Showing posts with label bicycles. Show all posts
Showing posts with label bicycles. Show all posts

February 11, 2024

CPSC finally is taking real action on electronic certificates of compliance

Published February 5, 2024

Reprinted with permission from Bicycle Retailer and Industry News 

Original article link 

A certificate of compliance requirement was in the original Consumer Product Safety Improvement Act passed in 2008 and signed by George W. Bush. It has taken 16 years for the Consumer Product Safety Commission to finally implement the full intended scope of electronic certificates of compliance as originally envisioned by Congress in 2008.

There have been multiple “beta” and “pilot” programs with many large institutional participants (especially many large retailers, e.g., Walmart and Target) giving feedback on the process. Only one or two small bike brands gave feedback per the current notice of proposed rulemaking, and it's not even clear they were in the pilot or beta programs.

The biggest issue I see for the bike industry is that the commission is proposing that the new rules take effect within 120 days of the new rules being passed; the passage date is not clear at this point. Given that the bike industry is slow to respond to large changes in the manner of doing business like this and that there has been zero coverage of this issue, I suspect there will be some pushback and scrambling going on especially by smaller brands.

These rules have been in effect for many years, but now that CPSC has teamed up with Customs and Border Protection (CBP) on this project, the certificates will need to be filed before importation using the elaborate electronic system called the Automated Commercial Environment (ACE). The CBP has completed its ACE interface and the Partner Government Agency Message Set, which now enable importers or their brokers to submit electronic import data.

The Supplemental Notice of Proposed Rulemaking (SNPR) to amend 16 CFR Part 1110 was first published on Dec. 8, 2023. All 65 pages are here, not including the 289-page Ballot package that the CPSC commissioners have to vote on and that contains more details about the Part 1110 rule change. Comments have to be received by Tuesday at 5 p.m. They can be made here.

Only finished products or substances that are subject to a CPSC rule, ban, standard, or regulation, are required to be tested and certified, and only such finished products that are imported into the United States for consumption or warehousing would be required to e-file certificates with CBP.

How the bike industry is affected

This is of course where things start getting murky, especially for the bike industry that has many segments: human-powered bikes, e-bikes, bikes intended for kids under 12, original equipment components, aftermarket components, and replacement components. Many industries don’t have to deal too much with replacement parts, such as the toy industry.

Here is a quote from CPSC’s response to one comment made previously:

Comment 38: Several commenters expressed confusion regarding the difference between certificates for component parts, for finished products, and for replacement parts of consumer products.

Response 38: Proposed § 1110.3(b) defines “component part” as a product or substance that is intended to be used in the manufacture or assembly of a finished product, and is not intended for sale to, or use by, consumers as a finished product. The SNPR defines a “finished product” as a product or substance that is “regulated by the commission that is imported for consumption or warehousing or is distributed in commerce.” The SNPR definition explains that parts of such products or substances, including replacement parts, that are imported for consumption or warehousing, or are distributed in commerce, and that are packaged, sold, or held for sale to, or use by, consumers, are considered finished products.

 Only (1) finished products (2) subject to a CPSC rule must be tested and certified. (I added these numbers for clarification that it’s a two part-test.) Component part certificates are voluntary and are not required to accompany an imported component part, are not required to be furnished to retailers and distributors (as described in proposed § 1110.13(b)), and are not to be e-filed.

Not all replacement parts are finished products that require testing and certification. A replacement part of a consumer product that meets the definition of a finished product may be subject to Part 1110, if the replacement part is subject to a rule. For example, a stem for a bicycle that is sold to consumers as a replacement part requires a certificate, because stems, either as a stand-alone product or as part of a finished bicycle, must be tested for strength in accordance with 16 CFR 1512.18(g). (I tend to disagree with this part as the CPSC historically, even in recalls, has not taken this position that 16 CFR 1512 is a separately sold “component” standard but rather a “complete bike” standard.)

Additionally, parts of toys, such as doll accessories, that are sold to consumers as a separate finished product, must comply with all applicable rules, including for example lead in paint and/or lead content (Editor’s note: if it is a product intended for children under 12). If the same doll accessories were imported for manufacturing purposes and not for consumption or warehousing, (this is a small part of competent imports in the bike business) and were intended to be combined with a doll for sale, then such accessories would not be a finished product required to be certified until they are part of a finished product.

Majority of aftermarket products will need testing

So this means that 80% of the aftermarket products are going to need CPSC testing provided there is some requirement in a CPSC rule that arguably pertains to that bike product or component. If they are not “intended for children under 12” (kids product) that testing can be done in house apparently by the manufacturer or brand (subject to other requirements). If it is a kids product then a CPSC certified lab has to do the testing, which includes chemical testing (that does not meet California Prop 65 requirements, by the way).

E-bikes don’t have their own standard except for 16 CFR 1512, provided they meet the 20 mph requirement in the standard; if they don't, well then there are other issues to deal with. E-bike batteries, of course, don’t yet have a CPSC standard as they are not discussed in 16 CFR 1512, so in theory they escape the rule and these new testing and reporting requirements. How ironic as they are the biggest threat at this time and not really foreseen in 2008.

How this whole process is going to work as far as getting that testing data etc. into the CPB and CPSC computers is what has been the focus of multiple beta filing pilots. The importer of record has the responsibility. Not the foreign manufacturer. It's also not clear how this works with the tariff codes and what the timing is on the uploading of this data before the product hits U.S. shores. Import brokers are obviously a resource but won't likely be doing this for free. I do see a process where smaller companies are going to be allowed to access the data entry screens from the CPSC website using a special logon and portal. 

The “new” CPSC Product Registry will allow importers, or their designees, to enter the certificate data elements via a user interface, batch upload, and/or Application Programing Interface (API) upload. The user interface is a step-by-step process, where the importer submits one certificate at a time. The batch upload allows the importer to submit multiple certificates using a Comma-Separated Value template. The API upload allows the importer to build an API connection via the product registry and their data systems to instantaneously enter certificates. Clearly, this is going to involve some training on the brand side of the equation.

So, for example, if you import 10 SKUs, or more or less all of the same model bike widget with 10 colors, every time you get a container shipped from Asia, you will know what the test requirement is for the widget, and you will have it tested by the manufacturer, unless it's a child widget, and that data will pretty much be cut and pasted each time using a CSV data spreadsheet. But it will need to be changed if you change suppliers or test requirements or anything else on the product changes, usually SKU’s changes.

Import enforcement currently lacking

The whole rationale for this rule change and disruption is as follows: Currently, CPSC's import enforcement methodology is labor-intensive and lacks an efficient means of using product-specific data to identify potentially non-compliant products. CPSC co-locates staff alongside CBP staff at ports of entry to target shipments for examination.

Once identified, staff request that CBP place a shipment on hold and transport it to an examination station for CPSC inspection; an examination hold creates delay that costs businesses and CPSC time and money. Accordingly, stakeholders and CPSC have a common interest in reducing examinations of compliant products and maximizing examinations of products that are likely to be violative. Currently, certificates are collected only after a shipment is stopped for examination; certificate data are not used to target shipments for examination. Using certificate data for more precise targeting would maximize examination efficiency for stakeholders and staff.

Using certificate data can also improve CPSC's ability to target low-value shipments. CPSC's current targeting capabilities were designed for larger commercial shipments for which the commission receives CBP data. CPSC's port staff is currently unable to pinpoint with a high degree of certainty potentially non-compliant and hazardous products in low-value shipments, which CBP refers to as “de minimis shipments,” and international mail shipments. 

As we all know the de minimis shipments to consumers of batteries below an $800 value is where we are having a problem with low-quality batteries. But this new certificates filing rule won't fix the e-bike battery problem as there is not currently a CPSC standard specifically regarding batteries and as such no certificate filing will be required.

