# Yellow Corporation

> United States Bankruptcy Court, D. Delaware · February 26, 2025

URL: https://www.frixlaw.com/law-library/cases/10812808

## Case

- **Court:** United States Bankruptcy Court, D. Delaware
- **Decided:** February 26, 2025
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10812808

## Opinion text

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
Chapter 11
In re:

Case No. 23-11069 (CTG)
YELLOW CORPORATION, et al.,

Related Docket Nos. 2576, 2577, 2578
Debtors.
MEMORANDUM OPINION
In the days leading up to its bankruptcy filing, Yellow Corporation shuttered
its business and terminated the vast majority of its employees.1 Because the company
had not provided the affected employees with 60-days’ notice, many thousands of
these former employees asserted claims in this bankruptcy case for damages arising
out of alleged violations of the WARN Act, which (subject to certain exceptions)
requires such notice of any plant closing or mass layoff.2
On summary judgment, this Court held that although on the merits the
company was entitled to provide less than 60-days’ notice (because statutory
exceptions to the notice requirement applied), the company was obligated to provide
a notice that explained the reasons for the shortened notice period. The Court
concluded that the form of notice provided by the company was deficient. But the
Court also found that material factual disputes prevented it from resolving, on
summary judgment, the questions (1) whether, at the time Yellow ordered the layoffs

1 Debtors Yellow Corporation and its affiliates are referred to, collectively, as “debtors,”
“Yellow,” or the “company.”
2 The Worker Adjustment and Retraining Notification Act of 1988, codified at
29 U.S.C. § 2101, et seq., is referred to as the “WARN Act.”
of its union employees, it was an “employer” (and thus covered by the WARN Act) or
merely a “liquidating fiduciary” (in which case the WARN Act’s requirements would
not apply); and (2) whether the Court should reduce the damages on the ground that

“the act or omission that violated this chapter was in good faith and that
the employer had reasonable grounds for believing that the act or omission was not a
violation of this chapter.”3
The Court held a 3-day trial on those two issues from January 21, 2025 to
January 23, 2025. For the reasons set forth below and based on the evidence
presented at trial, the Court finds that Yellow was a liquidating fiduciary, rather
than an employer, at the time it ordered the termination of its union employees. As

such, those terminations do not give rise to WARN Act liability. Alternatively, the
Court concludes that if Yellow were an employer subject to the WARN Act at the time
it ordered the mass layoffs, the circumstances would justify a reduction in damages,
under 29 U.S.C. § 2104(a)(4), from the 60 days of back pay and benefits otherwise
provided by statute to 14 days of back pay and benefits.4
Procedural Background
The debtors tumbled into bankruptcy on August 6, 2023.5 Several weeks

earlier, a well-publicized dispute with the Teamsters Union left many of its customers
concerned about the company’s viability. That concern quickly became a self-

3 29 U.S.C. § 2104(a)(4).
4 This Memorandum Opinion sets out the Court’s findings of fact and conclusions of law under
Fed. R. Civ. P. 52, as made applicable to this contested matter under Fed. R. Bankr. P.
9014(c).
5 D.I. 1. All docket citations are to the main case unless otherwise noted.
fulfilling prophecy, as Yellow’s customers moved their shipments to other carriers.
The result was a precipitous decline in new shipments that effectively doomed the
company.

Various parties asserted claims against the debtors under the WARN Act.
Because the WARN Act authorizes unions to assert claims on behalf of their
members, the Teamsters filed approximately 20,000 proofs of claim on behalf of
former employees who belonged to the union.6 Two other groups of former employees
(the Moore and the Coughlen plaintiffs) asserted claims through adversary
proceedings.7 The debtors filed objections to all of the WARN proofs of claim.8 In
April of 2024, the parties in the Moore adversary proceeding filed cross motions for

summary judgment.9 The parties in the disputes over union proofs of claim and both
adversary proceedings helpfully agreed to present issues common to all of the WARN
Act claims in summary judgment motions that would all be heard together.10 The
Court heard argument on the summary judgment motions on October 28, 2024. On
December 19, 2024, this Court issued a memorandum opinion providing that the
summary judgment motions would be granted in part and denied in part. On January

6 See 29 U.S.C. § 2104(a)(4).
7See Moore, et al. v. Yellow Corp., et al., Bankr. D. Del. No. 23-50457 (the “Moore Adversary”);
Coughlen, et al. v. Yellow Corp., et al., Bankr. D. Del. No. 23-50761 (the “Coughlen
Adversary”). The Moore plaintiffs were a class of more than 4,000 non-union employees. The
Coughlen plaintiffs were individual former employees, some who belonged to the union (but
elected not to be represented by the union for the purpose of asserting their claims) and others
of whom were not union members (but were not members of the Moore class).
8 D.I. 2576, 2577, 2578.
9 Moore Adversary, D.I. 42.
10 April 11, 2024 Hr’g Tr. at 23.
13, 2025, this Court issued an order, pursuant to Rule 56(g) of the Federal Rules of
Civil Procedure, implementing that ruling, which made certain dispositive findings
and deemed other issues resolved for the purposes of trial.11 Trial was set to proceed

on all issues not resolved on summary judgment on January 21 through January 23,
2025.
Shortly before trial, the Coughlen plaintiffs and the Moore class both reached
tentative settlements with the debtors that resolved their claims. The parties have
represented to the Court that their respective settlements are pending final
documentation and are subject to approval by this Court.12 The Teamsters proceeded
to trial against the debtors on behalf of the members represented by the union.13

The key substantive points that remained outstanding after the summary
judgment ruling and the two settlements were (1) whether the debtors were a
liquidating fiduciary when they laid off substantially all union employees on July 30,
2023 and (2) whether, and to what extent, damages should be reduced pursuant to
29 U.S.C. § 2104(a)(4).14
At trial, the debtors presented the live testimony of Darren Hawkins, their

former Chief Executive Officer; Daniel Olivier, their Chief Financial Officer; Sarah
Statlander, their Vice President for Human Resources; and Brian Whittman, a

11 D.I. 5390; Rule 56(g) of the Federal Rules of Civil Procedure is made applicable by Rule
7056 of the Federal Rules of Bankruptcy Procedure.
12 Coughlen Adversary, D.I. 184; Moore Adversary, D.I. 229.
13 The International Brotherhood of Teamsters is referred to as either the “Teamsters” or the
“union.”
14 D.I. 5227 at 4, 6.
managing director of Alvarez and Marsal, a firm that has served as the debtors’
financial advisor.15 The Teamsters presented the live testimony of John Murphy,
their National Freight Director and co-chair of the Teamsters National Negotiating

