A federal appeals court yesterday reversed an earlier district court's decision that had dismissed a lawsuit filed by ABF Freight System Inc. against YRC Worldwide Inc. and the Teamsters Union.
The lawsuit alleged that three wage and benefit agreements entered into by rival YRC Worldwide Inc. and the Teamsters union over the past two years were made outside National Master Freight Agreement (NMFA), a collective bargaining compact that governs most of the nation's unionized trucking companies, including YRC and ABF. ABF argued the agreements between the Teamsters Union and YRC should, therefore, be rendered null and void. Last December, a federal district court in Arkansas ruled that the NMFA and the YRC-Teamster agreements were separate legal documents and that ABF lacked jurisdiction to challenge the YRC compacts.
Yesterday's ruling by the U.S. Court of Appeals for the Eighth Circuit in St. Louis reverses that decision and remands the case to the lower court in Arkansas for further proceedings.
The appeals court ruling is a legal victory for ABF, which is also seeking $750 million in damages from YRC and the Teamsters Union. Fort Smith, Ark.-based ABF had argued that the multiple agreements reached over the past two years by YRC and the Teamsters violated the five-year National Master Freight Agreement (NMFA) because they were not equally applied to all the companies covered by the compact, which was signed in 2008.
In a statement, ABF said it is "very pleased with [the appeals court's] decision and looks forward to further proceedings on its lawsuit seeking to level the playing field for all parties" of the NMFA.
The appeals court ruling is a setback to YRC, which could be faced with the possibility of having its labor contracts returned to NMFA status and voided by the courts. Such a move would rescind much of the cost savings the company has reaped through its separate agreements with the Teamsters.
In 2010, ABF and the Teamster leadership reached an agreement for wage and benefit reductions similar to what the union granted to YRC. However, ABF's rank-and-file employees rejected the proposal, leaving ABF at what it contends is a significant cost disadvantage to YRC.
In the suit, ABF said it had held discussions in 2007 with the Teamsters about negotiating a contract separately from the NMFA. However, the company was pressured by the union to remain with the understanding that the 2008 NMFA was to be a "national standards agreement" for all the companies that signed it.