The biggest issue I see right now is that the SNPR proposes a 120-day effective date for a final rule. So that means after the comments on this rule are received, I expect that the rule will be final in less than six months, and once that happens, there will be another six months to get ready for the enforcement. Hopefully, that will be enough time for the industry to get ready.

This is going to be a four-step process for each product: First, companies need to decide what CPSC rules pertain to their specific products; second, they need to determine if they are products intended for kids under 12 (a whole other analysis); third, they need to decide on a test protocol for their products and whether it can be done in house or requires a CPSC certified lab (see Step 2); then finally they need to set up an account with CPSC and learn the methods by which they have to enter all this data on an ongoing basis and how that data entry timeline coincides with the timely shipment and receiving of the product. 

Clearly there is lots of work to be done on this by brands. Our office is going to be assisting clients with this issue going forward as there are a number of issues that have to be dealt with that are more legal than scientific or logistical but the latter two issues are surely ones that must be addressed as well.

Steven W. Hansen is an attorney who represents product manufacturers, distributors and retailers in product liability and other lawsuits and provides consultation on all matters related to the manufacture and distribution of e-bikes and other consumer products. For further questions visit www.swhlaw.com or email legal.inquiry@swhlaw.com

 The information in this article is subject to change and may not be applicable in your state or country. 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 | www.swhlaw.com | 562 866 6228 © Copyright 1996-2020 Conditions of Use

June 5, 2023

CPSC Lithium-Ion Battery Safety; Notice of Meeting on July 27 2023 and Request for Comments

UPDATE 8/1/23: Today I received a Federal Register notice of the CPSC's "Semiannual Regulatory Agenda" just days after the meeting below. What stands out to me is that this document "...includes an agenda of regulations that the Commission expects to develop or review during the next 12 months." and there is no mention or reference at all in this very long document about ebikes, lithium batteries, bicycles or 16 CFR part 1512 (the bicycle and e bike regulation). Again these come out twice a year and we know that Congress is pushing CPSC to regulate ebikes via this bill but I don't thinks its likely that there will be anything significant happening at CPSC re batteries or ebikes until this bill passes. I might be wrong but I don't think anyone should be holding their breath in the next 12 mo for some regulations coming forth from the CPSC on the issues in the meeting referenced below. The proposed de minimus bill (H.R.4148 - Import Security and Fairness Act 118th Congress (2023-2024)) may also help the battery import situation well before CPSC acts.

Prior Post June 5 2023:

The Consumer Product Safety Commission will be holding a meeting on lithium-ion battery safety, with a specific focus on fires occurring in e-bikes and other micro-mobility products as well as the fire risks that may arise with the growing consumer market for other products containing such batteries. They are inviting interested parties to participate in or attend the meeting. A remote viewing option will be available for registrants. CPSC also invites interested parties to submit written comments related to the issues discussed in the notice.

There was allegedly going to be broader rulemaking announced on human powered bikes and or all of 16 CFR part 1512 as well but that notice has not yet appeared. That story appeared in Bicycle Retailer. It is not clear if this current notice is related to the notice discussed in Bicycle Retailer

If you wish to submit written comments for the record, you may do so before or after the meeting, as described in the ADDRESSES section of the notice. These written comments should be received by no later than August 21, 2023.  Please refer to the notice for the topics that the CPSC would like to see addressed.

Law Offices of Steven W. Hansen | www.swhlaw.com | 562 866 6228 © Copyright |

December 28, 2022

Class three (3) e bikes in CA now must be specifically prohibited on an equestrian trail, or hiking or recreational trail.

I am not sure why or who (outside the legislature) initiated this California bill in Feb. 2022. The purpose is to allow class 3 bikes anywhere a class 1 or 2 bike is allowed by default. Unless of course the city or the county (or some other CA state local jurisdiction) disallow class 1, 2 or 3 bikes on some specific path or area under their control. I think the intent here here is that the Legislature assumed that most local entities wont take any action on this unless there is a real problem locally.  Like Del Mar CA as an example. I do not think allowing class 3 on class 1 bike paths (and other places) was the intent of the original model legislation passed around by People for Bikes. This also raises more issues with respect to class 3 classification jurisdiction as has been raised by the US Consumer Product Protection Agency (CPSC) lately. FYI the reference to "motorized bicycle" below in pink means basically a moped like device that does not go over 30 mph. See details here (CCV sec 406)   So the legislature at least smartly preserved that exception. However I don't see much difference between a moped and class 3 devices functionally or speed wise and quite frankly the ebikes on the class 1 bikeways I see now likely do not even meet CA class 3 requirements. I really DON'T think class 3 ebikes are appropriate on Class 1 bikeways (those completely separate and not near roads) but quite frankly nothing has been done to enforce or even post the existing law on most class 1 bike paths in CA to date so I don't see this as having much of an effect.

[ Approved by CA Governor September 16, 2022. Filed with Secretary of State September 16, 2022. ]
LEGISLATIVE COUNSEL'S DIGEST

[swh note: I have left in the red and blue original editing in the bill markups]

AB 1909, as amended, Friedman. Vehicles: bicycle omnibus bill.
Existing law generally regulates the operation of bicycles upon a highway. A violation of these provisions, generally, is punishable as an infraction.
(1) Existing law prohibits the operation of a motorized bicycle or a class 3 electric bicycle on a bicycle path or trail, bikeway, bicycle lane, equestrian trail, or hiking or recreational trail, as specified. Existing law authorizes a local authority to additionally prohibit the operation of class 1 and class 2 electric bicycles on these facilities.
This bill would remove the prohibition of class 3 electric bicycles on these facilities and would remove the authority of a local jurisdiction to prohibit class 1 and class 2 electric bicycles on these facilities. The bill would instead authorize a local authority to prohibit the operation of a class 3 any electric bicycle at a motor-assisted speed greater than 20 miles per hour. or any class of electric bicycle on an equestrian trail, or hiking or recreational trail.

SECTION 1.

 Section 21207.5 of the Vehicle Code is amended to read:

21207.5.
 (a) Notwithstanding Sections 21207 and 23127 of this code, or any other law, a motorized bicycle shall not be operated on a bicycle path or trail, bikeway, bicycle lane established pursuant to Section 21207, equestrian trail, or hiking or recreational trail, unless it is within or adjacent to a roadway or unless the local authority or the governing body of a public agency having jurisdiction over the path or trail permits, by ordinance, that operation.
(b) The local authority or governing body of a public agency having jurisdiction over an equestrian trail, or hiking or recreational trail, may prohibit, by ordinance, the operation of an electric bicycle or any class of electric bicycle on that trail.
(c) The Department of Parks and Recreation may prohibit the operation of an electric bicycle or any class of electric bicycle on any bicycle path or trail within the department’s jurisdiction.




Law Offices of Steven W. Hansen | www.swhlaw.com | 562 866 6228 © Copyright 1996-2020 Conditions of Use

August 23, 2020

California Court rules that Amazon does have liability for a defective product (Bolger v Amazon.com LLC)

This article was reprinted with permission from Bicycle Retailer and Industry News  

By Steven W. Hansen, Esq. 

Update 11/19/20: The California Supreme Court on 11/18/20 denied Amazon.com LLC’s bid for judicial review of this case decided earlier this fall. So that mean this case is now a legally cite-able precedent and is "the law" in Calif.

An appeals court in California ruled Thursday that Amazon is not shielded from liability for defective products sold by third-party sellers through its online marketplace.

