LITTLE ROCK — A federal judge dismissed a lawsuit Thursday in which Arkansas Best Corp.’s trucking subsidiary alleged that the labor agreement governing its 8,000 unionized employees was breached and put the company at a competitive disadvantage.
ABF Freight System Inc.’s lawsuit, filed last month against the Teamsters, subsidiaries of YRC Worldwide and bargaining agent Trucking Management Inc., said that the union made changes to an industrywide labor agreement to benefit YRC.
ABF sought financial damages of $750 million that it said it would sustain by March 2013, when the National Master Freight Agreement between the union and the trucking companies will expire. ABF had claimed to be a party to the agreement, which governs wages and benefits between unionized trucking companies and the Teamsters Union.
But Judge Susan Webber Wright found that ABF and YRC, in fact, had two similar but separate contracts with the union, and therefore ABF did not have standing to bring its suit.
“I’m convinced these were really separate bargaining units, separate bargains, and separate contracts,” Wright said in her ruling from the bench.
ABF Freight System will consider an appeal after a review of the court’s ruling, Arkansas Best spokesman David Humphrey said in an e-mail late Thursday afternoon.
“We are disappointed inJudge Wright’s ruling and we continue to believe that our lawsuit is strong,” Humphrey wrote.
The carrier is using its www.abflegalaction.com website to communicate about its labor-agreement dispute.
In 2007, ABF told the union it would no longer be represented by Trucking Management Inc., which represented other trucking companies, and that it would negotiate its contract separately.
The company later signed an “interim agreement” with the union that incorporated the master freight agreement the union had reached with the other companies represented by Trucking Management, as well as other “memoranda of understanding” that addressed issues such as what would happen if YRC went under.
But that doesn’t mean ABF was party to the same contract, Wright found.
“ABF decided to go off on its own and then things weren’t going quite well, so you wanted to jump back on the bandwagon with YRC, and you didn’t do it - you didn’t do it in time and you made other deals,” Wright said, addressing ABF’s attorneys.
When YRC subsidiaries ran into financial difficulties during the recession, the company negotiated three sets of amendments to the master agreement concerning wage reductions and pension contributions.
ABF attempted to negotiate a similar concession package with the union, but in late May employees rejected the deal that had been reached between the company and the union.
Wright said that whether the union’s agreements with YRC constituted a breach of contract with ABF is a separate issue that she did not have to rule on at Thursday’s hearing.
Brad Raymond, an attorney with the International Brotherhood of Teamsters in Washington, D.C., said Thursday that the ruling will help YRC restructure and remain solvent.
“This will go a long way toward helping YRC survive the recession and move forward,” he said. “People aren’t going to want to invest in something with a $750 million lawsuit hanging over it.”
YRC Worldwide Inc. noted its dire financial situation in a filing with the U.S. Securities and Exchange Commission on Thursday.
The Kansas-based trucking business still needs to secure additional funding by the end of the month, under the concessions it agreed to with the Teamsters. If funding cannot be obtained, an estimated $600 million in annual cost savings will be null and void, YRC Worldwide said in the filing.
YRC did not return phone calls or respond to e-mails seeking comment.
Arkansas Best shares rose 19 cents to close at $28.28 on the Nasdaq stock exchange. Its shares have traded as high as $33.54 and as low as $18.84 during the past year.
YRC shares fell a penny to close at $3.34 on the Nasdaq. Its shares have traded as high as $29.75 and as low as $2.52 in the past 52 weeks.
Information for this article was contributed by Laurie Whalen of the Arkansas Democrat-Gazette.
Business, Pages 30 on 12/17/2010