Lawsuit reinstated, ABF seeks ‘level playing field’ from Teamsters

ABF contends that several rounds of Teamsters wage and benefit reductions have provided struggling YRC with an unfair advantage, and that modifications to the National Master Freight Agreement should include any company that is party to it — or the changes should be declared null and void.

The Trucker Staff

7/7/2011

FORT SMITH, Ark. — A dispute involving labor concessions and less-than-truckload giants ABF Freight Systems and YRC Worldwide will get another day in court.

An 8th U.S. Circuit Court of Appeals panel on Wednesday overturned a lower court decision to dismiss ABF’s $750 million lawsuit alleging the Teamsters union violated a collective-bargaining agreement.

The court ruled that District Judge Susan Webber Wright erred in dismissing the lawsuit late last year, and ordered new proceedings.

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ABF contends that several rounds of Teamsters wage and benefit reductions have provided struggling YRC with an unfair advantage, and that modifications to the National Master Freight Agreement should include any company that is party to it — or the changes should be declared null and void.

Union leadership last year endorsed ABF’s call for concessions comparable to those granted YRC, citing the financial difficulties at ABF brought on by the recession. Rank-and-file Teamsters working for the Fort Smith-based carrier rejected the deal, however, prompting the court action.

Wright dismissed the case on the grounds that ABF did not have legal standing to pursue the matter, with which the higher court disagreed.

ABF said in a statement the company was pleased with the decision and looks forward to another chance “to level the playing field” for all parties of the NMFA.

Anticipating the appeals court decision, Stephens Inc. analyst Jack Waldo last month said in an investor note that a favorable ruling “could be a game changer” for ABF as it seeks a more competitive cost structure and “a return to more historical levels of profitability.”

YRC, however, maintains that the claims are without merit and the company is confident it will prevail in district court. A company statement also said the decision will have no impact on ongoing restructuring efforts which will continue to move toward completion.

While the concessions were indeed much-needed relief for YRC, Dahlman Rose & Co. analyst Jason Seidl said that the ruling is a “minor positive” for ABF and a “minor negative” for YRC.

“We note that YRCW will continue to face mounting challenges until the debt deal is finalized,” Seidl wrote in Thursday’s research update. “Despite the case being remanded back to the lower court, we caution investors not to expect a final resolution for quite some time as we are sure any verdict would be met with more appeals from either side.”

Just last week in Las Vegas, delegates to the 28th International Brotherhood of Teamsters Convention unanimously approved a resolution “to prosecute chief executives and other Wall Street players responsible for the global financial crisis of 2008.”

The union said “there is no better example” of the impact of the financial crisis on Teamsters than YRC, which has flirted with bankruptcy brought on by a huge debt load, slow freight and slipping rates.

“While Wall Street schemed to profit from YRC’s failure, we gathered our best ideas and were able to keep the company afloat and 25,000 Teamster members working,” said Teamsters General Secretary-Treasurer Tom Keegel.

Carl Barelli, a 31-year Teamster, added that critics were wrong in urging union leaders to let YRC go bankrupt.

“It’s about saving the one thing absolutely vital to all of us — jobs, good-paying union jobs that allow us to provide a very good way of life for our families,” Barelli said.

Teamsters spokesman Galen Munroe says union is “analyzing it next course of action,” including whether to seek a hearing before the full 8th Circuit.

In addition to the 25,000 workers at YRC, based in Overland Park, Kan., the Teamsters represent 7,000 workers at ABF.

Kevin Jones of The Trucker staff can be reached for comment at kevinj@thetrucker.com.

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