Nationally this California Appellate case is one of the first decided against Amazon holding them directly liable for a defective product sold on its marketplace. It remains to be seen what happens on somewhat similar cases pending in state and federal courts throughout the country. On a related issue, the California Legislature is considering a bill (AB-3262 Product liability: electronic retail marketplaces) that would treat “electronic retail marketplaces” like retailers for purposes of California strict liability law. The future of this bill is uncertain and most if not all of California law regarding product liability is case law not statutory law.

The plaintiff in the California case, Angela Bolger, bought a replacement laptop computer battery on Amazon.com in 2016.

The listing for the battery on Amazon identified the “seller” (“sold by”) as “E-Life,” a fictitious name used on Amazon by Lenoge Technology (HK) Ltd. (Lenoge). Amazon charged Bolger for the purchase, retrieved the laptop battery from its location in an Amazon warehouse, (as this was an “FBA” sale or “fulfillment by Amazon”) prepared the battery for shipment in Amazon-branded packaging, and sent it to Bolger. Bolger alleged the battery exploded several months later, and she suffered severe burns as a result.

Interestingly a month after the purchase Amazon suspended Lenoge’s selling privileges because it became aware of a “grouping” of safety reports on Lenoge’s laptop batteries and Lenoge did not respond to Amazon’s requests for documentation. Three weeks later, Amazon permanently blocked Lenoge’s account.  Bolger sued Amazon in January 2017 and several other defendants, including Lenoge, alleging causes of action for strict products liability, negligent products liability, breach of implied warranty, breach of express warranty, and “negligence/negligent undertaking.” Lenoge was served but did not appear, so the trial court entered its default. Other entities were sued as well but foreign service of process was going to take 2-3 years. Three months after suit was filed, Amazon sent Bolger an email warning her that Amazon had learned that the Lenoge replacement battery “may present a fire hazard or not perform as expected…If you still have this product, we strongly recommend that you stop using the item immediately.”

What is most interesting to us is that there is no record of any CPSC recall regarding this battery or related companies which would be required before any notification were sent to a consumer regarding a safety issue; unless of course Amazon did not consider itself a seller or in the retail chain. Ironically there is still an Amazon seller named “Lenoge” selling laptop batteries on the site as of this writing.

After almost two years of litigation, Amazon moved for summary judgment, arguing primarily that the doctrine of strict products liability, as well as any similar tort theory, did not apply to it because Amazon did not design or manufacture the product, sell or distribute the battery, set the price, provide a warranty, or control the terms of the product offer. Similarly, Amazon argued it was not involved in sourcing the subject battery from the manufacturer or upstream distributor.” Amazon also submitted a declaration from an Amazon senior manager responsible for product safety, investigations, and recalls who asserted that “E-life retained title to the battery at all times,” and “E-life was also responsible for ensuring the battery that it sold to [Bolger] was properly packaged and complied with all applicable laws.” The Amazon manager acknowledged Amazon’s A-to-z Guarantee, but she denied it was a warranty. She stated, “The only warranty provided for a product comes from the third-party seller.”

The trial court judge agreed with all of Amazon’s factual and legal arguments (even though there were likely disputed facts that could have prevented the motion from being granted), and granted Amazon’s motion, and entered judgment accordingly. 

The three-judge panel at the Court of Appeal, strongly disagreed in a very well reasoned decision. We strongly urge readers to take a look at the opinion starting at page 18 as it pretty much lays out the entire basis of product liability in California and how Amazon’s attempt to shield itself from liability was really a smokescreen for its true role in the chain of distribution.

Initially the court pointed out that “Essentially the paramount policy to be promoted by the [product liability doctrine] is the protection of otherwise defenseless victims of manufacturing defects and the spreading throughout society of the cost of compensating them.” But “the facts must establish a sufficient causative relationship or connection between the defendant and the product so as to satisfy the policies underlying the strict liability doctrine.” The court looked at older decisions where product “facilitators” had benefited from service charges in providing the product and finding liability as the “overall producing and marketing enterprise is in a better position to insure against the liability and to distribute it to the public by adding the cost thereof to the price of the product.” 

One of the key factors (although perhaps not the deciding factor) in this case was that the Lenoge supplier was participating in the FBA program with Amazon. The court painstakingly went thru the process of how the battery got from Lenoge to Amazon and from Amazon to the consumer and that Amazon was an “integral part of the overall producing and marketing enterprise that should bear the cost of injuries resulting from defective products.”. The court painstakingly went thru all of the policies underlying the doctrine of strict products liability to confirm that the doctrine should apply.

First, Amazon, like conventional retailers, may be the only member of the distribution chain reasonably available to an injured plaintiff who purchases a product on its website. 

Second, Amazon, again like conventional retailers, “may play a substantial part in insuring that the product is safe or may be in a position to exert pressure on the manufacturer to that end; the retailer’s strict liability thus serves as an added incentive to safety.”

Third, Amazon, like conventional retailers, has the capacity to adjust the cost of compensating injured plaintiffs between itself and the third-party sellers in the course of their ongoing relationship.

Amazon focused on dictionary definitions of “seller” and “distributor” and claimed it could not be held strictly liable because those definitions do not apply to it. It characterized its business as a service, i.e., a forum for others to sell their products, and therefore outside the rule of strict liability. The court felt Amazon’s arguments were unpersuasive.

First, regardless of whether Amazon selected this particular battery for sale, it chose to host Lenoge’s product listing, accept Lenoge into the FBA program, take possession of the battery, accept Bolger’s order, take her payment, and ship the battery to her. Amazon was therefore part of the chain of distribution even if it did not consciously select the Lenoge replacement battery for sale. Second, and more fundamentally, Amazon did choose to offer the Lenoge replacement battery for sale. Amazon was no mere bystander to the vast digital and physical apparatus it designed and controlled. The court reasoned Amazon made these choices for its own commercial purposes and so it should share in the consequences.

Many of the arguments Amazon asserted were contradictory. For example, Amazon argued that it did not set the price for third-party products and therefore cannot “spread the cost of defects across units sold.” But as Amazon noted, it does control its fees. If it desires, it can increase fees on high-risk products, or all products, and thereby spread the cost of compensating consumers injured by such products.  Of course, this is the problem in general with low-cost products. Costs must be cut somewhere and one of the ways to do that is by avoiding product liability and insurance costs. This is typically the case with overseas companies beyond the reach of US courts. But of course, the argument here is that Amazon does in fact have control over these overseas companies and can force them to insure Amazon.

Amazon also contended (as all internet companies do) that, regardless of its liability under California law, it is shielded by the federal Communications Decency Act (1996). The court ruled against Amazon on this issue as well as under existing case law, “while the [CDA] protects interactive computer service providers from liability as a publisher of speech, it does not protect them from liability as the seller of a defective product.” Here the liability was based on Amazon’s own conduct, as described above, not the content of Lenoge’s product listing. The court also distinguished eBay cases where eBay was not found responsible for users' false product listings.

It is important to point out that this appellate decision will almost surely be appealed by Amazon to the California Supreme court and that it could take well over a year for a final decision from that court. Once that decision comes down from the CA Supreme court (Its unclear if the US Supreme court would agree to hear this case) the case may still be sent back to the trial court for trial and appealed again from a verdict. Or the case may settle and this opinion and/or any Supreme Court opinion would stand as the law. Amazon may seek to “de-publish” the opinion so it could not be relied on as precedent. That outcome is unlikely in this case. 

The issue of Amazon’s strict liability for third-party sales has been, and continues to be, litigated in state and federal courts across the country. Some hold Amazon strictly liable while others do not.  Many of the other cases are factually distinguishable, including because the product at issue was NOT sold through Amazon’s FBA program (as in the Bolger case). Also other state statutes or case law have limited strict liability in a manner inconsistent with California law.   

