Federal Judge dismisses $750 million Arkansas Best lawsuit

U.S. District Court Judge Susan Webber Wright (Eastern District of Arkansas) has granted a motion to dismiss a lawsuit filed by Fort Smith-based Arkansas Best Corp. against YRC and the International Brotherhood of Teamsters.

On Nov. 1, Arkansas Best Corp. filed a lawsuit seeking up to $750 million in financial damages from alleged violations of a National Master Freight Agreement (NMFA) by the International Brotherhood of Teamsters and others.

Arkansas Best issued this statement after the dismissal: “Following the December 16 hearing on motions to dismiss ABF’s case for lack of subject matter jurisdiction, Judge Wright has granted the motions to dismiss. We are disappointed in this outcome and continue to believe that our November 1 lawsuit is strong. We are reviewing the Court’s ruling and considering next steps including possibly an appeal of the decision to the United States Court of Appeals for the Eighth Circuit.”

The Teamsters said the ruling was the “best possible outcome” for the 25,000 union drivers at YRC and the 7,000 at ABF.

“We have said all along that ABF took itself out of the National Master Freight Agreement and therefore has no right to bring the suit,” Brad Raymond, Teamsters General Counsel, said in this statement. “The bench dismissal should send a strong message to ABF that its attempts to interfere with the contractual arrangement between YRCW and its Teamsters-represented employees must end.”

Tyson Johnson, director of the Teamsters National Freight Division, noted: “ABF needs to realize that it cannot circumvent the negotiating and ratification process through the courts. We negotiated with ABF in good faith earlier this year, reaching an agreement that was overwhelmingly rejected by its employees. ABF should concentrate on freight pick-up and delivery operations of its company rather than trying to put YRCW out of business through litigation and other means. We are pleased that Judge Wright dismissed this lawsuit because it removes an impediment to YRCW’s restructuring efforts.”

BACKGROUND

The NMFA, implemented April 1, 2008, was designed to cause equal labor costs and other benefit payments among trucking companies with drivers represented by the Teamsters.

However, YRC Worldwide, the largest less-than-truckload carrier in the U.S., received three rounds of wage and benefit concessions from the Teamsters, with the most recent announced Nov. 1 that includes up to $350 million annually through 2013. Previously, the Teamsters voted to approve a 15% pay cut among unionized YRC drivers.

ABF Freight System, the largest subsidiary of Arkansas Best and a less-than-truckload carrier that competes with YRC, was unable to obtain similar concessions from the Teamsters. In April, ABF and the Teamsters hammered out a deal that included a similar 15% pay cut approved by Teamster drivers for YRC. In attempting to convince drivers to approve the deal, Teamsters officials said Arkansas Best was losing about $10 million a month in 2010 and needed pay cuts to keep from burning through cash reserves.

But the special pleading did not sway union members. Ballots were sent April 30 to about 7,000 active employees and about 1,000 drivers with recall rights. The final count was 3,764 votes against and 2,936 votes for the new contract.

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