Committee.16 The Court found all the witness testimony to be credible. The Court
has also reviewed and considered the testimony of several witnesses whose
designated deposition testimony was admitted, and the various exhibits that have
been admitted into evidence. The parties also submitted post-trial briefs, which this
Court found helpful.17
This Court’s finding of facts and conclusions of law are set forth below. Readers
should note that this Memorandum Opinion largely picks up the story where the

Court’s December 19, 2024 summary judgment opinion left off. As such, familiarity
with that opinion is presumed.18
Findings of Fact
In the summer of 2023, Yellow was facing financial challenges.19 Yellow had
acquired various trucking companies that competed in overlapping markets.20 The
company faced an urgent need to integrate these businesses in order to eliminate

15 Jan. 21, 2025 Hr’g Tr. at 35-37 (Hawkins); Jan. 21, 2025 Hr’g Tr.at 168 (Olivier); Jan. 21,
2025 Hr’g Tr. at133-134 (Statlander); Jan. 22, 2025 Hr’g Tr. at 9 (Whittman).
16 Jan. 23, 2023 Hr’g Tr. at. 7-8 (Murphy).
17 See D.I. 5591 (debtors); D.I. 5592 (Teamsters).
18 The Court’s December 19, 2024, summary judgment opinion is docketed at D.I. 5227 and
can also be found at 2024 WL 5181660 (Bankr. D. Del. Dec. 19, 2024). It is referred to as the
“summary judgment opinion.”
19 Jan. 21, 2023 Hr’g Tr. at 40 (Hawkins).
20 Id. at 38.
redundancy and manage its cost structure.21 It dubbed this internal reorganization
effort “One Yellow,” which it sought to implement in three phases.22 It had
implemented the first phase in 2022, and in the summer 2023 was seeking to

implement the second.23
The company viewed One Yellow as the key to its long-term financial stability.
At the same that the company was focused on seeking to implement One Yellow, its
investment banker, Ducera, was actively focused on its effort to refinance the
company’s existing debt.24 The challenge, as CEO Darren Hawkins put it, was that
“the operating plan moving forward … had to go along with that refinancing.”25
Otherwise put, no lender was going to invest new capital into Yellow – capital that it

needed as its liquidity was tightening – unless and until there was a plan in place to
integrate the company’s separate lines of business and thereby reduce its operational
costs. But implementation of phase two of One Yellow required the consent of the
Teamsters union.26 And while Teamsters had consented to phase one, negotiations
over phase two were becoming protracted and bitter.27
As the summer progressed and negotiations with the Teamsters dragged on,

the company’s cash position continued to weaken. Yellow thus began looking for

21 Id.
22 Id.
23 Id. at 38-40.
24 Id. at 42 (Hawkins).
25 Jan. 21, 2025 Hr’g Tr. at 63.
26 Id. at 41.
27 Id. at 38-40.
alternative ways to extend its financial runway.28 Among Yellow’s most substantial
monthly expenses was the $50 million it paid in healthcare and pension benefits to
various pension funds.29 From June 14 to June 16, Yellow reached out to several of

these pension funds, including Central States Pension Fund (which represented the
largest share of Yellow’s pension obligations), to request a two-month contribution
deferral.30 Hawkins testified that he believed a two-month deferral could give the
company sufficient time to reach an agreement with the Teamsters, finalize its debt
refinancing, and then make a “retroactive” payment to the pension funds, such that
the employees would maintain their benefits.31 The pension funds, however, denied
the company’s deferral request.32

As the situation with the Teamsters became more critical, Yellow began
communicating directly with its employees.33 Yellow management sent emails to
employees updating them on its negotiations with the Teamsters, the steps it was
taking to preserve capital (like requesting a deferral from certain pension funds), and
the potential consequences of the failure to reach an agreement with the union.34 And

28 Id. at 47.
29 Id.
30 Debtors’ Exs. 37, 38, 39; Joint Ex. 51. The various exhibits admitted into evidence at trial
are cited as “[party’s name]’s Ex(s). ____.”
31 Jan. 21, 2025 Hr’g Tr. at 47.
32 Id. at 47-48. Joint Ex. 56. The record shows that the company, when making this request,
provided the unions with documents showing the state of the company’s financial condition.
Jan. 23, 2025 Hr’g Tr. at 32-33 (Murphy). Nevertheless, when Sean O’Brien, the Teamsters’
general president, learned of Yellow’s deferral request to the New England Teamsters
Pension Fund, he responded by saying “HELL NO.” Joint Ex. 53 (all caps original).
33 Jan. 21, 2025 Hr’g Tr. 43 (Hawkins).
34 Joint Exs. 41, 48, 50, 55, 75.
while most Yellow employees did not have email accounts, these emails were
displayed prominently on bulletin boards throughout Yellow’s terminals and often
made their way onto industry specific online forums that were frequented by Yellow

employees.35 Hawkins explained that these communications served two purposes.
The first purpose was “to be transparent.”36 Hawkins explained that “[m]any
of the employees knew me personally, and vice versa. I wanted to make sure that they
were informed of the events that were playing out. There was a tremendous amount
of media coverage and other things that were happening, and I wanted to make sure
that everyone had accurate information as it involved all of our employees.”37
The second purpose was more instrumental – to keep the Teamsters at the

negotiating table. Hawkins explained that “Yellow has a long-time, union legacy.
From the day I started when I was 21 years old, Yellow was a union company then,
and it was a union company on our last day of operation.”38 He said that he “wanted
to make sure that our employees understood where we were at and also that they
were communicating with their unions around these subjects because [] the union
leadership … [] will listen to me, but they will act upon employee input.”39

35 Jan. 21, 2025 Hr’g Tr. at 142 (Statlander). See also id. at 60 (Hawkins) (“We would send
out a document like this and everyone at the facilities that had e-mails, the terminal manager
would print it and post it.”); Coughlen Dep. Tr. at 82-83 (former employee testifying that he
saw an email from Hawkins posted on a company bulletin board).
36 Jan. 21, 2025 Hr’g Tr. at 43 (Hawkins).
37 Id.
38 Id. at 44.
39 Id. at 44-45.
But with no agreement forthcoming and no other obvious way to maintain its
business operations, Yellow acted unilaterally, and did not make its July payments
to Central States and other pension funds when they came due.40 The company’s

hope and expectation was that the unions would work with the company, and that
the parties would focus their attention on an agreement that would permit the
company to implement the second phase of One Yellow and then refinance its debt.41
But that is not how it turned out.
On July 17, Central States sent a memorandum to the Teamsters reporting
that Yellow had not made its monthly contributions. As a result, the memorandum
explained, “Yellow’s members in the Pension Fund will stop earning pension benefit

accruals for work performed on and after July 23, 2023” and “healthcare claims
incurred on or after July 23, 2023 will not be paid.”42
Later that day, Murphy sent a letter to the company on behalf of the union.
The letter reported that the union had been informed by the pension funds that the
company had failed to make its benefit payments that were due to the pension
funds.43 The letter went on to say that the union was providing the company with “a

seventy-two (72) hour notice that the affected Local Unions … intend to engage in