So now what are the implications of the Bolger case? Well knowing Amazon and how it likes to assert its leverage over sellers, it will likely immediately start requiring very large insurance policies naming it as additional insured for all third party sellers (but especially those who use FBA) As California is such a huge market for Amazon and Amazon cannot be sure where a third party seller product may be shipped, any decision in any state holding Amazon responsible will make it such that Amazon will have to enforce the insurance requirements system-wide. Also as most plaintiffs do not pursue entities in other countries that require complex foreign service and jurisdictional issues to be overcome, it will be interesting to see how this decision forces Amazon to force the small sellers to pony up when it comes to the defense and indemnification of Amazon. The overall effect will likely be increased prices on the Amazon third party platform (even more so that post-COVIID-19) which may hurt it in its fight with Walmart.

This decision was a long time in coming but I had to say the writing was on the wall. The decision is a great read for those that want to learn about how Amazon deals with sellers. Amazon wants a big piece of the sales pie. It wanted to have total control over sellers and buyers while keeping the two isolated from each other. But when it came to liability its position was “oh we don’t sell anything and have nothing to do with the marketing of the product”. Well that facade has now been severely eroded. The emperor's lack of clothes has now been pointed out in a court decision that will be heard around the world.

Law Offices of Steven W. Hansen | www.swhlaw.com | 562 866 6228 © Copyright 1996-2020 Conditions of Use

August 12, 2020

California Bill alert; AB-1286 Shared mobility devices: agreements (2019-2020) (AB 371 2022)

UPDATE 6/21/22. This bill was renumbered to AB 371 and CAL Bike does not like the insurance requirements. Quite a few provisions have been added since 2020 version below. Here is the calbike campaign and the link to the current version of the bill. Act now in contacting your CA legislator as votes can happen very quickly without warning.

UPDATE 9/2/20. So the legislative year is over in CA as of 8/31/20...whew...The final bill language is set forth below as of 9/2/20. They still did not clean up the issue below in my 8/27/20 update. If the bill is signed by Gov. Newsom it looks like it would take effect January 1, 2021.

UPDATE 8/27/20:

It appears that the mobility industry and or others in the industry were able to remove all the provisions in the bill relating to releases. However in my opinion the definition of a  “Shared mobility device” and a  “Shared mobility device provider” is still too vague which then leads to a problem with this remaining provision "(b) Before distribution of a shared mobility device, a shared mobility service provider shall enter into an agreement with, or obtain a permit from, the city or county with jurisdiction over the area of use. "Distribution" is way too vague and again this could apply to very small rental operations that cannot afford such high insurance limits.

ORIGINAL 8/12/20 POST:

Once again someone in the California legislature got whiff of a bad idea and decided to run with it. Just like the AB 5 bill last year regarding independent contractors and the resulting unwinding of Uber in CA., now we have a "shared mobility bill" that attempts to "fix" a few issues in that sector but does it in a very heavy handed way. 

The first problem is the definition of a "shared mobility device". (ellipses eliminates unneeded verbiage) "Shared mobility device” means an electrically motorized board.... motorized scooter ... electric bicycle... [human powered] bicycle..., or other similar personal transportation device, .... that is made available to the public..". It gets worse.

“Shared mobility service provider”... means a person or entity that offers, makes available, or provides a shared mobility device in exchange for financial compensation..."

So if one person wanted to rent a bike to someone, this law applies to that person renting a bike. Rather overbroad and too all inclusive. Poorly drafted in my opinion. There should be some revenue size threshold added to this definition.

Now for the good part, if you rent one of these devices (regardless of the size of your business or the amount of revenue to you earn) you have to purchase a policy from a California admitted insurer (might be tough from what I know of this insurance market) and the limits have to be 1 million per claim and 5 million dollars in the aggregate. In some respects that is more than Walmart suppliers have to procure to sell to Walmart.

But there is more. The "agreement between the provider and a user shall not contain a provision by which the user waives, releases, or in any way limits their legal rights or remedies under the agreement.". So even though California statutory law and case law allows for such waivers and releases in the recreational sports context, this legislator knows better and is going to go against established law. Such releases are not allowed in a product liability case to begin with. All this does is expose the companies renting (not product manufacturers or distributors) to MORE liability and make it harder for them to extricate themselves from litigation. Also the insurance market has "priced in" those waivers and without them insurance costs will likely rise in this sector. Legislators should think very long and hard before tinkering with existing liability laws and precedent. The law of unintended consequences makes things hard to fix once a new law is unleashed.

It goes on to provide that "A city or county that authorized a provider to operate within its jurisdiction before January 1, 2020, and continues to provide that authorization shall adopt rules for the operation, parking, maintenance, and safety rules regarding the use and maintenance of shared mobility devices..."

Quite frankly I trust the mobility companies to come up with better rules for operation than any government entity. Trust me I have seen this play out before. Government entities are not very adept at this especially considering the hundreds of different devices out there.

It is worth noting that this bill is co-sponsored by the Consumer Attorneys of California (CAOC) (which is a large association of attorneys that represents plaintiff's) and the League of California Cities (which is a group that generally advocates for cities) It is supported by the Environmental Defense Fund and a number of consumer protection groups. It is opposed by a number of shared mobility service providers, TechNet, and the Civil Justice Association of California.

The senate Judiciary Committee Analysis is as follows (in part)

Required prohibition on waiver of rights and remedies

Pursuant to the bill, the agreement and permit must also prohibit provisions in shared mobility provider agreements between providers and users by which the user waives, releases, or in any way limits their legal rights or remedies under the agreement. Writing in opposition, were a coalition of groups, including a number of providers such as Bird and Lime.

What is interesting is that the committee responded to their opposition with:

"It is true that such waivers are generally permitted and widely used, but are subject to certain limitations and requirements laid out in statute and case law. Civil Code Section 1668 provides:All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.Relevant judicial precedent further requires that waivers must be clear, unambiguous, and explicit in expressing the intent of the subscribing parties, as well as comprehensible in each of its essential details. (Benedek v. PLC Santa Monica(2002) 104 Cal.App.4th 1351, 1356; Westlye v. Look Sports, Inc.(1993) 17 Cal.App.4th 1715, 1731."

So even after acknowledging years of case law out there to protect consumer from onerous releases or waivers the Legislature still felt it was appropriate and ban outright the use of waivers and in a very broad fashion (not just for electric devices) or limiting the ban to large providers.

The plaintiff attorneys association responded (some what inaccurately) that:

"The opposition argues that such agreements are common. However, (1) [releases] being common does not make them right and (2) they are different from other rental agreements/operators. The companies manufacture (Editor: that is not true in all circumstances) and place e-scooters into the stream of commerce and are more akin to a product manufacturer and/or retailer and less like an innocent rental agency with no control over the product. Also, the manufacturers have the exclusive control to fix/maintain the scooters. (Editor: this is is also not always accurate) When a driver rents a vehicle, he or she is not required to waive the liability of car defects; neither should a scooter rider."

The Civil Justice Association of California (CJAC) responded that "The scooter manufacturer has no way of exerting control over the scooter rider and does not deserve full legal responsibility for accidents that may occur as a result of a rider’s behavior." The Legislative analyst responded that "assumption of risk" can still be asserted but I would point out if the defendant is in fact a product manufacturer or in the stream of distribution "assumption of risk" is not available as a defense in a pure product liability case.

If you want to see the full bill analysis click here. It is worth a read.

The entire bill as it exists today is set forth below. This bill was last amended in June of 2019 and it is just now coming up for a hearing with the CA Senate Judiciary Committee on August 18, 2020. Don't ask why. It passed out of committee on 8/19/20 and is now set for a 'third reading". This is part of the problem with the CA legislature. Surprise hearings on dormant bills months down the road. Maybe that's planned. August 31 is the last day to pass the bill.

