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Antiwaiver Statute Defeats Choice of Law Provision in Contract Entered Into Eight Years Before Statute’s Enactment

A federal court in Minnesota denied a motion to dismiss a lawsuit alleging wrongful termination of a sales representative agreement. Hedding v. Pneu Fast Co., 2019 WL 79006 (D. Minn. Jan. 2, 2019). Minnesota resident Curt Hedding was a sales representative for nail and staple manufacturer Pneu Fast. Under the parties’ 2006 agreement, Hedding represented Pneu Fast in selling and distributing products across nine states, including Minnesota and Ohio. In 2018, Pneu Fast terminated the agreement without explanation or an opportunity to cure. Hedding filed suit, alleging the termination violated Minnesota’s Termination of Sales Representative Act, which requires “good cause” for termination with notice and an opportunity to cure. Pneu Fast argued that the agreement’s Ohio choice-of-law provision waived application of the Minnesota Act.

The court sided with Hedding, finding the Act was not waived. Although parties had previously been able to waive application of the Act, in 2014 the legislature added an antiwaiver provision that invalidated choice-of-law provisions in contracts with Minnesotan sales representatives that were “entered into, renewed or amended on or after” August 1, 2014. While recognizing that the parties’ agreement predated the antiwaiver provision, and acknowledging that no written amendment or renewal had been executed, the court observed that the parties allegedly expanded Heddings’ sales territory in 2015 and 2016, creating new obligations and costs in the process. The court also noted that the parties continued their relationship, despite being on notice of the Act’s protections and passage of the antiwaiver provision. Finding that the territory expansion “renewed or amended” the agreement after August 1, 2014, the court held that the antiwaiver provision applied. It therefore nullified the Ohio choice-of-law provision and denied Pneu Fast’s motion to dismiss.

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