40 Id. at 48. Joint Ex. 62.
41 Jan. 21, 2025 Hr’g Tr. at 48 (Hawkins).
42 Joint Ex. 68 at 068.003. See also Jan. 23, 2025 Hr’g Tr. at 15 (Murphy) (“The benefit funds
sent us a letter [by] email that said that [Yellow was] not going to … make those payments
and they were going to cut off benefits to our members.”).
43 Joint Ex. 68 at 068.002.
lawful strike activity unless and until such delinquency is cured.”44 The letter stated
that “strike activity shall commence any time on or after Monday, July 24, 2023.”45
The fact of the strike notice was quickly publicized, which triggered a

precipitous decline in Yellow’s business.46 Within the first 24 hours, Yellow’s core
customers began diverting their business to other trucking companies.47 And because
there was capacity in the market, competitor freight carriers were able to pick up the
excess load quickly.48 That, in turn, triggered “a domino effect” which caused new
shipments to “evaporate.”49 Hawkins described the confluence of customers’ concerns
about Yellow’s ability to complete shipments with the existence of excess capacity in
the market as a “perfect storm.”50 The economic conditions allowed Yellow’s core

customers to divert the majority of their freight to other trucking lines within a
matter of days, significantly faster than Yellow’s management had thought possible.51
The strike notice also kicked off a flurry of activity within the company as it
prepared for a potential strike.52 Because Yellow operated on a 24/7, 365 basis, its
systems were not designed to house all of its equipment at once.53 Accordingly, it took

44 Id. See also Jan. 23, 2025 Hr’g Tr. at 15-16 (Murphy) (discussing the notice).
45 Joint Ex. 68 at 068.002.
46 Jan. 21, 2025 Hr’g Tr. at 50-51 (Hawkins).
47 Id.
48 Id. at 57.
49 Id. at 51.
50 Id. at 57.
51 Id.
52 Jan. 21, 2025 Hr’g Tr. at 51.
53 Id. at 60.
some time to prepare to have all of the company’s equipment return to its terminals
at the same time.54 For that reason, in order to prepare for a strike that would
commence by Monday, July 24, the company had to cease normal operations by

Saturday, July 22.55 “[F]rom Saturday evening through Sunday at midnight … the
complete focus had to be on having [the] equipment” secured inside a Yellow facility.56
The Teamsters called off the strike in the afternoon of Sunday, July 23, just
hours before the strike had been scheduled to start (at 12:01 a.m. on Monday).57 By
then, however, Yellow’s systems had been largely shut down. The result was
“gridlock and log jam.”58 “[W]e had trailers touching each other when we tried to get
all our equipment on terminal lots and gates locked.”59 Hawkins explained that

getting the company’s operations running again “would be a multiday event.”60
As a result, it was hardly as if Yellow could start accepting shipments again
once the strike was called off. As Hawkins explained, the company was “trying to get
the freight that we already had freed up. And also at this point, customers [were]
insisting on priority delivery and [the company was necessarily focused on] getting
that accomplished for those that had the most pressing need.”61

54 Id. at 60-61.
55 Id. at 62.
56 Id.
57 Id. at 64.
58 Jan. 21, 2025 Hr’g Tr. at 65.
59 Id. at 66.
60 Id. at 64-66.
61 Id. at 66.
Those were not the only challenges flowing from the strike notice. Yellow’s
lenders also reacted to the news, with the company’s asset-based lenders refusing to
permit it to access $50 million in credit that would have otherwise been available.62

And perhaps more fundamentally, the company’s management concluded that its
core customers would not be returning any time soon and that it would essentially be
impossible to refinance the company’s debt.63 On July 26, Yellow’s management
decided there was no path forward and it would need to liquidate the company.64
Once that decision was made, Yellow began working to effectuate an orderly
shutdown.65 Hawkins testified that the company was particularly focused on
achieving a safe and efficient winddown that minimized customer disruption and

respected the welfare of its employees.66 The company also devoted substantial
resources to its effort to prepare to file for bankruptcy protection, with a view towards
being in a position to file the case by July 31.67 While the company had begun
contingency planning as early as July 17, the work at that time was focused largely
on identifying the information that would need to be gathered in the event of a filing.68

62 Id. at 65.
63 Id. at 66; Joint Ex. 91a at 091A.002.
64 Jan. 21, 2025 Hr’g Tr. at 66-67 (Hawkins) (identifying July 26, 2023 as “the day [] I told
union leadership that I would not have the liquidity to pay employees beyond that week [and
that] we were going to have to liquidate the company.”).
65 Id. at 67.
66 Id.
67 Jan. 22, 2025 Hr’g Tr. at 14 (Whittman).
68 Id. at 13.
The company’s advisors did not begin work in earnest to prepare a bankruptcy filing
until July 26.69
Over the next five days, Yellow’s management, consultants, and lawyers (both

in-house and outside counsel) worked to (1) raise and negotiate debtor-in-possession
financing; (2) negotiate the use of cash collateral with Yellow’s three lender groups;
(3) prepare the first-day papers; (4) prepare the debtor-in-possession financing
budget; (5) organize the logistics of winding down the company (i.e., crafting a plan
to move trucks and remaining freight into Yellow’s terminals); (6) identify and
address employee issues, including WARN compliance; and (7) develop a cohesive
communications strategy.70 While Whittman from Alvarez and Marsal (the

company’s financial advisor) testified that, in light of the size and complexity of the
case, he would have preferred to have had three weeks to prepare such a filing, the
process of preparing the case for bankruptcy was condensed into a five day period.71
On July 26, Yellow began drafting its WARN notices.72 This was not the first
time Yellow had prepared such notices, as Statlander, the head of human resources,
testified that she had been involved in the preparation of such notices in connection

with personnel actions in May 2022 and then again in February and March of 2023.73
She explained that Yellow’s usual practice was that counsel would prepare the form