The committee can be reached at:
State Capitol
Room 2187
Sacramento, CA 95814
Phone: (916) 651-4113
Fax: (916) 403-7394
Email: sjud.fax@sen.ca.gov

The bill author can be reached here.

FINAL LANGUAGE OF BILL AWAITING SIGNATURE BY GOV. NEWSOM LIKELY WITHIN 30 DAYS:

The people of the State of California do enact as follows:


SECTION 1.

 Title 10.1 (commencing with Section 2505) is added to Part 4 of Division 3 of the Civil Code, to read:

TITLE 10.1. Shared Mobility Devices

2505.
 (a) For purposes of this title:
(1) “Shared mobility device” means an electrically motorized board as defined in Section 313.5 of the Vehicle Code, motorized scooter as defined in Section 407.5 of the Vehicle Code, electric bicycle as defined in Section 312.5 of the Vehicle Code, bicycle as defined in Section 231 of the Vehicle Code, or other similar personal transportation device, except as provided in subdivision (b) of Section 415 of the Vehicle Code, that is made available to the public by a shared mobility service provider for shared use and transportation in exchange for financial compensation via a digital application or other electronic or digital platform.
(2) “Shared mobility service provider” or “provider” means a person or entity that offers, makes available, or provides a shared mobility device in exchange for financial compensation or membership via a digital application or other electronic or digital platform.
(b) Before distribution of a shared mobility device, a shared mobility service provider shall enter into an agreement with, or obtain a permit from, the city or county with jurisdiction over the area of use. The agreement or permit shall, at a minimum, require that the shared mobility service provider maintain commercial general liability insurance coverage with a carrier doing business in California, with limits not less than one million dollars ($1,000,000) for each occurrence for bodily injury or property damage, including contractual liability, personal injury, and product liability and completed operations, and not less than five million dollars ($5,000,000) aggregate for all occurrences during the policy period. The insurance shall not exclude coverage for injuries or damages caused by the shared mobility service provider to the shared mobility device user.
(c) (1) A city or county that authorizes a provider to operate within its jurisdiction on or after January 1, 2021, shall adopt rules for the operation, parking, and maintenance of shared mobility devices before a provider may offer any shared mobility device for rent or use in the city or county by any of the following:
(A) Ordinance.
(B) Agreement.
(C) Permit terms.
(2) A city or county that authorized a provider to operate within its jurisdiction before January 1, 2021, and continues to provide that authorization shall adopt rules for the operation, parking, and maintenance of shared mobility devices by January 1, 2022, by any of the following:
(A) Ordinance.
(B) Agreement.
(C) Permit terms.
(3) A provider shall comply with all applicable rules, agreements, and permit terms established pursuant to this subdivision.
(d) Nothing in this section shall prohibit a city or county from adopting any ordinance or regulation that is not inconsistent with this title.

SEC. 2.

 The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

 

OLDER VERSION OF THE BILL BELOW:

Introduced by Assembly Member Muratsuchi

February 21, 2019


An act to add Title 10.1 (commencing with Section 2505) to Part 4 of Division 3 of the Civil Code, relating to mobility devices.


LEGISLATIVE COUNSEL'S DIGEST


AB 1286, as amended, Muratsuchi. Shared mobility devices: agreements.
Existing law regulates contracts for particular transactions, including those in which one person agrees to give to another person the temporary possession and use of personal property, other than money for reward, and the latter agrees to return the property to the former at a future time.
This bill would require a shared mobility service provider, as defined, to enter into an agreement with, or obtain a permit from, the city or county with jurisdiction over the area of use. The bill would require that the provider maintain a specified amount of commercial general liability insurance and would prohibit the provider from including specified provisions in a user agreement before distributing a shared mobility device within that jurisdiction. The bill would define shared mobility device to mean an electrically motorized board, motorized scooter, electric bicycle, bicycle, or other similar personal transportation device, except as provided.
This bill would require a city or county that authorizes a shared mobility device provider to operate within its jurisdiction on or after January 1, 2020, to adopt operation, parking, maintenance, and safety rules and maintenance rules, as provided, regarding the use of the shared mobility devices in its jurisdiction before the provider may offer shared mobility devices for rent or use. The bill would require a city or county that authorized a provider to operate within its jurisdiction before January 1, 2020, and continues to provide that authorization to adopt those operation, parking, maintenance, and safety rules and maintenance rules, as provided, by January 1, 2021.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Title 10.1 (commencing with Section 2505) is added to Part 4 of Division 3 of the Civil Code, to read:

TITLE 10.1. Shared Mobility Devices

2505.
 (a) For purposes of this title:
(1) “Shared mobility device” means an electrically motorized board as defined in Section 313.5 of the Vehicle Code, motorized scooter as defined in Section 407.5 of the Vehicle Code, electric bicycle as defined in Section 312.5 of the Vehicle Code, bicycle as defined in Section 231 of the Vehicle Code, or other similar personal transportation device, except as provided in subdivision (b) of Section 415 of the Vehicle Code, that is made available to the public by a shared mobility service provider for shared use and transportation in exchange for financial compensation via a digital application or other electronic or digital platform.
(2) “Shared mobility service provider” or “provider” means a person or entity that offers, makes available, or provides a shared mobility device in exchange for financial compensation or membership via a digital application or other electronic or digital platform.
(b) Before distribution of a shared mobility device, a shared mobility service provider shall enter into an agreement with, or obtain a permit from, the city or county with jurisdiction over the area of use. The agreement or permit shall, at a minimum, require that the provider comply with both of the following requirements:
(1) Requires Require that the shared mobility service provider to maintain commercial general liability insurance coverage with a carrier doing business in California, with limits not less than one million dollars ($1,000,000) for each occurrence for bodily injury or property damage, including contractual liability, personal injury, and product liability and completed operations, and not less than five million dollars ($5,000,000) aggregate for all occurrences during the policy period. The insurance shall not exclude coverage for injuries or damages caused by the shared mobility service provider to the shared mobility device user.
(2) The shared mobility provider agreement between the provider and a user shall not contain a provision by which the user waives, releases, or in any way limits their legal rights or remedies under the agreement.
(c) (1) A city or county that authorizes a provider to operate within its jurisdiction on or after January 1, 2020, shall adopt rules for the operation, parking, maintenance, and safety rules regarding the use and maintenance of shared mobility devices before a provider may offer any shared mobility device for rent or use in the city or county. county by any of the following:
(A) Ordinance.
(B) Agreement.
(C) Permit terms.
(2) A city or county that authorized a provider to operate within its jurisdiction before January 1, 2020, and continues to provide that authorization shall adopt rules for the operation, parking, maintenance, and safety rules regarding the use and maintenance of shared mobility devices by January 1, 2021. 2021, by any of the following:
(A) Ordinance.
(B) Agreement.
(C) Permit terms.
(3) A provider shall comply with all operation, parking, maintenance, and safety rules applicable rules, agreements, and permit terms established pursuant to this subdivision.
(d) Nothing in this section shall prohibit a city or county from adopting any ordinance or regulation that is not inconsistent with this title.

SEC. 2.

 The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
 

Law Offices of Steven W. Hansen | www.swhlaw.com | 562 866 6228 © Copyright 1996-2020 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 | www.swhlaw.com | 562 866 6228 © Copyright 1996-2013 Conditions of Use

April 13, 2015

Comment period closing April 15 2015 on Prohibition of Children's Toys and Child Care Articles Containing Specified Phthalates

The Consumer Product Safety Commission (CPSC) comment period to permanently ban certain phthalates closes in a few days (April 15) unless they agree to extend the comment period. If your products contain any type of phthalates its a good idea to at least review this regulation and comment here. On December 30, 2014, the Commission published an Notice of Proposed Rulemaking (NPR) in the Federal Register proposing to prohibit children's toys and child care articles containing specified phthalates. (79 FR 78324). This was a well written article about the upcoming vote/issue.

