Minnesota bill would negate indemnity clauses

By Keith Goble, Land Line state legislative editor | 2/10/2012

On the move at the Minnesota statehouse is a bill that is intended to protect truck drivers in the state from an unfair clause in motor carrier contracts.

The Senate Transportation Committee voted Thursday, Feb. 9, to advance a bill to do away with indemnification clauses in trucking contracts. The clauses are set up to protect shippers or hold them harmless from anything that happens with a shipment.

There are 30 states that have acted to outlaw the provisions in contracts. In the past year alone Arizona, Oregon, Utah and Wisconsin have adopted the protection for truckers.

Supporters say that indemnification clauses require freight carriers to take on liability for the negligence of shippers. As a result, truckers are responsible for trailer packing, even though shippers actually do the packing.

Sponsored by Sen. Julianne Ortman, R-Chanhassen, the bill – SF1687 – would outlaw provisions in motor carrier contracts that provide for shippers to be indemnified for losses caused by their own negligence and make them “void and unenforceable.”

“This bill would say it is against public policy in Minnesota for these contracts to include indemnification language,” Ortman told committee members.

“(Instead) all parties should bear their own responsibility for their own conduct in the transaction,” she said. “This would also make sure that third parties involved would also bear responsibility for their conduct.”

Affected contracts are defined as “a contract, agreement, or understanding” between a motor carrier and a shipper covering the transportation of property for hire by the motor carrier, entry on property to load, unload or transport property, including the storage of property.

The protection would not apply to intermodal chassis, containers, or other intermodal equipment.

Minnesota Trucking Association President John Hausladen told committee members that almost 33,000 trucking operations in the state with interstate authority would be affected by the effort.

He also pointed out that 97 percent of trucking companies nationwide operate 20 or fewer trucks.

“This industry is still largely a small truck type operation. These are the kind of folks we are here to talk about and represent,” Hausladen said.

Minnesota Trucking Association Chairwoman Joyce Brenny addressed the committee. Brenny is the owner of Brenny Specialized Transportation in St. Joseph, MN, and a member of OOIDA. She addressed the argument that truckers should avoid signing contracts with the unfair provision.

“Some would say ‘just don’t sign the contract.’ The reality is we just can’t afford not to,” Brenny testified. “Trucking firms feel that if they balk at these provisions they will lose business. In today’s freight markets we can’t afford to not sign these contracts.”

Joe Rajkovacz, OOIDA’s director of regulatory affairs, said the bill 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.

Rajkovacz said it is ironic that Minnesota lawmakers are considering the protection since it is where SuperValu is located.

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.

SF1687 awaits consideration in the Senate Commerce Committee. If approved, it would advance to the Senate Judiciary Committee before it is cleared for Senate floor debate.

To view other legislative activities of interest for Minnesota, click here.

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