69 Id. at 14.
70 Id. at 15-16.
71 Id. at 15; See also Kaldenberg Dep. Tr. at 120-121 (“[I]t looks like we sent the [DIP sizing
analysis] to Apollo on [July] 26th.”).
72 Jan. 21, 2025 Hr’g Tr. at 135-136 (Statlander).
73 Id. 135.
of notice, which would be shared with Yellow’s human resources department.74
Statlander testified that the company followed this same process in preparing the
July 2023 WARN notices, though on a compressed timeline.75 The notices were sent

to union leadership on July 30, 2023, and then to the approximately 20,000 employees
the next day.76 The terminations were also communicated in meetings and phone
calls.77
Yellow’s employees were generally unsurprised to hear the news.78 Broadly
speaking, the company’s employees were aware of the impact the strike notice had on
the company.79 In communicating with employees about the cause of the company’s
failure at the time of the terminations, Yellow took care to avoid pointing fingers at

the Teamsters. Statlander, for example, testified that the company “didn’t want to
potentially inflame the situation by citing the actions of the [Teamsters] to the Union
employees.”80 Hawkins testified to similar effect.81 As he explained on cross

74 Id.
75 Id. at 135, 139.
76 Joint Ex. 104; Jan. 21, 2025 Hr’g Tr. at 158 (Statlander).
77 Coughlen Dep. Tr. at 104-105; Torres Dep. Tr. at 84-85. See also Jan. 21, 2025 Hr’g Tr. at
140 (Statlander).
78 Coughlen Dep. Tr. at 104-105 testifying that he was not surprised to receive a call on July
30 indicating that the company was closing because “the previous week Yellow had stopped
picking up freight); Torres Dep. Tr. at 86; Green Dep. Tr. at 38-39. See also Jan. 21, 2025
Hr’g Tr. at 140 (Statlander) (“I don’t think anyone was surprised by why they had been called
into that meeting that day.”).
79 Id. at 56 (Hawkins) (testifying that the company’s employees were “[a]bsolutely” aware of
the effect of the strike notice on the company).
80 Jan. 21, 2025 Hr’g Tr. at 138 (Statlander).
81 Id. at 105 (Hawkins).
examination, the company had some concern about physical violence at the time of
the layoffs, and the company did not wish to “take a very difficult situation and make
it worse.”82

The company’s plan was to shut down, and lay off the union employees, by noon
eastern standard time on Sunday, July 30.83 Because Sundays were the slowest day
of the week, with the fewest number of employees on site, the company viewed a
daytime closing on July 30 as the “ideal” choice.84
By that time, Yellow was no longer working to deliver shipments to its
customers.85 Instead, the goal in these final days was to “move freight as far as we
could.”86 Sometimes that resulted in a delivery, sometimes freight was simply

transported to a terminal and left for the customer to pick up.87
Yellow made its final delivery at 11:30 p.m. Eastern Time on July 29, 2023.
Daniel Olivier, the company’s CFO, testified that he was able to draw that conclusion
from his review of various of the company’s business records, including payroll
records.88 The Court credits this testimony and finds that the last shipment was

82 Id. at 128.
83 Id. at 68.
84 Id. at 67.
85 Id. at 68.
86 Jan. 21, 2025 Hr’g Tr. at 68.
87 Id.
88 Id. at 169-180 (Olivier); Debtors’ Exs. 112-118. The Court concluded that some but not all
of the documents on which Olivier relied were properly admissible into evidence. Jan. 21,
2025 Hr’g Tr. at 176-178, 183-185, 188-198, 223-228. The Court is satisfied that the
documents that were admitted into evidence sufficiently establish the point. Because
Olivier’s testimony derives entirely from his review of these documents, the Court’s finding
delivered at 11:30 p.m. on July 29. 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.”89
Jurisdiction
The district court has subject-matter jurisdiction over this proceeding under
28 U.S.C. § 1334(b), as a dispute “arising under” § 502 of the Bankruptcy Code. This
case has been referred to this Court under 28 U.S.C. § 157(a) and the district court’s

is grounded primarily on the underlying documents themselves, informed by Olivier’s
explanation of the nature of these business records (as to which Olivier did have personal
knowledge).
The Court also reserved judgment on a handful of other evidentiary matters pending the
Court’s review of the trial transcript. The resolution of those issues is as follows:
(1) The objection to a portion of Hawkins’ testimony (on Jan. 21, pp. 69-70) is sustained
on the ground that the debtors’ conduct after the alleged WARN Act violations to
assist in placing affected former employees is not relevant to the resolution of either
of the issues before the Court.
(2) The relevance objection to testimony elicited on cross-examination of Hawkins (on
Jan. 21, pp. 86-87) is overruled. The similarity between the work performed after July
30 and the work performed in the ordinary course, while not dispositive, is a relevant
consideration. See infra at p. 24.
(3) The objection to the questions of Whittman on cross examination (on Jan. 22, p. 27)
on the ground of lack of foundation are overruled. Subsequent testimony established
that the witness had sufficient personal knowledge of the matters addressed for the
testimony to be admissible under Rule 602.
(4) The objection to the impeachment (on Jan. 22, p. 38) is overruled. Whether or not the
statement in question is “inconsistent” with the witness’ trial testimony within the
meaning of Rule 801(d)(1)(A) is a close question, but beside the point in view of the
independent admissibility of the deposition testimony under Rule 801(d)(2)(D).
(5) To the extent this Memorandum Opinion relies on designated deposition testimony,
this Court has concluded that any objections to the testimony on which it relies are
properly overruled.
89 Jan. 21, 2025 Hr’g Tr. at 69 (Hawkins).
standing order of February 29, 2012. This claims allowance dispute is a core matter
under 28 U.S.C. § 157(b)(2)(B).
Analysis
I. The debtors became liquidating fiduciaries on July 29, 2023, and were
therefore not subject to 29 U.S.C. § 2102’s notice requirements when
they laid off their union employees on July 30, 2023.
The summary judgment opinion (at pp. 42-49) provided an overview of the legal
principles that mark the line between an “employer” that runs a “business enterprise”
and is thus covered by the WARN Act, and a “liquidating fiduciary” that is not.90 In
short, once an entity that is winding down has stopped running its business but is
merely in the process of liquidating, it is no longer an employer, but is instead a
liquidating fiduciary.