Here is a refresher on whether your product might be at issue in this regulation:

Section 108(a) of the CPSIA permanently prohibits the manufacture for sale, offer for sale, distribution in commerce, or importation into the United States of any ‘‘children’s toy or child care article’’ that contains concentrations of more than 0.1 percent of di(2-ethylhexyl) phthalate (DEHP), dibutyl phthalate (DBP), or butyl benzyl phthalate (BBP). Section 108(b)(1) of the CPSIA prohibits on an interim basis (i.e., until the Commission promulgates a final rule), the manufacture for sale, offer for sale, distribution in commerce, or importation into the United States of ‘‘any children’s toy that can be placed in a child’s mouth’’ or ‘‘child care article’’ containing concentrations of more than 0.1 percent of diisononyl phthalate (DINP), diisodecyl phthalate (DIDP), or di-n-octyl phthalate (DNOP). The CPSIA defines a ‘‘children’s toy’’ as ‘‘a consumer product designed or intended by the manufacturer for a child 12 years of age or younger for use by the child when the child plays.’’ Id. Section 108(g)(1)(B). A ‘‘child care article’’ is defined as ‘‘a consumer product designed or intended by the manufacturer to facilitate sleep or the feeding of children age 3 and younger, or to help such children with sucking or teething.’’ Id. Section 108(g)(1)(C). A ‘‘toy can be placed in a child’s mouth if any part of the toy can actually be brought to the mouth and kept in the mouth by a child so that it can be sucked and chewed. If the children’s product can only be licked, it is not regarded as able to be placed in the mouth. If a toy or part of a toy in one dimension is smaller than 5 centimeters, it can be placed in the mouth.’’ Id. Section 108(g)(2)(B). These statutory prohibitions became effective in February 2009. The interim prohibitions remain in effect until the Commission issues a final rule determining whether to make the interim prohibitions permanent. Id. Section 108(b)(1).


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

July 7, 2012

Don’t Just Rubber Stamp Your Insurance Renewal; It’s More Complicated Than You Think

Reprinted with permission from the June/July 2012 edition of Bicycle Dealer Magazine

Download pdf version

By Steven W. Hansen, esq.

I’m currently defending two cases, one involving a retailer and another a non-profit bike association where there was insurance in place at the time of the accident but no coverage due to exclusions or lack of “optional” coverages. Both of the situations are very costly mistakes as neither the defense costs in the suit nor the indemnity payment to the plaintiff will be covered and must be borne by the insured.

Most retailers never think much about their coverage once they secure it, other then trying to find a lower price each year. They treat insurance as a “commodity” (something they would never do with bikes) and only shop based on price, not coverages. This problem is often due to a lack of understanding about what insurance policies cover and do not cover and some brokers’ lack of understanding of the bicycle business and the coverages that are most needed by those in the business. As this magazine is read primarily by IBDs, the focus of this article will be on insurance for retailers, not manufacturers.

Many retailers are unaware that one of their biggest liability exposures is product liability. Some assume they cannot be sued for that, as the manufacturer made the product. Even if they never touched the product (just sold it), in most states, the retailer can be on the hook for the entire loss. In cases where the retailer installed the product, allegations are often made that make the retailer the target of the products liability case. Some retailers actually lack the “products completed operations” coverage on their policy, as they don’t understand the insurance terminology, which is foreign to most people.

Lots of retailers and manufacturers ask me what limits of liability coverage they should carry. This is a very hard question to answer and, in the end, comes down to the size of your business (its value), your actual exposures and your tolerance for risk. This is something that really has to be customized for each client.

There are two main types of policies offered for retailers. One is referred to as a “BOP” (or Business Owner’s Policy) and the other is CGL (Commercial General Liability). BOP is generally very price competitive and generally non-auditable, meaning that unlike CGL policies, the insurer cannot come back after the policy ends and seek more premium as your sales exceeded estimates. CGL policies are priced using different methods and are almost always more costly than the BOP’s. BOP’s are far more common for retailers. Again, which type you get depends on the type of operation you run and the coverages you want added in. BOP’s are often very limited with very few options.

For example, if your store carries a product which it helped to design there could be an argument that your store is the designer of the product and the BOP policy may not have the coverage needed to deal with that exposure.

Another area often overlooked are certificates of insurance. Most retailers know (or assume) that their upstream suppliers or manufacturers carry insurance that covers product liability claims. But some retailers wrongly assume that if they become involved in a suit, the upstream supplier’s insurer will defend and indemnify them. This often is not the case, as the retailer has not been added to the manufacturers policy via a certificate of insurance. The problem is that certificates can be worded in such a way as to not offer any coverage to the retailer. In addition, there are parts of the policy that are not provided to the retailer that discuss the scope of what the retailer can be indemnified for by the manufacturers policy. As most retailers don’t understand this area, it’s rarely discussed with brokers or suppliers in an intelligent fashion, if at all.

The certificate issue can become more complicated by indemnity contracts between upstream and downstream parties in the supply chain. These contracts are often poorly drafted, not well thought out and often fail to take into account insurance issues that may arise due to these contacts. For example, in many cases the party required to indemnify may not have any insurance coverage for any contractual obligation or just for the contract drafted in that specific instance. That can cause hardship to the indemnifying party and also make it less likely that the party that was to be indemnified under the agreement will not get what it bargained for. I often tell clients that if there is no insurance coverage for an indemnification agreement, they are likely not worth the paper they are written on.

Other areas overlooked by retailers are all the scenarios where problems or injuries are likely to occur. Examples are sponsorship of riders or events, rentals of bikes and related equipment, used bikes, repairs, thefts, contractual obligations, recalls, employee matters, data issues, loss of business or revenue, importing/exporting -- the list goes on.

For example, most retailers know that workers compensation coverage is required by law for employees, but fail to obtain any type of “employment practices” liability coverage that can cover wrongful discharge or discrimination claims, hiring claims etc. I tell people that often your own employees can become your worst nightmare if they turn against you -- much worse than a former customer. But again employment practice coverage varies widely from insurer to insurer so you have to be very careful about what you are paying for. In some instances, such coverage will only provide a defense to the claim but no indemnity if there is a settlement or a verdict against you.

Thefts are a complicated area as they can occur in many different ways and some types of theft are not covered by policies or are excluded. Thefts can be categorized as thefts by third parties or thefts by employees. Burglary-type thefts (by force) and thefts by some sort of deception (like giving a bogus credit card or promising to come back from a test ride and never doing so). They are also segregated by types of things stolen: money, data, identities, products etc. Policies can differ greatly on what is and is not covered, so you have to ask very pointed and specific questions of your broker (preferably in writing) as to what is and is not covered.

Data loss has become a huge marketing area lately in the insurance market, both in terms of data (incoming or outgoing) damaging your business or causing harm to third parties (such as in loss or leakage of personal information on the Internet or credit card information). The broadest types of coverage are almost always sold separately. Some “basic” coverages might get included in the primary policy. These coverages can get quite complicated and quite costly. Often, they cover more than smaller businesses need, especially if they are not processing lots of online orders and have good data management practices in place or outsource that function to the third party. But again, it really depends on your unique exposures.

Given the complexities involved in insurance, the jargon used by brokers that retailers clearly don’t understand and some brokers who are not at all familiar with the risk that retailers face in the recreational arena, I often am asked to do “insurance audits” or broader “liability audits” for clients. Some of this work should be done by the brokers, but often, it’s not, or it’s incomplete or its done using insurance jargon that leaves the insured not quite sure what’s covered and what’s not. Another problem is that some brokers that sell these policies are not very familiar with types of coverages or more importantly what types of “likely retailer scenarios” are covered and which ones are not under a particular policy.

