Judge Dismisses Yellow’s Breach of Contract Lawsuit Against the Teamsters

Glenn Taylor
·4 min read

The Teamsters won’t be held responsible for the demise of Yellow Corp., at least in the eyes of the courts.

A Kansas federal judge dismissed a $137.3 million breach of contract lawsuit against the Teamsters, first filed in June after the defunct trucking company said the union interfered in its attempt at a restructuring. Yellow shuttered its operations in late July, a week before filing for bankruptcy.

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U.S. District Court Judge Julie Robinson said in her ruling that the less-than-truckload (LTL) company failed to exhaust grievance procedures under the terms of the union contract before bringing their claims in the case.

Yellow sued the union for what it called a breach of their collective bargaining agreement by rejecting proposed changes to its business model—which included the intended consolidation of four separate LTL operations and shuttering—and not agreeing to schedule a required hearing on the matter.

In the suit, Yellow claimed it wasn’t required to go through with the normal grievance process because its claims didn’t involve a strike, and because it was seeking monetary damages.

But the court ruled that any grievances, disputes and interpretations of the union’s master agreement must be directed to a regional joint area committee, which then can be immediately referred to the national grievance committee.

The trucking firm had been rapidly running out of cash amid the attempted second phase of its One Yellow restructuring plan. At the time, the Teamsters had said they had fully honored the agreement’s terms.

“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,” said Teamsters general president Sean O’Brien in a statement. “As the Teamsters expected, the court saw right through Yellow’s PR stunt of a lawsuit.”

While 22,000 of roughly 30,000 Yellow employees were represented by the Teamsters, the relationship between the trucking company and the union seemed to get more contentious over the past few years. Although Yellow placed the blame on the Teamsters for sabotaging plans of a turnaround, the union touted claims that it conceded as much as $5 billion in wages and benefits since 2019 to keep the company afloat.

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

The union had also criticized Yellow for financial mismanagement despite taking a $700 million Paycheck Protection Program (PPP) loan in 2020, in exchange for the federal government taking a nearly 30 percent stake in the company.

The dust hasn’t quite settled on Yellow and the Teamsters, even months after the company ceased operations. The LTL wants to block the union’s effort to claim $257 million in debt it says the fallen trucker owes in benefit liability.

The Chapter 11 claim asserted by the Western Conference of Teamsters Pension Trust Fund is 14 years late and charges improper interest, Yellow said in a filing with a Delaware bankruptcy court.

Aside from the Teamsters battle, Yellow is still engaged in a legal battle with another pension fund, Central States Pension Fund (CSPF). The bankruptcy court is soon expected to rule on a venue for hearing $6 billion in withdrawal liability claims from the funds. While the pension funds have asked that the dispute be settled through arbitration, Yellow wants the matter to stay before the bankruptcy court.

Already having auctioned off most of its terminals for roughly $2 billion, Yellow’s bankruptcy estate is currently in the process of selling its rolling stock.

The Teamsters-Yellow drama also comes as a group of union delivery drivers continue to picket Amazon warehouses, with the latest occurring in City of Industry, Calif. on Monday.

Delivery drivers that work for the last-mile delivery company Battle-Tested Strategies—a company formerly contracted as an Amazon delivery partner—have picketed more than 30 warehouses since last June. The firm is accusing Amazon of unfair labor practices against its workers, with the Palmdale, Calif.-based workers attempting to address low wages and dangerous working conditions, including exposure to extreme heat.

Amazon cut ties with the delivery company last year for what the e-commerce giant called “a track record of failing to perform,” but the delivery firm continues to present itself as a group of “Amazon delivery drivers” in the press materials coordinated by the Teamsters.