As the facts of this case demonstrate, 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. 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 guidance from the
caselaw is, in large part, that “the more closely the activities resemble those of a

business winding up its affairs, the more likely it is the entity is not subject to the

90 See summary judgment opinion. See also In re United Healthcare Sys., 200 F.3d 170, 176-
177 (3d Cir. 1999). To enforce the WARN Act, the plaintiff must establish that the defendant
is an employer under the statute. Because demonstrating the applicability of the statute is
an element of the claim, the Teamsters correctly acknowledged that the plaintiff bears the
burden of proving up facts that satisfy the element. Jan. 23, 2025 Hr’g Tr. at 104-105 (closing
argument).
WARN Act” and vice versa.91 Based on that guidance, the Court concluded on
summary judgment that because the debtors were still in the process of making
deliveries when they terminated their non-union employees on July 28, they were

still “employers” at that time, and thus covered by the WARN Act. But because the
summary judgment record did not reveal whether the final delivery was made before
or after the July 30 termination of the union employees, it denied summary judgment
on whether the debtors were “employers” when they terminated the union employees.
The Court’s summary judgment opinion relied heavily on the Third Circuit’s
decision in In re United Healthcare System.92 Because the relevant analysis is
necessarily fact dependent, the details of what happened there warrant careful

review. The defendant there was a hospital in New Jersey.93 The hospital had been
experiencing financial distress since 1993, but its issues did not become critical until
1996.94 By then, the hospital was having trouble “maintaining essential supplies
(such as blood).”95 That year, United Healthcare System engaged in discussions
regarding potential transactions with other hospitals.96 Though none of these
negotiations led to an agreement, the hospital “did not believe financial problems

would force it to close.”97 It adopted a budget for 1997 that showed short term losses

91 In re United Healthcare Sys., 200 F.3d at 178.
92 200 F.3d 170 (3d Cir. 1999).
93 Id. at 172.
94 Id.
95 Id.
96 Id.
97 Id.
but positive revenues by year end. And for a time, the hospital conducted business
as usual.98
In early 1997, however, United Healthcare System began to divert

“withholding and other tax payments to meet general operating expenses.”99 It was
then that Primary Healthcare offered to purchase the hospital.100 In the midst of
those negotiations, United Healthcare System’s secured lender, Daiwa, expressed
doubts over the viability of the hospital.101 Discussions with United Healthcare
System about the pending merger did not allay the lender’s fears.102
On February 13, 1997, Daiwa issued a notice of default and terminated all
financing.103 As a result, United Healthcare System was unable to continue its daily

operations or meet its daily expenses.104 On the same day, Blue Cross Blue Shield
stopped providing health insurance to United Healthcare System’s employees
because of non-payment.105 Three days later, on February 16, United Healthcare
System decided to sell its assets to another hospital system, Saint Barnabas, and
close the hospital.106

98 In re United Healthcare Sys., 200 F.3d at 172.
99 Id.
100 Id.
101 Id.
102 Id.
103 Id. at 172-173.
104 In re United Healthcare Sys., 200 F.3d at 173.
105 Id.
106 Id.
On February 19, United Healthcare System informed the New Jersey
Department of Health that “it would close and surrendered its certificates of need.”107
The New Jersey Department of Health revoked the hospital’s certificates of need and

issued them to Saint Barnabas to facilitate the transfer of United Healthcare
System’s services.108 The same day, United Healthcare System filed a bankruptcy
petition and provided WARN notices to its employees.109
The WARN notice said that the terminations would be effective on or around
April 20 and that the employees should continue reporting to work until that date.110
By February 21, all of United Healthcare System’s patients had been sent home or
transferred to a Saint Barnabas affiliate.111 As a result, United Healthcare System’s

“employees were unable to perform their regular duties but instead cleaned, took
inventory and prepared the company’s assets for sale.”112 On March 6, the hospital
told 1,200 of its 1,300 employees that they should no longer report to work.113
The parties agreed that the 1,200 employees were entitled to be paid for the 16
days they worked between the issuance of the February 19 WARN notice and the
March 6 termination. The question was whether those employees had valid WARN

Act claims for the additional 44 days of pay to which they would be entitled if the

107 Id.
108 Id.
109 Id.
110 In re United Healthcare Sys., 200 F.3d at 173.
111 Id.
112 Id.
113 Id.
WARN Act were applicable to the hospital as of the date of their termination.114 The
bankruptcy and district courts both found that the debtor was an employer through
the time of the March 6 terminations.115 The Committee appealed to the Third

Circuit.
The Third Circuit reversed, holding that the hospital was a liquidating
fiduciary. Importantly for the purpose of this case, the court focused its analysis on
whether the defendant was an “employer” “when it terminated its employees on
March 6, 1997.”116 It held that it was not, rejecting the lower courts’ conclusion that
the mere fact that the hospital’s employees were doing work foreclosed application of
the liquidating fiduciary exception.117 What mattered was the nature of the work

being done. “The more closely the activities resemble those of a business winding up
its affairs, the more likely it is the entity is not subject to the WARN Act.”118
The court found that, because United Healthcare System had (1) surrendered
its certificates of need (which hospitals in New Jersey must have to provide care) on
February 19; (2) filed a voluntary petition that contemplated liquidation the same
day; and (3) discharged or transferred all its patients to another hospital by February

21, it had become a liquidating fiduciary by February 21 (at the latest).119

114 Id. at 173-174.
115 Id. at 174.
116 In re United Healthcare Sys., 200 F.3d at 175.
117 Id. at 178.
118 Id.
119 Id. at 173 n.1.
Accordingly, the defendant was a liquidating fiduciary well before it terminated its
employees on March 6.120
Here, applying the same analysis, Yellow was a liquidating fiduciary when it

ordered the layoffs of its union employees on July 30, 2023. While every exercise in
line drawing is necessarily fraught, based on the trial record, this Court’s conclusion
is that Yellow crossed the line from being an “employer” to being a “liquidating
fiduciary” at 11:30 p.m. on July 29, 2023, when it completed its final delivery.
As set forth above, the evidence presented at trial shows that the last delivery
was made on July 29.121 Indeed, the company’s general policy from July 26 onward
was to “move freight as far as we could.”122 That is, to get the freight as close to its

destination as possible to ensure that Yellow was prepared to cease operations
permanently by noon Eastern Time on July 30.123 In some cases, that meant
transporting freight to the nearest terminal and working with the customer to sort
out how to retrieve it.124
In the summary judgment opinion, the Court rejected Yellow’s argument that
it became a liquidating fiduciary on July 26, when it made the decision to liquidate

its business. Rather, the Court concluded that the debtors were running a “business
enterprise” so long as they were still making deliveries to customers. The