To make matters worse, what’s covered or not covered can change from year to year or insurer to insurer. Typically, the changes are less from year to year than they are when you change insurers. You have to make sure that coverage has not been changed or restricted when the new policy issues. A broker may also be told that a policy will cover a certain act or loss, but then when the policy is actually issued by the insurer months later, it turns out the forms attached were changed or the form asked for was not included and you end up with a costly coverage problem.

Insurance can be daunting. It’s better to find out what you are paying for well before you need it.

Steven W. Hansen is an attorney who defends recreational product manufacturers, distributors and retailers in product liability matters and provides consultation regarding product recalls, owners manuals and warnings, insurance coverage questions, risk management and product compliance and development.

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 | www.swhlaw.com | 562 866 6228 © Copyright 1996-2008 Conditions of Use

March 18, 2012

The new ANSI Z535 standards and drafting better user / owner manuals


We have been assisting clients with the drafting or users (or owners) manuals for some time. Companies have become much better about drafting these manuals in recent years, however many company's manuals are still seriously lacking in many areas. The biggest problem we see is that companies do not think out a long term strategy with respect to manuals, how they are to be effectively and ultimately delivered to consumers and developing a framework for revising them over time, to name a few areas that are lacking.

If your company does not have any manuals (or recent, well drafted manuals) this may be the time to get started or at least do a refresh on what you have and to rethink your entire strategy. The reason this may be a good time is that ANSI (American National Standards Institute) has just recently published two key standards dealing with warnings and drafting these manuals. The two standards are:

ANSI Z535.4 "Product Safety Signs and Labels" originally published in 1991. The 2007 version was revised and published in Sept 2011; (again this one only involves so called "on product" warnings)

ANSI Z535.6 "Product Safety Information in Product Manuals, Instructions, and Other Collateral Materials" originally published in 2006. The 2006 version was revised and published in Sept 2011; (this standard deals with complete manuals and is meant to be complimentary to Z535.4)

There are 4 other standards in the ANSI Z 535 series ( Z535.1, Z535.2, Z535.3, and Z535.5) that are not directly relevant for drafters of manuals for recreational products.

Now of course none of the Z535 series standards tell you what to say in your manuals or warnings or even what substantive topics to cover, (that is usually covered by more substantive standards like the EN 14781 entitled "Racing bicycles - Safety requirements and test methods", for example) but the Z535 standards do tell you the manner in which you should convey it, including organization, style, graphics etc. From our own review I will say that most manuals that we have not assisted on are poorly organized. Z535 aims to improve that problem specifically.

Another thing to keep in mind is that a manual is not all about "warnings" but also about instructing users on how to assemble, use or maintain the product. We always say that if users are properly instructed often times the need for the warning is reduced. But you need both components. Another area lacking in manuals is instructive, intelligent warnings. For example we often see the generic warning: "use of this product may result in serious injury or death...." Great info. That's true with almost any product. You need to tell the user the specific areas or details about the product where he or she is most likely to get hurt and how the injury is likely to occur (the mechanism of injury). This is the reason most people's eyes glaze over when reading warnings. You are not telling them something they don't already know. (think about cigarette warnings and recent controversy about making them have more impact)

Now many people will say that just having a "standard" does not guarantee that you will get past a "failure to warn" claim and I would agree with them (see my prior article Using Standards in Defending Product Liability Cases, for more detail on that issue). However whenever you fail to meet or at least demonstrate that your company at least considered a standard in drafting a warning or manual, you can pretty much be assured that overcoming a failure to warn claim will be an uphill battle with a judge or jury. The reason is that standards (especially those from recognized bodies like ANSI, ISO or ASTM) are seen as embodying years of diligent work by the worlds experts on the subject, application of the scientific method, and in most cases some democratic form of creation. That's hard for most companies to compete against in house.

At a minimum you need someone with legal training (in the relevant field of product liability) and some knowledge of the the substantive area being warned about, to review your manual at least every 2-3 years or more often if substantial changes to the manual or product are being made. Having someone outside the company critique the manuals is essential. This is a continual process and should be examined in a comprehensive fashion; again not just the manuals themselves but the delivery system, the design, the languages, the timeline etc. Once this is done properly inside people can be trained to carry on the work on a yearly basis.

Law Offices of Steven W. Hansen | www.swhlaw.com | 562 866 6228 © Copyright 1996-2012 Conditions of Use

July 21, 2011

CPSC announces lead limit on childrens products will be reduced from 300ppm to 100ppm effective August 14, 2011


Update to this story posted August 2, 2011

Unfortunately the CPSC decided to move forward and reduce the lead content in products intended for "children" from 300ppm to 100ppm (parts per million) effective August 14, 2011. (Originally it was 600ppm when the law first took effect) This unfortunately was required by Congress, provided the CPSC in its rulemeaking function determined that it was "technologically feasible" to get the lead down to 100ppm. As the bicycle industry indicated in testimony before the CPSC this effectively eliminates the use of all recycled steel frames, most of which are used to make low cost children's bikes (low cost is helpful here as the children quickly outgrow the bikes). The bicycle industry also indicated that at this point in time lead testing results were not very reliable when you try to reach below 300ppm. Ahh..but its "technologically" feasible with NASA level equipment. Well sure, but we are not building a space shuttle and the recreational sports industry does not have NASA's "budget" (tax dollars).

The CPSC of course focused on "technologically" feasible, not "economically" or "reasonably" feasible. Thank you congressional staffer that used a poor choice of words. (see definition in bold below which was what the CPSC was using as guideance).

The bigger point here is that this law was flawed from the start. No children in the USA are dying or  getting sick from lead poisoning in toys, bicycles or motorcycles. The biggest "lead" threat to children does not come from consumer products. The law should only have applied only to specific items likely to go in a child's mouth (shown by empirical evidence). Bicycles, motorcycles and most recreational products don't. Unfortunately Congress chased lead (and a few select phthalates) as the only bogeyman (thanks to misled consumers and the media) and did not even focus on the most plentiful sources of lead to kids. We need to focus on what is really harming kids in the US. Lead is not in the top 20. The bigger problem is the whole race to go from 600ppm to 100pm is futile and will not insure any greater safety, but will incur exponentially more costs for small businesses. This is the problem with regulation. "Regulation" always looks and sounds good from 20,000 feet up until people that really have to make the widgets take a close look at it and what will really be required to implement it. Then you see the nightmare train wreck. But people with lifetime jobs in Government could care less about your small business job. And we wonder why unemployment is still so stubbornly high.

We all thought the CPSC would do the right thing in implementing the law via regulations, but the fact is that no one is willing to stick their neck out in government and declare the "emperor has no clothes" (or that this law and the 100ppm standard really does nothing at all to protect children and just harms US small businesses). The same is true in Congress. If a legislator came out and said reducing lead 600ppm to 100ppm means nothing to children's safety the "children's lobby" would accuse then of "wanting to harm children and puppy dogs". Some have come out and been bold but were outnumbered and outvoted.

There have been numerous bills to address some of the problems in the CPSIA since 2008. None really have moved thru Congress which in the last two years has been in a state of panicked deadline gridlock. Now with the debt crisis coming to a head on August 2, 2011 there are very few days to deal with this issue before the August 14, 2011 deadline. The National Association of Manufacturers is taking their best shot in an ad campaign here:


National Association of Manufacturers Ad Campaign regarding HR 1939


The only thing on the table now with any hope of passing (any time this summer) is HR 1939 which has been stalled in "mark up" since Mid May 2011.


