December 29, 2016

List of California legislation (bills) that became Law in 2016

We recently became curious as to the comprehensive list of legislation signed and vetoed in California in any given year. We then set out to find a comprehensive list not limited to any particular subject matter (or just the "popular bills" the media liked) and low and behold we could not find one (at least available to the public). Governor Browns office also does not issue a comprehensive yearly list but rather issues many press releases throughout the year listing all the bills signed or vetoed on a particular day. Most of these press releases contain many bills. Some only a few. 

In 2016 the Legislature sent Governor Brown 1,059 pieces of legislation, 898 of which the governor signed into law. He vetoed 159 and two become law without signing. We show 5,103 bills were introduced in the State Legislature. Only 20.75% of the bills made it to the Governor's desk and only a mere 17.6% were signed and became law. If we assume each bill is an average of 7 pages long (and some are much longer) that would be about 6,300 pages of new laws! Happy reading! Some of these are real gems.....only became possible through the hard work of lobbyists and special interests! Quite frankly I'm pretty impressed with our 78 year old Governor's ability to wade thru this mess. Having a full time state legislature (unlike most states) is quite frankly both a blessing and a curse.

Now keep in mind that this list is only "legislation" signed or vetoed in 2016. It does NOT include changes in the California administrative code (non legislative) and related "codes" passed by State agencies. Nor does it include voter initiatives passed in 2016. Nor does it include cases decided by the various appellate level courts in California that can greatly affect how a given law is interpreted or enforced, or create all new obligations in and of themselves ("Judicial law" or precedent). This also does not include local laws or ordinances passed by various California counties (58) or other municipalities (482) or other governmental entities. Finally this list only includes laws passed or vetoed in 2016. Some of these take effect January 1, 2017 (typically) but many may not take effect until later or some even earlier (rare). Also keep in mind there are laws passed in 2014-2015 that may just now be taking effect in 2017.

There really is something in this 37 page list for everyone. We were not able to put it in chronological order due to the fact that it was hard enough to avoid duplication with the many press releases that came out in a 12 month period. The order signed is also really not important. What is important is the date the law becomes effective, which can vary for each piece of legislation. The veto and signing statements are hyperlinked in the list but the legislation passed/signed is not. The fastest way to look it up is by typing in the bill number here and making sure you have the right year (2016). Let us know if you see any duplicative entries or if you think we have missed something. The last date anything was signed or vetoed was September 30, 2016 and we are not aware of anything still pending on the Governors desk as of this writing.

Law Offices of Steven W. Hansen | | 562 866 6228 © Copyright 1996-2016 Conditions of Use

January 15, 2016

The pitfalls of insurance coverage and additional insured certificates issued by Asian based non US admitted insurers

This re-titled article is reprinted with permission from Bicycle Retailer and Industry News

Editor's note: Steven W. Hansen an attorney who defends product manufacturers, distributors and retailers in product liability lawsuits and provides consultation on all matters related to the manufacture and distribution of consumer products. For further questions visit

How the problem arises
We receive lots of inquiries each year from both clients and their insurance brokers about how handle additional insured certificates issued to U.S.-based companies from their key Asian based manufacturing suppliers, who almost without exception, use policies issued by  Asian based non U.S. admitted/regulated insurers. If you are not closely monitoring and vetting all your suppliers additional insured certificates each year then you better go back to square one, read our article on audits, then read this article. This article does not address EU (European) or Japan based non-U.S. insurers. That is a separate future article.

This article is an attempt to outline some of the many issues with coverage provided by Asian based insurers ("AI's" for purposes of this article) and how to begin to spot these issues and develop strategies to overcome them. This article has been assembled from our first hand experience in claims with Asian based insurers and dealing directly with our client's coverage problems arising therefrom. Your first hand experience and opinion may vary, but we feel that these issues at least need to be identified and addressed by those companies least familiar with them.

Why the coverage exists 
You need to understand there is a reason for insurance issued by AIs. First of all there is a need as Asian based manufacturers are usually asked about this coverage by the U.S. companies they supply (or it is required to close the deal). Secondly, AI's are utilized as their coverage is usually much cheaper than U.S.-based coverage, even for the same limits of coverage. There is a good reason for this; in most cases the AI coverage is more limited in scope than most U.S. policies issued to the U.S. companies buying products from Asia and also because the AI's "loss ratio" tends to be lower. This means that the ratio of dollars paid out on claims to dollars of premiums collected is better than comparable U.S. insurers loss ratios. This may be partly due to the fact that the AI's can freely deny so many U.S. claims using their restrictive policies and their is no recourse by U.S. additional insureds in U.S. courts against the AI's directly.

Questions that have to be asked when vetting such coverage
The first question of course is the experience of your insurance broker and in house attorney in dealing with such AI's and their claims process. If you/they don't know the right questions to ask then seek outside expertise.