120 Id. at 173.
121 Jan. 21, 2025 Hr’g Tr. at 169 (Olivier); Debtors’ Exs. 112-118.
122 Jan. 21, 2025 Hr’g Tr. at 68 (Hawkins).
123 Id.
124 Id. at 89.
incremental process of deciding to liquidate and winding down the business here
certainly has similarities to the facts described in United Healthcare System. And in
the summary judgment opinion, this Court pointed to Third Circuit’s emphasis on

the point at which United Healthcare System had discharged or transferred its last
patient in deciding that Yellow was still a business enterprise so long as it was
making customer deliveries.
In fairness, the language of United Healthcare System did not firmly exclude
the possibility that the defendant there might have become a liquidating fiduciary at
some time before it had discharged or transferred its last patient. So the debtors’
argument on summary judgment that it might have been a liquidating fiduciary at

the time of the July 28 non-union layoffs was by no means an unreasonable one for
them to have made. Nevertheless, because of the need to draw some discernable line
between being an employer and a liquidating fiduciary, this Court believes that the
best reading of United Healthcare System is the one this Court adopted on summary
judgment: in the usual case, a defendant will remain a “business enterprise” so long
as it is conducting the revenue-generating activity on which its business was

premised. When that work is complete, it becomes a liquidating fiduciary even if
there is remaining work for the employees to do in connection with the company’s
liquidation.
For that reason, the Court rejects the Teamsters’ contention that Yellow was
a business enterprise on July 30, 2023 because some of its employees continued to do
work after that time – even work that bore some resemblance to what they did in the
ordinary course. The record shows that the debtors continued to stage freight for
customer pick-up and continued to employ security personnel at the terminals. That
said, once the last delivery was made on July 29, 2023, that activity was no longer in

the service of generating future revenues. Rather, much like United Healthcare
System after February 21, 1997, the company’s activity was primarily focused on
winding down its affairs.125 And after the completion of the debtors’ final delivery,
whatever work occurred in the terminals was done only to prepare the properties for
an eventual sale.126
The Teamsters argue that because the debtors had employed security
personnel, transported equipment between terminals, and staged containers for

customer pickup in the ordinary course of business, the debtors were not liquidating
fiduciaries.127 But as described above and in the summary judgment opinion, that
argument is effectively foreclosed by United Healthcare System, which makes plain
that a defendant that has employees who are still working, but is no longer operating
its core business functions, is not an “employer” within the meaning of the WARN
Act.128

125 Jan. 21, 2025 Hr’g Tr. at 90 (Whittman); Jan. 22, 2025 Hr’g Tr. at 31 (Whittman).
126 Jan. 22, 2025 Hr’g Tr. at 25 (Whittman).
127 Jan. 23, 2025 Hr’g Tr. at 85 (closing argument).
128 See United Healthcare Sys. 200 F.3d at 178. Nothing in the district court’s decision in In
re Start Man Furniture, LLC, 647 B.R. 116 (D. Del. 2022), is to the contrary. There, the court
found that where a business continued to run stores and sell goods notwithstanding a
decision to liquidate, the defendant was still an employer and not a liquidating fiduciary.
That conclusion is wholly consistent with the analysis set forth above. See id. at 129 (“a
fiduciary that is a liquidating company remains an ‘employer’ if the methods it uses to benefit
creditors includes the continuation of operations in the normal commercial sense.”).
At trial and in its post-trial brief, the union made another argument – that the
time at which you ask the question whether the debtor is a “business enterprise” or
“liquidating fiduciary” is the time at which the employer makes the decision to

terminate the employees, not the time at which the termination is announced.129 And
here, the Teamsters argue (without contradiction from the debtors) that the record
shows that the decision to liquidate the company was made on July 26.130
The principal basis for the Teamsters’ legal argument flows from one passage
in the United Healthcare System decision. That opinion, quoting the Third Circuit’s
prior decision in Hotel Employees, describes how the WARN Act was intended, at
least in part, to address the problem of a plant closing being “concealed from the

employees.”131 And United Healthcare System goes on, quoting from Hotel Employees,
to say: “The thrust of WARN is to give fair warning in advance of prospective plant
closings. It would appear, therefore, that if an employer knew of a … closing and
failed to notify its employees, the WARN Act would apply.”132 Following that block
quote, the United Healthcare System court noted that “[i]n this case, there is no
evidence that United Healthcare knew in advance that it would be forced to close but

concealed that knowledge from its employees.”133

129 Jan. 23, 2025 Hr’g Tr. at 77 (closing argument); D.I. 5592 at 4.
130 See Jan. 21, 2025 Hr’g Tr. at 66-67, 76.
131 United Healthcare Sys., 200 F.3d at 178 (quoting Hotel Employees and Restaurant
Employees Int’l Union Local 54 v. Elsinore Shore Assocs., 173 F.3d 175, 182 (3d Cir. 1999)).
132 Id.
133 United Healthcare Sys., 200 F.3d at 178.
From that, the Teamsters argue that the question whether a defendant was an
“employer” under the WARN Act should be viewed as of the time the defendant
decided to conduct a mass layoff, not as of the time it announced the mass layoff. The

principal problem with that argument, however, is that it cannot be squared with the
words of the WARN Act itself. What the statute says is that an “employer shall not
order a plant closing or mass layoff until the end of a 60-day period after
the employer serves written notice of such an order [on the required recipients of the
notice].”134 The crucial word in that sentence, for this purpose, is “order.” The
Teamsters would have the Court re-write the statute so that it provided that an
“employer shall not decide to order” a plant closing or a mass shutdown without

having given the requisite notice. But that is not what the statute actually says.
The Third Circuit cases on which the Teamsters rely do not provide any basis
for disregarding the words of the statute. The discussion in Hotel Employees about
an employer concealing its knowledge of a mass layoff immediately follows a
discussion of the unanticipated business circumstances defense.135 So in context, the
point of the reference to an employer’s concealment is that the failure to give notice

of a layoff does not necessarily give rise to liability. If the plant closing is the result
of unanticipated business circumstances, the employer may have a valid defense. It
is only when the closing is known, but the employer conceals its knowledge, that
liability would attach. But nothing in that passage suggests that the triggering event

134 29 U.S.C. § 2102(a) (emphasis added).
135 Hotel Employees, 173 F.3d at 181 & n.4.
is the making of the decision, rather than the issuance of the “order,” as the language
of the statute says.
Nor does the sentence in United Healthcare System, following the quotation

from Hotel Employees, alter this analysis. That sentence says: “In this case, there is
no evidence United Healthcare knew in advance that it would be forced to close but
concealed that knowledge from its employees.”136 That statement was the predicate
for the next sentence: that instead, “United Healthcare made repeated and intensive
good-faith efforts to remain financially viable and to ensure its employees would keep
their jobs.”137 For what it is worth, all of that is equally true in this case.
Perhaps the reference in United Healthcare System to “concealed knowledge”

could support an argument for providing a judicial gloss on the statute. If an
employer had decided to conduct a mass layoff and intentionally delayed issuing the
“order” until business operations ceased to avoid WARN Act liability, the language in
the Third Circuit opinion could support the claim that courts should disregard the
defendant’s gamesmanship. But even if that is correct, it would have no application
on the facts here, where the delay between the July 26 “decision” and the July 30

“order” was merely a function of the company’s effort to conduct an orderly winddown.
Absolutely nothing in the trial record suggests that the debtors delayed making the
announcement as part of a scheme to conduct an end run around the WARN Act.

