Judge again dismisses ABF suit against Teamsters

U.S. District Court Judge Susan Webber Wright has again ruled against Arkansas Best Corp. in the trucking company’s attempt to pursue a $750 million claim against the International Brotherhood of Teamsters and other parties.

Arkansas Best issued a statement Wednesday (Aug. 1) saying they were “disappointed” by Wright’s ruling, and indicated they are considering a second appeal of her dismissal.

“ABF is studying the ruling and evaluating its options which include, among other avenues, taking a second appeal to the Eighth Circuit or refiling the case in the District Court,” the company noted in its statement.

On Nov. 1, 2010, Arkansas Best Corp. — the parent company of ABF Freight System — filed a lawsuit seeking the $750 million in financial damages from alleged violations of a National Master Freight Agreement (NMFA) by the International Brotherhood of Teamsters and others.

YRC 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 has been unable to receive similar concessions from the union.

On Dec. 16, 2010, Judge Wright (Eastern District of Arkansas) dismissed the suit for lack of subject matter jurisdiction. On April 12, 2011, attorneys for ABF presented their case in the United States Court of Appeal for the Eighth Circuit (St. Louis) as to why the court should overturn a lower court ruling. On July 6, the Eighth Circuit ruled in favor of ABF. The 17-page ruling issued by the three-judge panel included several comments that favored the ABF argument that the lawsuit should be heard in the district court.

“In view of the course of dealing  between ABF and the Union – detailed at length by the district court – the Union may have defenses to ABF’s claims. However, as to the Union defendants and its bargaining representative TNFINC, ABF has rights under the NMFA sufficient to show an injury-in-fact that is fairly traceable to the challenged acts of the union defendants and is likely redressable in court,” the ruling noted.

One of the reasons Wright again dismissed the suit was her opinion that ABF had not followed all the procedures available outside of the courts.

“ABF, not the Union, stopped the grievance procedure from moving forward by filing this action. Nor does the Court find that the Union’s actions have prejudiced ABF. The parties have not engaged in discovery or litigated substantial issues on the merits, and it would not be inequitable at this stage to require ABF to proceed under the grievance procedure,” Wright noted in the opinion issued Wednesday (Aug. 1). (Link here for a PDF copy of the ruling.)

Continuing, she noted: Because ABF has failed to allege facts showing that exhaustion is not required in this case, it appears from the face of the complaint that ABF has failed to exhaust the NMFA grievance procedure.”

Jack Waldo, a transportation sector analyst with Little Rock-based Stephens Inc., has said the YRC-Teamster arrangement has placed ABF at a disadvantage, but he is not optimistic about the arrangement ending anytime soon.

“The harsh reality for ABFS is that they are currently at a competitive disadvantage, one largely created by the same Union that collects dues from ABFS' Teamster employees, and there’s a strong likelihood that this competitive advantage will remain for an extended period of time unless some drastic steps are taken by outside forces,” Waldo wrote in a 2010 investor note. “Unfortunately for ABFS, the eventual outcome of trying to remedy this situation is largely out of their hands.”