United States District Court, D. Minnesota
P. Brees, GASKINS, BENNETT & BIRRELL, LLP, for plaintiff.
Benjamin Kinney, LAW OFFICES OF THOMAS SHIAH, and Michael S.
Poncin, MOSS & BARNETT, PA, for defendant.
MEMORANDUM OPINION & ORDER
R. TUNHEIM CHIEF JUDGE
Curt Hedding (“Hedding”) brings this action
against Defendant The Pneu Fast Company (“Pneu
Fast”), alleging a violation of the Minnesota
Termination of Sales Representative Act
(“MTSRA”). Presently before the Court is Pneu
Fast's Motion to Dismiss for failure to state a claim
pursuant to Fed.R.Civ.P. 12(b)(6) and lack of subject matter
jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1). Because
Hedding has alleged facts sufficient to show a violation of
the MTSRA and has claimed damages in excess of $75, 000, the
Court will deny the motion.
is a Minnesota citizen and the owner of Hedding Sales &
Services (“Hedding Sales”), a Minnesota sole
proprietorship. (Am. Compl. (“Compl.”)
¶¶ 1-2, June 19, 2018, Docket No. 21.) Hedding
Sales represents manufacturers in the sale and distribution
of goods. (Id. ¶ 3.) In 2006, Hedding Sales
entered into a Representative Agreement (the
“Agreement”) with Pneu Fast, an Illinois
corporation specializing in the production of nails and
staples used in certain power tools. (Id.
¶¶ 4-5, 11). The Agreement established that Hedding
Sales would represent Pneu Fast in the sale and distribution
of its products across nine states, including Minnesota and
Ohio. (Id. ¶ 11 & Ex. A
(“Agreement”) at 7.) It was to be effective
indefinitely and, according to its terms, would be governed
by the laws of the State of Ohio. (Id. at 5; Compl.
¶¶ 11, 12.)
relevant part, the Agreement also contained the following
terms: (1) Pneu Fast would pay Hedding Sales a 10% commission
for one year on new accounts, and 5% thereafter (Agreement at
8); (2) either party could terminate the Agreement with or
without cause (id. at 4); (3) in the event of
termination, Pneu Fast would not be liable to Hedding Sales
for any damages whatsoever (id.); and (4) any
amendment to the Agreement would not be effective unless in
writing signed by both parties, except that product prices,
product categories, geographic territory, and the commission
schedule could be “amended at any time by giving
written notice thereof to [Hedding Sales], ”
(id. at 5).
2008, Hedding Sales established a new account for Pneu Fast
with Menards, a large home improvement chain. (Compl. ¶
15). Despite agreeing that Hedding Sales would receive a 10%
commission on new accounts for the first year and 5%
thereafter, Pneu Fast never paid Hedding Sales more than 4%
in commissions on the Menards account. (Id.
¶¶ 16-20). Nevertheless, Hedding Sales continued to
work on the Menards account through 2018. (Id.
¶ 36.) Because of its efforts, the account expanded into
new states throughout the U.S., including expansions in 2015
and 2016 into Kansas, Missouri, and Wyoming. (Id.
¶¶ 24, 26.)
March 2018, Pneu Fast's President and COO, Reno Joseph,
sent a letter to Hedding Sales (the “Termination
Letter”) terminating the Agreement. (Id.
¶ 36.) The Termination Letter stated that the
termination would be effective immediately. (Id.
¶ 37.) It also denied Hedding Sales any outstanding
commissions until Hedding returned all product samples to
Pneu Fast. (Id. ¶ 39.) The Termination Letter
did not include a statement of reasons for the termination,
nor did it give Hedding an opportunity to address any such
reasons. (Id. ¶ 40.)
now brings a single claim against Pneu Fast, alleging
wrongful termination in violation of the Minnesota
Termination of Sales Representatives Act
(“MTSRA”), Minn. Stat. § 325E.37 (2018).
(Compl. ¶¶ 45-55-.) Pneu Fast seeks to dismiss the
Amended Complaint for failure to state a claim upon which
relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6) and
lack of subject matter jurisdiction pursuant to Fed.R.Civ.P.
12(b)(1). (Mot. to Dismiss, June 4, 2018, Docket No. 23.)
MINNESOTA TERMINATION OF SALES REPRESENTATIVES ACT
purpose of the MTSRA “is to afford some protection to
sales representatives by limiting the circumstances under
which their agreements may be terminated.”
Cooperman v. R.G. Barry Corp., No. 4-91-663, 1992 WL
699500, at *8 (D. Minn. Jan. 10, 1992). The MTSRA's
protections extend to sales representatives who are residents
of or maintain their principal place of business in Minnesota
or whose sales territory includes all or part of Minnesota.
Minn. Stat. § 325E.37, Subd. 6. The MTSRA defines
“sales representative” as “a person who
contracts with a principal to solicit wholesale orders and
who is compensated, in whole or in part, by
commission.” Id. at Subd. 1(d).
the MTSRA, a manufacturer may terminate a sales agreement
upon good cause, provided the manufacturer gives the sales
representative (1) notice of its intent to terminate at least
90 days before the expiration of the agreement, and (2) 60
days in which to correct the reasons stated for termination.
Id. at Subd. 2. If a manufacturer does not have good
cause to terminate, it must renew the sales agreement or give
written notice of its intent not to renew at least 90 days
before the expiration of the agreement. Id. at Subd.
3. A sales ...