The third time wasn't the charm for ABF Freight System Inc. in its three-year legal battle to overturn separate collective bargaining agreements reached in 2009 and 2010 between the Teamsters Union and ABF's less-than-truckload (LTL) rival YRC Worldwide Inc.
On Aug. 30, the U.S. Eighth Circuit Court of Appeals in St. Louis affirmed a lower court decision dismissing ABF's complaint that separate agreements negotiated between YRC and the Teamsters were illegal because they fell outside the scope of the National Master Freight Agreement, the compact governing labor relations in the trucking business.
The appellate court's decision marks the third time ABF has failed in its effort to reverse the separate agreements. Federal District Court Judge Susan Webber Wright has twice before dismissed ABF's complaint.
In a statement after the appellate court ruling, Fort Smith, Ark.-based ABF said it was reviewing the decision and assessing its options. It said it was "disappointed" with the ruling. By contrast, Overland Park, Kan.-based YRC said it was pleased with the decision.
YRC had received three rounds of concessions from its unionized workers calling for significant wage and benefit cuts. The separate agreements were seen at the time as vital to keeping financially ailing YRC in business. However, ABF argued that it never received similar concessions and that the givebacks to YRC gave its rival a significant and unfair cost advantage. ABF has the highest cost structure in the LTL business. The Teamsters represent workers at both companies.
ABF had sought to return YRC's cost structure to the levels that existed prior to the separate agreements. It also sued YRC and the Teamsters for $750 million in damages.
CONTRACT NEGOTIATIONS CONTINUE
In June, ABF's approximately 7,500 unionized workers ratified a five-year collective bargaining agreement. The tentative compact calls for an immediate 7-percent wage reduction, which would be recouped in increments over the life of the contract. For the first time, ABF can subcontract out over-the-road driving, at least up to the equivalent of 6 percent of its total miles. In return, all current union health, welfare, and pension benefits will be maintained. Workers would get a 1-percent bonus if ABF's operating ratio—the ratio of expenses to revenues—fell between 95.1 and 96. They would get a 2-percent bonus if the ratio fell between 93.1 and 95 and a 3-percent bonus if it dropped below 93.
ABF's national compact cannot be implemented until all regional supplements have been renegotiated and ratified by the affected members. All but two of the original 27 supplemental agreements have been approved. However, in late August members of the central region local cartage agreement—the largest ABF supplement with about 1,700 affected members—rejected their compact for a second time. Unionized office employees in the western region did the same. Under the Teamster constitution, after two rejections, the union's principal negotiators must return to the bargaining table to address the issues. If no new agreement is reached or members reject a proposal for a third time, a strike vote would be taken in the affected areas.
ABF and the union have agreed to another 30-day extension of the current agreement to Sept. 30 in order to give both sides time to hammer out an agreement. This marks the sixth one-month extension since the current contract expired March 31.