Yellow Corp. was found to be not liable for failing to provide 60 days’ notice to union employees when it ceased operations two years ago.
Bankruptcy judge Craig Goldblatt ruled that the insolvent trucking firm was a “liquidating fiduciary,” rather than an employer, when it laid off roughly 22,000 Teamsters-affiliated employees on July 30, 2023.
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The Teamsters had alleged that Yellow was in violation of the Worker Adjustment and Retraining Notification (WARN) Act in not giving its members the proper notice.
But the “liquidating fiduciary” designation meant that Yellow no longer operated a business enterprise by the time it provided the notices. When a company stops conducting business and is merely in the act of liquidating its assets, it is no longer an employer covered by the WARN Act.
“In the real world, the task of shutting down a large and complex business is typically a process that takes place over time. It cannot be accomplished just by flipping a switch,” Goldblatt’s 36-page opinion said. “And that can make the task of drawing the line between when a defendant is a ‘business enterprise’ on the one hand and ‘liquidating fiduciary’ on the other a challenging one.”
The determinant in this case came down to when the less-than-truckload (LTL) provider stopped making deliveries.
During the three-day trial from Jan. 21 to Jan. 23, the court found that Yellow made its final delivery at 11:30 p.m. Eastern Time on July 29, thus determining the company was a liquidating fiduciary from that point forward.
“From then until noon on July 30 ‘the only part of the process left was to ensure all equipment was inside the gates and we had all of our employees back at our facilities before noon so that they could be outside of the gates when the closing occurred at noon Eastern,’” the opinion said, quoting testimony from Yellow’s chief financial officer Daniel Olivier.
The Delaware court had rejected Yellow’s argument that it was a liquidating fiduciary on an earlier date, July 26, 2023, in a prior summary judgment opinion laid out in December. On that date, Yellow decided to liquidate its business, but still was running deliveries until July 29.
While the Teamsters lawyers argued that Yellow had been effectively stalling until July 30 to give the notice to avoid any liability, the court ruling indicated that the trucking company still staged freight for customer pickup and continued to employ security personnel at the terminals. Only after the final delivery, was the company no longer operating its core business functions, the court ruled.