136 United Healthcare Sys., 178 F.3d at 178.
137 Id. at 178-179.
Nor do the other cases on which the Teamsters rely in their post-trial brief
support their reading.138 For example, in Deveraturda the Ninth Circuit held that
when the federal government took over airport security following the events of

September 11, 2001, private security services were not liable under the WARN Act
for failing to provide termination notices to their employees, since it was the federal
government, rather than the private companies, that made the decision.139 Nothing
in the opinion speaks at all to the question here, which is whether the term “order”
as used in 29 U.S.C. § 2102(a) in fact means the making of the decision to issue such
an order.
The Teamsters also rely on Lichtenstein.140 They contend that the case stands

for the proposition that the defendant “ordered” the shutdown a week before the
employees were notified when it directed its human resources staff to conduct a mass
layoff. Whether that case actually stands for that proposition is far from clear. The
relevant passage says the following:
On May 15, 2023, Anuvia informed Mr. Lichtenstein and other workers
not to return to work. Anuvia followed up with a form letter terminating
all remaining employees on May 23, 2023, when the plant permanently
shut down operations. Mr. Lichtenstein was laid off as part of plant
shutdowns or mass layoffs as defined by the WARN Act, for which he is
entitled to receive 60 days advance written notice under the WARN
Act.141

138 See D.I. 5592 at 3.
139 Deveraturda v. Globe Aviation Security Services, 454 F.3d 1043, 1045 (9th Cir. 2006).
140 Lichtenstein v. Anuvia Plant Nutrients Corp., No. 8:23-cv-1423, 2023 WL 7411512, at *2
(M.D. Tenn. Oct. 26, 2023).
141 Id. (internal citation omitted).
Whether or not the court in Lichtenstein said so, this Court has no particular
quarrel with the proposition that an employer may “order” a shutdown when senior
management directs subordinate employees to effectuate that shutdown. Even if that

is a correct statement of the law, it does nothing to help the Teamsters on the factual
record here. To be sure, the record shows that the company made the decision to
liquidate on July 26. But there is nothing to indicate that a decision as to when
particular employees would be terminated was made or communicated to anyone on
any date prior to the date on which the WARN notices were given. Because this is an
issue on which the Teamsters bear the burden of proof, the absence of any evidence
of an earlier “order” (even on the broadest understanding of the term “order”) is fatal

to their contention.142
Finally, Judge Walsh’s decision in Cain recites the plaintiff’s contention that
the defendant there “not only planned but actually ordered the mass layoffs sometime
before it filed for bankruptcy and before it liquidated its business.”143 Nothing in that
opinion is remotely inconsistent with the proposition that the relevant question under
the WARN Act is when the defendant “ordered” the mass layoff or plant shutdown.

Accordingly, Yellow was a liquidating fiduciary, not a business enterprise, at
the time the termination of the company’s union employees was “ordered” on July 30,
2023. The union employees’ WARN Act claims will therefore be disallowed.

142 See Jan. 23, 2025 Hr’g Tr. at 104-105 (closing argument) (counsel for Teamsters
acknowledging that they bear the burden of proof on the liquidating fiduciary issue).
143 Cain v. Inacom Corp., No. ADV 00-1724, 2001 WL 1819997, at *1-*2 (Bankr. D. Del. Sept.
26, 2001).
II. In the alternative, the debtors are entitled to damages reduction
under 29 U.S.C. § 2104(a)(4).
Courts have discretion to “reduce the amount of [WARN] liability” if the
defendant demonstrates that (1) the violative act or omission was done in good faith
and (2) it had reasonable grounds for believing that the act or omission was not a
violation of the WARN Act.144 To qualify for the good faith defense, an employer must
present evidence of its subjective intent to comply with the act and of the objective

reasonableness of its compliance efforts.145 Damages reductions under § 2104(a)(4)
are “intended for circumstances where the employer technically violates the law but
shows that it did everything possible to ensure” that its employees received enough
advance notice of the layoff.146 On the record here, the Court concludes (in the
alternative) that if there is a basis for imposing liability under the WARN Act,
Yellow’s good faith efforts to comply with the statute provide a basis for reducing its
liability to 14 days of pay and benefits, rather than the 60 days’ to which they would

otherwise be entitled.
A. The debtors have demonstrated their subjective intent to
comply with the WARN Act and the objective reasonableness of
their compliance efforts as required under 29 U.S.C. § 2104(a)(4).
Subjective intent may be established by a showing that the employer “worked
with legal counsel to determine whether the company was in compliance with WARN,
as well as more general evidence that the company had its employees’ welfare in

144 29 U.S.C. § 2104(a)(4).
145 See, e.g., Frymire v. Ampex Corp., 61 F.3d 757, 767-768 (10th Cir. 1995).
146 Castro v. Chicago Housing Auth., 360 F.3d 721, 731 (7th Cir. 2004).
mind.”147 Courts that have analyzed § 2104(a)(4) have generally looked to the totality
of the circumstances when analyzing the subjective element.148
In Frymire v. Ampex Corp., the court found that the defendant employer had

demonstrated a good faith intent to comply with the act.149 The court emphasized the
extensive conversations between the company’s human resources department and its
legal counsel, as well as its “pay in lieu of notice” policy that provided affected
employees with three-weeks’ notice or pay instead of notice “so that they could more
easily seek employment elsewhere.”150 The court also pointed to the fact that the
employees had a sense that layoffs may be coming.151
In Jamesway Corp., by contrast, the court rejected the debtor’s contention that

its WARN liability should be reduced on the basis of good faith.152 The court looked
to circumstantial evidence of the debtors’ subjective belief that they were in
compliance with the act and found that, despite the fact that the debtors were aware
of their WARN Act obligations, and were able to send notices, they chose not to do
so.153
Here, the Court is persuaded that the company intended to comply with the

