Alternative Dispute Resolution-Force Majeure

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7^th Circuit Court of Appeals

Case Name: Quality Custom Distribution Services LLC v. International Brotherhood of Teamsters, Local 710

Case No.: 24-1648

Officials: Easterbrook, Rovner, and Lee, Circuit Judges.

Focus: Alternative Dispute Resolution-Force Majeure

A collective bargaining agreement between the Teamsters Union and Quality Custom Distribution guaranteed that the top 80% of senior employees would receive at least 40 paid hours per week. However, during the early months of the COVID-19 pandemic, many Starbucks stores in and around Chicago either closed or reduced their operating hours, causing senior employees to average only 30 hours per week. In response, the Union demanded that the employer compensate for the shortfall, but the employer refused, citing an exception for Acts of God.

The dispute was brought before an arbitrator, who ruled in favor of the Union. The arbitrator acknowledged that epidemics could be considered Acts of God but determined that the primary cause of the reduced work hours was the Governor of Illinois’ executive orders, which did not fall under that exception. The employer then challenged the arbitration decision in the Northern District of Illinois, seeking to have it overturned, but the court declined to do so.

On appeal, the Seventh Circuit upheld the district court’s decision, emphasizing that as long as the arbitrator had interpreted the contract, the ruling must stand, regardless of whether the interpretation was correct. Since the arbitrator had evaluated the “Act of God” clause and determined it did not apply to the Governor’s orders, the court found no grounds to overturn the decision. Additionally, the court criticized the employer’s conduct in the litigation process for imposing unnecessary costs and ordered the company to explain why sanctions should not be imposed.

Affirmed.

Decided 03/13/25

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