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Further protection for independent manufacturers’ representatives was realized earlier this year when an amendment to the Minnesota Termination of Sales Representative Act (MTSRA) was signed into law by Governor Mark Dayton.

Demonstrating how the MTSRA, codified as Minn. Stat. 325E.37, has evolved over the years, this is the third time Agency Sales magazine has reported on this law and subsequent amendments. Each time, further refinements have been made to the law — which was originally enacted in 1990 — to protect Minnesota manufacturers’ representatives that are covered under the Act. Parties involved in the successful efforts to strengthen the law stress the importance of contributions made by MANA attorneys, association members and others, and emphasize the importance of the support received in both houses of the Minnesota legislature, which passed the legislation in a completely bi-partisan manner.

According to MANA-member Gene Hoff, Minenko & Hoff, P.A., Edina, Minnesota, who spearheaded the amendment effort, “This time the change to the law came about as the result of a fairly recent court case which held that the sale of paper to a company which used the paper as material to make coupon books and sales circulars was not a wholesale order under the MTSRA, but rather a sale to the end user. The facts of the case were rather convoluted and the decision was not appealed. After a group of us read the impact of that case, it was our belief that amending the MTSRA to clarify what a wholesale order is, was necessary.”

Hoff continued, “We were able to successfully work to amend the law to achieve this goal.”

The amended law reads as follows: “‘Wholesale orders’ means the solicitation of orders for goods by persons in the distribution chain for ultimate sale at retail, and also includes material, component, or part orders for use or incorporation into a product, and later resold.”

Joint Effort Spells Success

Hoff was quick to praise the joint efforts of several parties to ensure the successful passage of the amendment. “We specifically put together a team of Minnesota reps, rep attorneys, and MANA in order to get the Amendment passed. We also were fortunate to work with Franzen and Moore, a Minnesota government relations firm that agreed to assist in the effort. Vic Moore, one of their principals, was very instrumental in navigating this bill through the legislature.”

Ultimately, the bill was coauthored by members of both parties. “This was accomplished in a truly bipartisan manner,” Hoff said, “and in my opinion demonstrated that the Minnesota legislature values the efforts of manufacturers’ representatives in Minnesota.”

In describing the work done to pass the amendment, Moore said, “It took the entire legislative session. First we had to meet with counsel and get the bill drafted. That was followed by having authors and legislators sign on. Finally, we introduced the bill, requested a hearing and moved it on to the legislature’s floor. The amendment was submitted to two committees and we had to testify at hearings. Once approved, the amendment was sent to the governor, who signed it in May.”

Bi-Partisan Support

Just as Hoff praised the bi-partisan efforts of the Minnesota legislature, Moore added, “Any time you get the level of bi-partisan support that we did, you naturally increase your chances of having legislation passed. Thankfully this was hardly a partisan measure. It really wasn’t difficult to convince people of the common sense of this measure.”

As mentioned earlier, this is the third time this law has been covered in Agency Sales. In August 2014, we reported on an amendment to the law that provided “…greater notice and commission protection for independent manufacturers’ representatives…who contract with out-of-state principals. They may not be terminated prematurely without good cause as defined under the statute. If the law is not complied with, reps may also seek reasonable attorneys’ fees.”

In a follow-up report on that same amendment in the January 2015 issue of Agency Sales, Attorney Hoff noted that the 2014 amendment to the MTSRA cured a long-standing loophole.

Prior to the effective date of that amendment, “…a principal could include a waiver or another state’s choice of law provision in a written sales representative agreement which had the effect (except for limited exceptions) of circumventing the protections under the MTSRA. For example, a principal based in Los Angeles could insert a waiver or a California choice of law clause in its sales representative agreement, which had the effect of over-riding the protection under the MTSRA. The 2014 amendment provides that any such choice of law provision or waiver is void and not enforceable.”

Clarifies Wholesale Order

Likewise, this latest amendment precludes an argument that the MTSRA does not include wholesale orders for parts, components, or materials incorporated into a product and later resold. “In a nutshell,” said Hoff, “this was an effort to clarify the definition of a wholesale order. It was important because a large number of manufacturers’ reps in Minnesota solicit these types of wholesale orders.”

He added, “I’ve been working closely with reps for 20 years. I find them to be very hard-working people, who invest a great deal of their own time and money in developing business in a territory. By clarifying the definition of wholesale orders, it was our goal to ensure protection under the MTSRA for the time and capital these reps invest in soliciting a variety of wholesale orders.”

Finally, Hoff noted that “The new amendment strengthens the MTSRA and further protects those reps who are covered under this law. It shows what can be achieved by team building, hard work and belonging to a tuned-in trade association such as MANA.”

MANA welcomes your comments on this article. Write to us at [email protected].