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States move forward with indemnity protection

By Keith Goble, state legislative editor

Efforts to help level the playing field for truck drivers are winning support in three western statehouses. Other states are also addressing the issue.

In Arizona, a bill nearing final approval at the statehouse would do away with indemnification clauses in motor carrier transportation contracts. The clauses are set up to protect shippers or hold them harmless from anything that happens with a shipment.

Advocates for the rule change say that truckers are simply asking for fairness in contracts.

“We are asking shippers to be responsible for their own negligence and we will be responsible for our negligence. That’s all we’re asking for,” Karen Rasmussen, president and CEO of the Arizona Trucking Association, told lawmakers during a recent hearing.

Shippers that improperly load product would be prevented from shifting liability. Contractual language to the contrary would be void.

Specifically, the bill would void indemnity provisions in all future contracts for the transportation, loading, unloading or incidental services of property by motor carriers.

Rep. Jerry Weiers, R-Glendale, told lawmakers during discussion on the bill that people need to be held accountable.

“People who hold the cards are telling the little guy they don’t have a choice in this,” Weiers said.

In neighboring Utah, Gov. Gary Herbert has signed into law a bill to also make contracts unenforceable that provide for shippers to be indemnified for losses caused by their own negligence.

Sen. Stephen Urquhart, R-St. George, highlighted indemnification clauses that are included in motor carrier contracts with refineries when he explained the bill during Senate floor discussion.

“They have been required to indemnify the refinery. If anything happened that was the refinery’s fault, the motor carrier would pick up the cost. That’s kind of silly. So we are changing that,” Urquhart said.

The Oregon Senate voted overwhelmingly to forward to the House a similar pursuit.

The bills in Arizona, Utah and Oregon define affected contracts as any written agreement for the transportation of property for compensation or hire; entry on property to load, unload or transport property; or any service incidental to such activity, including the packing or storage of property.

A Minnesota bill to void indemnification clauses in trucking contracts also includes the protection.

Joe Rajkovacz, OOIDA’s director of regulatory affairs, points out that many indemnification bills would effectively prohibit a receiver from pre-conditioning unloading by attempting to require the motor carrier to obtain specific insurance coverage that many times is not commercially attainable.

To make matters worse, Rajkovacz said the receiver often requires itself to be named as co-insured on a policy.

“This type of scam is often used by receivers to force motor carriers into paying for unloading services provided by the receiver – services from which they profit dramatically,” he said. 

“It is ironic that Minnesota is pursuing this legislation considering it is the home state of SuperValu.”

Supervalu is a receiver that OOIDA sued in 2005, accusing it of violating federal law related to the loading and unloading of motor vehicles. OOIDA and member plaintiffs Rajkovacz and Carl Shaefer await a ruling from an appeals court, which is expected this spring.

Elsewhere, New York and Iowa lawmakers are considering indemnity protection in construction contracts. If approved, no longer would trucking companies, professional drivers and construction companies be forced to take responsibility for damage that is not their fault. LL

March/April
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