Unknown Ratings
One problem with AI's is they tend to not be rated by U.S. insurer rating agencies with respect to their financial strength. The reasons for this are varied but can be due to the fact that the AI's will not submit to regular audits by the U.S. rating agencies. The lack of a U.S.-based rating can seriously limit the use of AI's coverage when your company is trying to sell items to large companies like Walmart or Amazon.

Restrictive policies
AI's also tend to issue very restrictive policies when compared to U.S. policies. One way they do this is by only offering "claims made" (versus "occurrence") coverage which creates a whole host of issues as to how claims need to be timely handled. If you have never heard these phrases, again go back to square one. AI's also tend to use manuscripted or non standard policy provisions unlike those issued by most U.S. insurers. This unique policy terminology becomes a bigger problem as U.S. courts never get the opportunity to interpret it as they do U.S.- based policies. U.S. policies also tend to use very standard (copyrighted) policy language not used by their Asian counterparts. The reason this language is used by U.S. insurers of course is so that there is some degree of predictability when courts interpret the language.

Inexperienced claims staff
Not only are the policies a problem but the claims staff (internal and third party) can be inexperienced (or in some cases untrained) and are usually totally unfamiliar with the U.S. legal process and case law as it respects the claim process, coverage and liability. Or sometimes what knowledge they do have is used against the U.S. additional insureds. In our experience most AI staff routinely confuse coverage and liability. In some instances claims are never even opened as legitimate claims are "denied" (or more likely "ignored") before they ever reach the AI, or are denied for reasons that would receive much higher scrutiny in the U.S.

Limited policies
The AI policies are usually financially restrictive as well when compared to U.S.- issued policies. There are often large self insured retention amounts (SIR's) on these policies, in addition to low per claim and aggregate limits as well as limits on total defense costs that erode the available limits of the policy even further (so called "burning limits" policies). The Asian suppliers (with the blessing of the AI and the AI broker) also tend to issue too many additional insured certificates to too many U.S. companies which further erodes the viability of the policies. This creates a very murky situation should multiple claims later arise.

Limited usefulness
Due to these issues above many U.S.-based insurers will not give U.S.-based certificate holders any "credit" for these AI issued certificates. What this means is that these AI certificates are not worth the paper they are written on (at least insofar as U.S. insurers are concerned). Thus U.S. insureds won't get any rate reductions on their own U.S. coverage due to the fact that U.S. insurers are betting on the AI's not coming through for the U.S. additional insureds when needed.

Risky strategy
At the end of the day what this really means is that whether or not your U.S.-based company gets a defense and indemnification in a U.S. suit (or other country other than the AI's home country) from an AI comes down to how much pressure can be applied by your company to the Asian supplier, to its Asian based broker and ultimately the AI. That's a very risky strategy which can drastically change from one year to the next as players in the game change, let alone the viability of your long term business relationship with the Asian supplier.

Looking Forward
Again this all comes down to due diligence, experience in the AI market, timing and relative bargaining power. If your company is not getting the right advice from the insurance brokers and attorneys consulting with it, asking the right questions and offering solutions at the right time in the process, you will not get anywhere and may end up being counterproductive. Trying to retroactively work around or safeguard against these issues/pitfalls can be frustrating as you are not negotiating directly with the AI, nor are you on equal footing with them as compared to your Asian supplier. Many "contractual workarounds" attempted with the Asian insured supplier will not yield results for the simple reason that the AI is not a party to the contract and its insured has no power to bind it. The biggest problem with insurance is that you don't know you have a problem usually until years after the coverage was placed. At that point its too late to try to "fix" it.

Evolving picture
There are a lot more legal and underwriting issues and strategies involved than just the few mentioned in this article. Its never too late to start fixing these potential gaps in coverage. But they generally take a few policy renewals to iron out. And even then its an ongoing yearly battle as the players and policies in the shell game often change.

The information in this column is subject to change and may not be applicable in your state.  It is intended as a thought-provoking discussion of general legal principles and does not constitute legal advice. Any opinions expressed herein are solely those of the author.

Law Offices of Steven W. Hansen | | 562 866 6228 © Copyright 1996-2013 Conditions of Use

April 22, 2015

Letter of AAFA to U.S. Trade Representative Regarding counterfeit goods on the TaoBao platform of Alibaba

We came across a copy of this April 8, 2015 letter and thought it would be helpful to share it with some of our clients and others in the recreational sports market who we know are having similar frustrations not only with Alibaba but Amazon as well. The letter is quite detailed and is a good outline of at least the the American Apparel & Footwear Association's (AAFA) longstanding issues with Alibaba and TaoBao. AAFA represents the apparel and footwear industry.

Law Offices of Steven W. Hansen | | 562 866 6228 © Copyright 1996-2013 Conditions of Use