Yellow Corp settles DOD lawsuit
Yellow Corp. officials said they have settled a dispute with the Department of Defense (DOD) in which the less-than-truckload carrier was alleged to have incorrectly charged for freight shipments from 2005 to 2013.
The Defense Department complaint alleged overcharging for carrier services, “unjust enrichment or a payment by mistake” and “failing to comply” with contractual terms and government procurement rules.
Specifically, the government alleged that Yellow operating companies – YRC Freight, Yellow Transportation and Roadway Express – inflated shipment weights, billed the Defense Department using improper rates and falsified statements in efforts to conceal their actions. Yellow was accused of reweighing thousands of shipments and not returning the over-payments when the shipments were lighter than originally estimated.
$6.8 million settlement
Yellow will pay $6.8 million to the government to settle the nearly 13-year-old civil matter. Yellow admitted no liability and denied “the government’s core allegations.”
All along, the company maintained no wrongdoing and said it had “meritorious defenses,” which it intended to “vigorously’’ defend.
“We remain confident that we complied with the then-existing rules and our contractual obligations,” said Leah Dawson, Yellow’s executive vice president and general counsel, in a press release. “While we believe we had strong defenses, we decided, in the best interests of all parties, to resolve this matter for a small fraction of the amount originally demanded.”
An amount for the overcharges was never quantified publicly, but a U.S. Department of Justice press release announcing the 2018 complaint alleged “millions of dollars.”
Yellow has moved freight for the Defense Department since World War II.
It was the company’s designation as “critical to maintaining national security” that allowed it to receive a controversial $700 million Covid relief loan in 2020. Documents from the commission overseeing the distribution of CARES Act funds show Yellow provides 68 percent of the Defense Department’s less-than-truckload (LTL) services.
In April 2021, the company reached a $2.1 million settlement with investors claiming financial damages related to the matter.
“We are pleased to have come to a resolution,” said Darren Hawkins, chief executive officer. “Now we can continue to focus on the important work ahead. With our nation’s current supply chain constraints and the critical role Yellow plays in delivering freight, there’s no time for distraction.”