Mass Layoff Settlement Reached for Defunct Yellow Corp.
A significant development has emerged in the bankruptcy proceedings of Yellow Corp., the former less-than-truckload carrier that ceased operations in July 2023. On Tuesday, a Delaware federal bankruptcy court hearing revealed that the company has reached tentative settlements with two plaintiff classes alleging failure to provide proper notification ahead of mass layoffs.
The Moore Class and Coughlen Claimants
The Moore class, comprising approximately 3,200 nonunion employees, and the Coughlen claimants, a group of 482 mostly union employees, have agreed to settle their claims for undisclosed amounts. Notably, around 2,700 former employees in the Moore class had already signed severance agreements releasing the company from further liability, which the court has deemed valid and enforceable.
Background of the Layoffs
Yellow Corp. released most of its nonunion employees on July 28, 2023, followed by the release of Teamsters employees two days later, on the same day it ceased operations. The company had claimed it didn’t have sufficient time to provide the required 60 days’ notice under the Worker Adjustment and Retraining Notification Act.
Court Rulings and Defenses
The court previously rejected Yellow’s “faltering company” and “unanticipated business circumstances” defenses, which aimed to justify shortening the notification period. Furthermore, the court deemed the WARN notices provided by Yellow as “insufficient” due to the lack of detail, including the omission of a July 18, 2023, Teamsters’ strike notice.
CEO Testimony and Strike Notice
Former Yellow CEO Darren Hawkins testified on Tuesday that the company deliberately excluded the strike notice from the layoff notifications to union employees to avoid exacerbating the situation. Hawkins also stated that the company had previously cited the strike notice as the reason for its closure.
Liquidating Fiduciary Defense and Last Shipment
The timing of Yellow’s last shipment remains a crucial factor in determining whether the company can use a “liquidating fiduciary” defense. Yellow claims it saw no viable path forward on July 26, 2023, and was unwinding its affairs and preparing to sell assets at the time of its closure. The court will rule on the company’s operating status and its handling of the WARN notifications, which may impact the claim amounts.
Severance Payments and Liability Releases
Separate testimony from Yellow CFO Dan Olivier provided insight into the last shipment, while the court will also decide whether certain employees who received severance payments must sign liability releases after the fact. Yellow had accelerated severance payments to some employees ahead of its bankruptcy filing, expecting them to sign a release later.
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