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Yellow Corp. files $137M suit against Teamsters trucking union

The century-old trucking corporation is accusing the union of breaching its contract and blocking Yellow's efforts to modernize its business.
Yellow Corp. files $137M suit against Teamsters trucking union
Posted at 10:20 AM, Jun 28, 2023

Yellow Corporation, one of the nation's largest transportation companies, has filed a lawsuit against the International Brotherhood of Teamsters (IBT) trucking union for alleged breach of contract and attempts to block Yellow's efforts to modernize its business. 

Yellow claims the Teamsters caused more than $137 million in damages by "unjustifiably blocking, for over eight months, Yellow’s restructuring plan to modernize its business," which is necessary to avoid a looming bankruptcy.

Yellow and the Teamsters union have been tied up in negotiations since last year over the company's proposed restructuring efforts to consolidate its business operations and create a "super regional carrier" referred to as One Yellow. However, the company claims the Teamsters union is delaying it from initiating Phases 2 and 3 of its restructuring plan.

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Three years ago, Yellow received a $700 million pandemic-era bailout from the U.S. government in exchange for a 30% equity stake in the company. However, the company is reportedly running low on cash and accusing the Teamsters union of blocking Yellow's restructuring plan in attempt to force it into "economic ruin."

"For many months, we have made good faith efforts to meet with the IBT to propose a path forward that works for all parties, but they refuse even to meet, let alone engage in honest talks" Yellow Corporation management said in a statement. "We have communicated with all stakeholders in Washington, D.C., including the Biden Administration, to apprise it of the imminent loss of tens of thousands of jobs, the significant anti-competitive effects on the American economy and the devastating impact to the supply chain, and to seek their assistance in persuading the IBT to negotiate a mutually acceptable agreement. "

The complaint filed in the U.S. District Court for the District of Kansas also alleges that Teamsters General President Sean O'Brien orchestrated a "militant approach" to block Yellow's restructuring plan by leveraging the company's dire financial position. The Teamsters union has vehemently denied those claims and blamed Yellow for bad business practices.

"Yellow Corp.’s claims of breach of contract by the Teamsters are unfounded and without merit," O'Brien responded in a statement. "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."

Yellow's government loan allowed the company to stay afloat throughout its restructuring plan, but the company says economic headwinds and its contract dispute with the Teamsters union have put it in a dicey financial position. The current Teamsters contract is set to expire on March 31, 2024, and Yellow has warned that negotiations — or lack thereof — are putting the company's future at risk.

Yellow currently holds more than $1.5 billion in outstanding debt and has maintained that if the Teamsters continues to delay its restructuring plan, the company could run out of cash by as early as next month.

"Completion of One Yellow in 2023 is critical to Yellow’s ability to survive," the company said in a statement.

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