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ABF files $750-million suit against Teamsters, YRC Worldwide

Nov. 1, 2010
ABF Freight System has filed a grievance as well as a lawsuit against both the International Brotherhood of Teamsters (IBT) and YRC Worldwide (YRCW) in response to a new labor deal the two parties reached ostensibly to help make YRCW viable as a transportation entity going forward

ABF Freight System has filed a grievance as well as a lawsuit against both the International Brotherhood of Teamsters (IBT) and YRC Worldwide (YRCW) in response to a new labor deal the two parties reached ostensibly to help make YRCW viable as a transportation entity going forward.

Named in the suit are IBT; the Teamsters National Freight Industry Negotiating Committee; Teamsters Locals 373 (Fort Smith, AR) and 878 (Little Rock, AR), individually and as representatives of a class of all Teamsters Locals that are parties to the NMFA (National Master Freight Agreement); YRC Inc.; New Penn Motor Express Inc.; USF Holland Inc.; and Trucking Management, Inc.

ABF, a subsidiary of Arkansas Best Corp., is claiming that the Teamsters-YRC deal violates the National Master Freight Agreement, the collective bargaining agreement that covers most unionized trucking employees in the U.S.

Download the entire court case

The suit, filed in federal court in Arkansas, claims the defendants violated the NMFA in 2009 and again this year by entering into concessionary side agreements with YRC companies to the exclusion of ABF and other carriers that are signatories of the NMFA.

“It is ABF’s firm belief that the three rounds of concessions granted to YRC – with the latest deal just ratified last week – by the IBT are in violation of the NMFA that has been in effect since April 2008,” said Wesley Kemp, president & CEO of ABF Freight System, Inc. “The NMFA applies equally to every company that signed it and quite simply, with these three amendments, it does not do that.”

“We need a long-term, industry-wide solution that is fair to all NMFA parties,” he continued. “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.”

Teamster members ratified the new contract, known as the “Restructuring Plan” late last week. The contract was agreed to on Sept. 29 and extends the current NMFA and Supplemental Agreements for two years, out to March 31, 2015.

The Restructuring Plan provides for annual wage and benefit increases, including a resumption of partial pension contributions beginning in June 2011, the Teamsters said. The Teamsters said at the time of the initial agreement that YRCW will only be a viable entity going forward “with a reduced level of debt and new investors. The sacrifices of YRCW Teamsters set the stage for the company’s lenders to do their part and make this company an attractive investment for new investors,” Tyson Johnson, director of the Teamsters National Freight Div/, said at the itme.

Under terms released by the Teamsters, a 15% wage reduction will continue until that time. Hourly rate and mileage increases will be instituted of 40 cents on April 1, 2011; 45 cents on April 1, 2012; and 40 cents each on April 1, 2013 and April 1, 2014. Those increases would be less the 15% reduction, the Teamsters said.

ABF claims “the third and latest amendment to the NMFA is expected to ‘provide further wage, benefit and work rule changes that are expected to generate an average of $350 million in annual savings through the end of the extended agreement’ according to YRC Worldwide Inc.’s 8-K report, filed on Sept. 29.”

A news release issued by ABF also states that the concessionary agreements were “unlawful, unfair and inconsistent with the plain language, intent and purpose of the NMFA and that they resulted in a substantial competitive disadvantage for ABF.”

Kathy Fieweger, a spokesperson for ABF, said the suit is in response to the inability of ABF to successfully negotiate with the Teamsters, which then struck a separate agreement with YRC. ABF has about 8,000 union employees.

“No one is supposed to have a [separate] agreement” under the NMFA, Fieweger told Fleet Owner. “There is no one company that is supposed to have a side agreement.”

Fieweger added that because of the separate concessionary agreements the Teamsters reached with YRCW (the first being in January 2009), ABF was “forced” into trying to resolve the situation with the union.

“They haven’t been able to resolve this issue with IBT for over a year,” Fieweger said, pointing out that ABF has had continued discussions with the Teamsters over the issue. In fact, ABF had previously reached agreement with the IBT negotiating committee, only to have the “rank-and-file” members reject it, she said.

ABF is also seeking financial damages estimated to be about $750 million by the time the NMFA is set to expire on March 31, 2013.

David Smith, president & CEO of Trucking Management, Inc. (TMI), declined comment on the suit. Calls to the Teamsters and YRC Worldwide for comment have yet to be returned. TMI is the primary multi-employer bargaining arm of the unionized general freight trucking industry and negotiates and administers the NMFA on behalf of its membership.

Fieweger added that ABF has been working with the Teamsters for more than a year on concessions. A preliminary agreement was rejected by ABF’s Teamster members in May.

A full copy of the ABF legal filing can be found at: www.ABFLegalAction.com.

Download the entire court case

About the Author

Brian Straight | Managing Editor

Brian joined Fleet Owner in May 2008 after spending nearly 14 years as sports editor and then managing editor of several daily newspapers.  He and his staff  won more than two dozen major writing and editing awards. Responsible for editing, editorial production functions and deadlines.

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