Wesley Kemp blasted it, noting that the three rounds of concessions granted to YRCW are in violation of the NMFA that has been in effect since April 2008.

“The NMFA applies equally to every company that signed it and quite simply, with these three amendments, it does not do that,” Kemp said in a statement. “We need a long-term, industry-wide solution that is fair to all NMFA parties. We have the obligation to our employees, to our customers and to Arkansas Best shareholders to enforce our rights under the NMFA and compete on the same playing field with our industry peers.”

But, wait, there is more.

Earlier this month, 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 says 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.

And that leads us to a hearing set for December 16, which should make for one fascinating day in the LTL industry. It is hard to say what happens, but it is highly likely it will be messy and ruffle some feathers on both sides.