Yellow Freight in Violation of ERISA

Kansas City, MOAn ERISA class action suit has been filed against YRC Worldwide Inc., alleging violations of ERISA statutes. "We represent people who are either retired or still working for Yellow Freight [YRC]," says attorney Diane Nygaard. "This class is on behalf of all plan participants whose 'Defined Contributions' and 'Individual Account' plans invested in Yellow Freight stock from April 6, 2009 until the present."

In a nutshell, the Yellow Freight Pension Plan invested in Yellow Freight stock and the stock took a big tumble, potentially affecting tens of thousands of truck drivers. By the end of 2007, Yellow Freight had over 22,700 employees on its payroll, mostly long distance truck drivers nationwide as well as employees of Roadway Express, which was acquired by Yellow Freight. The company also bought New Penn, Holland, and Reddaway—all transportation companies.

Nygarrd explains that Yellow Freight was "on the ropes" when it bought Roadway Express a few years back. It took on a lot of debt and servicing that has led one of the largest transportation service providers in the world into imminent bankruptcy. "It is now considered to be on death row," says Nygaard.

YRC recently announced that bondholders will now become stockholders. "The company is trying to eliminate their corporate debt to investors to improve their balance sheet and reduce the amount of interest they have to pay the bondholders," explains Nygaard. "This plan may or may not be approved by a vote of the bondholders—the deadline has been extended to the end of this year.

"The trustees of the ERISA plan have continued to buy and hold the YRC stock in the plan, despite the fact that the financials of the company have deteriorated inexorably over the last 18 months and thereby reducing the value of the retirement savings accumulated for members of the plan.

"The company made matching contributions to the employees' plan accounts equal to 50 percent of each participant's pre-tax contribution every year and all those matching contributions were invested in stock of the company."

Cases are on file in federal court in Kansas City Kansas because YRC headquarters is located in Overland Park, a suburb of Kansas City. The defendants are Bill Zollars, CEO and Chairman of the Board for Yellow Freight, as well as the members of the committee who are responsible for the plan.