ABF Can Proceed with Suit Against YRC, Teamsters

A court has ruled that ABF can proceed in its lawsuit against YRC and the Teamsters that claims the deal the struggling LTL truck with the union in its restructuring plan isn't fair to other companies that are part of the National Master Freight Agreement.

The U.S. Court of Appeals for the Eighth Circuit (St. Louis) reversed and remanded a lower court's previous dismissal of ABF's lawsuit against YRS, the Teamsters and other related entities.

When the original lawsuit was filed in November 2010, ABF Freight System filed suit against rival YRC Worldwide and the Teamsters aimed at blocking a labor agreement central to YRC's survival.

That move came after the Teamsters membership ratified a "restructuring plan" aimed at saving more than 25,000 union jobs. ABF claimed that wasn't fair to other less-than-truckload competitors that are also covered under the National Master Freight Agreement. It was the third round of union concessions at the struggling LTL carrier.

ABF sought to have the lower court create an appropriate grievance review committee to resolve the dispute, or to have the contract amendments benefiting only YRC declared null and void by the court, as required by the NMFA. ABF also sought an award of monetary damages estimated to be approximately $750 million. ABF will continue to seek that relief on remand.

YRC Worldwide maintains that the claims are without merit. The company says it is confident it will prevail in district court. YRC is continuing to move forward toward completion as previously announced.

According to the Stifel Nicolaus Transportation & Logistics Research Group, the Appeals Court decision is a blow to YRC Worldwide, which is seeking to complete its second out of court restructuring by the July 22 deadline.

In its original motion to dismiss, YRC itself stated that the mere existence of a lawsuit could substantially imperil YRC's liquidity, jeopardize its debt restructuring, and discourage its ability to obtain new financing. While no decision has been made on the merits of the case, the mere specter of losing its substantial labor cost advantage and paying damages puts at risk the company's already tenuous operating viability.