Teamsters to appeal decision that freed Yellow from WARN liability

The Teamsters union told former Yellow Corp. union employees that it will file an appeal on their behalf after a federal bankruptcy court in Delaware last week denied their claims that the company had failed to provide adequate notice ahead of layoffs.

Worker Adjustment and Retraining Notification Act claims from approximately 22,000 members accused the company of failing to provide 60 days’ notice prior to mass layoffs in 2023. In its Feb. 26 ruling, the court decided that Yellow (OTC: YELLQ) was a “liquidating fiduciary” winding down affairs and no longer an employer subject to WARN liability when the terminations occurred.

The court also said that if its determination of Yellow’s operating status at the time of the layoffs is incorrect, then the claims should be reduced to just 14 days’ pay and benefits, not the 60 days allowed under the law, as Yellow acted in good faith planning and preparing the WARN notices.

“The union takes several issues with the ruling that will require appeals to higher courts,” a Tuesday memo from John Murphy, Teamsters national freight director, explained to the rank and file. “The union also believes Yellow was still a business enterprise on July 30, 2023, and that the Court lacked the discretion to reduce Yellow’s WARN liability.”

The notice said the Delaware court’s decision to allow Yellow to shut down and then fire employees without any liability renders the WARN Act meaningless.

Yellow showed at a January hearing that its last shipment to a customer was made on July 29, 2023, at 11:30 p.m. EDT. While it was still making linehaul moves between facilities and prepping freight for customer pickup at its terminals when employees were notified of the layoffs on July 30, it was not engaged in “ordinary course” activities, the court ruled.

The court’s ruling on the timing of the last shipment means nonunion employees, who were terminated on July 28, 2023, while Yellow was “still making deliveries to customers,” fall under the WARN Act.

The union’s memo made clear that the outcome of its WARN litigation against Yellow does not impact “its ongoing efforts to reconcile member claims related to unpaid vacation or sick time with Yellow, nor the timing of Yellow’s payment to members of their contract-based claims.”

No timeline for the appeals process was provided.

“The union will continue to pursue and advocate for members’ claims to ensure that members receive the compensation they are owed under contract and under law,” the notice concluded.

Friday court filings showed Yellow agreed to settle two WARN claim class actions representing approximately 3,700 former employees for $12.3 million.

A separate filing with the court on Friday showed an appeal from Yellow and its largest shareholder seeking to toss out rules allowing multiemployer pension funds to delay recognition of federal bailout money (keeping employers on the hook for withdrawal liability) will proceed in the U.S. Court of Appeals for the 3rd Circuit. The outcome of the appeal has bearing on the $6.5 billion in pension claims Yellow faces.

As the litigation continues, the meter keeps running. A January monthly operating report for Yellow’s estate showed $168 million in professional and legal fees have been paid since the August 2023 bankruptcy filing.

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