WARN Act and that (as least with respect to the union employees whose claims are

147 Id.
148 See, e.g., Frymire, 61 F.3d at 767-768; Castro, 360 F.3d at 730-731.
149 61 F.3d 757 (10th Cir. 1995).
150 Id. at 768-769.
151 Id. at 769.
152 235 B.R. 329, 346-347 (Bankr. S.D.N.Y. 1999).
153 Id. at 347.
at issue here) its efforts to do so were objectively reasonable. To begin, the debtors
did in fact send a WARN notice.154 And while this Court ruled on summary judgment
that the form of the notice fell short of what the statute required, the Court noted (for

reasons detailed in its summary judgment opinion) that the question was a close
one.155 And if the availability of a damages reduction in cases of objective good faith
is to mean anything, it must cover a situation in which a defendant fails to comply,
but comes close to doing so.
As far as the company’s internal processes go, there is evidence that the
debtors’ human resources department was involved in the review, communication,
and circulation of the WARN notice.156 Statlander testified that the debtors’ human

resources team was familiar with the WARN Act’s notice requirements and felt
comfortable speaking up if something seemed improper.157
Given the “gigantic amount of work” being done in the days before the layoffs,
the Court is satisfied that the imperfections in the notice itself are not inconsistent
with the proposition that the company had engaged in good faith efforts to comply
with the statute.158 That conclusion is further supported by ample evidence in the

record that the company generally sought to keep its employees apprised of the
situation. To be sure, the Court believes that those efforts were motivated at least as

154 Joint Ex. 104.
155 Summary judgment opinion at 31-37.
156 Jan. 21, 2025 Hr’g Tr. at 138-139.
157 Id.
158 Id. at 139.
much by the company’s desire to have the employees pressure union leadership into
taking a more flexible position in the parties’ negotiations as it was by a desire to
ensure that the employees were fully in the loop. But even so, these informal efforts

to keep the employees aware of the circumstances are broadly consistent with the
goals of the WARN Act.
The Teamsters argue that the debtors are not entitled to a reduction of
damages based on good faith. In their view, the fact that the WARN notice did not
mention the strike notice means that the debtors could not have reasonably qualified
for the unforeseeable business circumstances defense under 29 U.S.C. § 2101(b)(2)
and therefore fails the objective prong of § 2104(a)(4).159 But the Court previously

found that, at least as to the faltering company exception, the “inadequacy of the
notices is a very close question.”160 And because the company would have only needed
to prevail on one of its affirmative defenses in order to avoid WARN Act liability, the
failure to mention the strike notice is not fatal to its argument that its efforts to
comply with the statute were objectively reasonable. The Court accordingly finds
that the debtors’ efforts to comply with the WARN Act’s notice requirements were

objectively reasonable.
B. The debtors’ WARN Act liability may be reduced, but not
eliminated.
The debtors argue that their WARN Act liability should be reduced to zero
because the affected union employees did not suffer any harm. And at some level,

159 Jan. 23, 2025 Hr’g Tr. at 92.
160 Id. at 90-92; summary judgment opinion at 61.
there is a common sense to their position. Under the Court’s summary judgment
ruling, had the debtors added a sentence to their notice stating that “the company
has been in active negotiations with its lenders and other parties in an effort to

refinance its existing indebtedness, and the issuance of WARN Act notices during the
pendency of those negotiations would have hindered those efforts,” it would have fully
complied with its obligations under the WARN Act as applied to its union employees.
Would the inclusion of such a sentence really have made a difference to the
employees, particularly in light of the company’s extensive communications with
them about its status and the widespread publicity of the company’s travails?
Probably not. But, in the Court’s view, that does not provide a legal basis to eliminate

the company’s WARN Act liability on good faith grounds. Congress’ objective in
providing 60 days’ backpay under the WARN Act was not to provide a “make whole”
remedy for the harm caused by the failure to provide an adequate notice.161 The
statute simply provides that affected employees are entitled to a day of backpay for
each day the employer violated the statute.162 Here, if this Court is incorrect in its
conclusion that the debtors were not “employers” at the time they ordered the layoffs

in question, then they violated the WARN Act and, to give effect to the purpose of the
statute, should bear some liability.
That said, the statute expressly provides for the exercise of discretion in
reducing damages in cases in which the defendant acts reasonably and in good faith,

161 Bledsoe v. Emery Worldwide Airlines, 635 F.3d 836, 842-843 (6th Cir. 2011); Roberts v.
Genting New York LLC, 68 F.4th 81, 92 n.11 (2nd Cir. 2023).
162 29 U.S.C. § 2104(a)(1).
as the debtors have here. And when exercising its judicial discretion, a court may
consider the totality of the circumstances.163 This Court’s judgment is that even if the
debtors were employers, imposing 60 days of liability for backpay and benefits would

be disproportionate in view of the record showing good faith efforts both to comply
with the statute and to keep employees apprised of the company’s status more
generally. The Court also accepts the company’s explanation that the failure to
mention the strike notice in the WARN notice was motivated, at least in part, by a
desire to avoid exacerbating a potentially volatile (and perhaps even dangerous)
situation.164 The Court also accepts the notion that Yellow’s employees had been
made aware of the company’s efforts to stabilize its precarious financial situation.165

Given the unforeseen and uniquely challenging circumstances in which the
WARN notices were drafted, and the company’s desire to treat its employees with
dignity during the layoffs, the Court finds that to the extent there is any WARN Act
liability, it is appropriate to limit the damages to 14 days of backpay and benefits per
affected employee.

163 See, e.g., In re Blinds to go Share Purchase Litig., 443 F.3d 1, 8 (1st Cir. 2006); Franks v.
Bowman Transp. Co., 424 U.S. 747, 770 (1976).
164 Jan 21, 2025 Hr’g Tr. at 56, 60 (Hawkins); id. at 138 (Statlander). To be sure, the Company
went on about a week later to file a rather inflammatory first-day declaration in which it
pointedly blamed the Teamsters for the company’s failure. See D.I. 14. But that later filing
is not inconsistent with the company’s stated desire to avoid inflaming tensions at the time
of the shutdown.
165 Joint Exs. 48, 50, 55, 75.
Conclusion
Because the debtors were a liquidating fiduciary as of July 30, 2023 (at the
latest) the union members’ claims for WARN Act liability shall be disallowed.
Alternatively, if there is any WARN Act liability, such lability shall be limited to 14
days of back pay and benefits per affected employee. The parties are directed to settle
an appropriate order so providing.

C1 JM
Dated: February 26, 2025
CRAIG T. GOLDBLATT
UNITED STATES BANKRUPTCY JUDGE

36

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10812808. Public record. Not legal advice.