So starting on August 14, 2011 manufacturers and distributors of children's products must comply with the new 100 ppm federal limit for total lead content. CPSC will not enforce the CPSIA's independent third party testing requirement for total lead content until December 31, 2011, due to a stay of enforcement that is already in place. There are some legitimate questions and ambiguities regarding how the new 100 ppm requirement interacts with the latest "bicycle-motorcycle stay" thru December 31, 2011.


The first is whether or not your company complied with the stay's initial requirements (which required some onerous reporting) and if you failed to do that whether or not you can take advantage of the stay thru December 31, 2011.


The second is to keep in mind that as to bicycles the stay only deals with components made with metal alloys, including steel containing up to 0.35 percent lead, aluminum with up to 0.4 percent lead, and copper with up to 4.0 percent lead. (see 74 FR at 31257 for all details)


Finally there is a question as to how the stay thru December 31, 2011 interacts with the current 100 ppm lead requirement. One could argue that you have to make sure lead is below 100 ppm in your children's product but you don't have to "test and certify". Apparently this sort of "catch 22" makes sense to people in government. The reality is that the CPSC likely will not be chasing down manufactures of bicycles and motorcycles on the 100 ppm requirement until after December 31, 2011, but I would not want to bet my company on that or anything the CPSC may or may not do. They are just too unpredictable these days.


Finally, to add to the confusion, lead content levels for children's products (the base material) are different than the so called "lead paint/coatings standard" which has been .009 percent since August 14, 2009.

FOR IMMEDIATE RELEASE
July 15, 2011
Release #11-278
CPSC Announces New, Lower Limit for Lead Content in Children’s Products

WASHINGTON, D.C. - The U.S. Consumer Product Safety Commission (CPSC) voted (3-2) that there was insufficient evidence to make a determination that manufacturers of children’s products sold in the United States could not meet a total lead content limit of 100 parts per million (ppm) for a product or product category. The new total lead content limit, which is called for in the Consumer Product Safety Improvement Act (CPSIA), goes into effect on August 14, 2011 for manufacturers, importers, retailers and distributors of children’s products.

Through the CPSIA, Congress set tough new levels for lead content in products designed or primarily intended for children 12 and younger. Lead is a heavy metal that is toxic for children, and associated with lowered levels of learning, impaired hearing, brain damage and, at high levels, can be fatal.

Congress directed CPSC to phase in the reduced levels for lead content over a three year period, starting with 600 ppm on February 10, 2009. The level dropped to 300 ppm on August 14, 2009. Finally, Congress directed the total lead content limit be set at 100 ppm, unless the Commission determined it was not technologically feasible for a product or product category.

The Commission was not able to determine that 100 ppm total lead content is not technologically feasible, as staff found that materials containing less than 100 ppm total lead content are commercially available in the marketplace for manufacturers. CPSC staff also found many products currently on the market, that have been tested by CPSC or other organizations, that are already in compliance with the new 100 ppm total lead content limit.

Starting on August 14, 2011, manufacturers, importers, retailers and distributors of children’s products must comply with the new 100 ppm federal limit for total lead content. CPSC will not enforce the CPSIA’s independent third party testing requirement for total lead content until December 31, 2011, due to a stay of enforcement that is already in place.

The stay of enforcement does not apply to children’s metal jewelry, which currently must undergo independent third party testing.

The new 100 ppm lead content limit does not apply to inaccessible (internal) parts of children’s products and certain component parts of children’s electronic devices, like electronic connectors and plugs, including headphone plugs.

Lead content levels for children’s products are different from the levels Congress set for lead in paint or surface coatings. The limit for lead in paint or surface coatings is .009 percent. The .009 percent level has been in place since August 14, 2009 and independent third party testing is required for all paints or surfaces coatings used on children’s products.

Commissioner's Statements: Chairman Inez Tenenbaum and Commissioner Nancy Nord (both PDF).

[Federal Register Volume 76, Number 46 (Wednesday, March 9, 2011)] [Notices] [Pages 12944-12945] From the Federal Register Online via the Government Printing Office [www.gpo.gov] [FR Doc No: 2011-5231]

CONSUMER PRODUCT SAFETY COMMISSION

[Docket No. CPSC-2010-0080]

Children's Products Containing Lead; Technological Feasibility of 100 ppm for Lead Content; Notice, Reopening of the Hearing Record

AGENCY: U.S. Consumer Product Safety Commission.

ACTION: Notice, reopening of the hearing record.

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SUMMARY: Section 101(a) of the Consumer Product Safety Improvement Act (``CPSIA'') provides that, as of August 14, 2011, children's products may not contain more than 100 parts per million (``ppm'') of lead unless the U.S. Consumer Product Safety Commission (``CPSC,'' ``Commission,'' or ``we'') determines that such a limit is not technologically feasible. The Commission may make such a determination only after notice and a hearing and after analyzing the public health protections associated with substantially reducing lead in children's products. On February 16, 2011, the Commission conducted a public hearing to receive views from all interested parties about the technological feasibility of meeting the 100 ppm lead content limit for children's products and associated public health considerations. Individual Commissioners requested at the hearing that certain participants respond to additional questions in writing, as well as submit relevant studies and additional data referenced in oral presentations. Accordingly, through this notice, the Commission is reopening the hearing record until March 24, 2011.

ADDRESSES: Supplemental Materials identified by Docket No. CPSC-2010- 0080 may be submitted by any of the following methods:

Electronic Submissions

Supplemental Materials may be submitted to the Office of the Secretary by e-mail at cpsc-os@cpsc.gov.

Written Submissions

Submit written submissions in the following way: Mail/Hand delivery/Courier (for paper, disk, or CD-ROM submissions), preferably in five copies, to: Office of the Secretary, U.S. Consumer Product Safety Commission, Room 502, 4330 East West Highway, Bethesda, MD 20814; telephone (301) 504-7923.

Instructions: All submissions received must include the agency name and docket number for this notice. All materials received may be posted without change, including any personal identifiers, contact information, or other personal information provided, to http://www.regulations.gov. Do not submit confidential business information, trade secret information, or other sensitive or protected information electronically. Such information should be submitted in writing.

Docket: For access to the docket to read background documents or comments received, go to: http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Concerning submission of materials: Rockelle Hammond, U.S. Consumer Product Safety Commission, Bethesda, MD 20814; telephone: (301) 504-6833; e-mail: cpscos@cpsc.gov. For all other matters: Dominique Williams, U.S. Consumer Product Safety Commission, Bethesda, MD 20814; telephone: (301) 504-7597; e-mail: dwilliams@cpsc.gov.

SUPPLEMENTARY INFORMATION: Section 101(a)(2)(C) of the CPSIA (15 U.S.C. 1278a(a)(2)(C)) provides that, as of August 14, 2011, children's products may not contain more than 100 parts per million (ppm) of lead unless the Commission determines that such a limit is not technologically feasible. The Commission may make this determination only after notice and a hearing and after analyzing the public health protections associated with substantially reducing lead in children's products. Section 101(d) of the CPSIA (15 U.S.C. 1278a(d)) provides that a lead limit shall be deemed technologically feasible with regard to a product or product category if:

(1) A product that complies with the limit is commercially available in the product category;

(2) Technology to comply with the limit is commercially available to manufacturers or is otherwise available within the common meaning of the term;

(3) Industrial strategies or devices have been developed that are capable or will be capable of achieving such a limit by the effective date of the limit and that companies, acting in good faith, are generally capable of adopting; or

(4) Alternative practices, best practices, or other operational changes would allow the manufacturer to comply with the limit.

In the Federal Register of January 26, 2011 (76 FR 4641), we published a notice (``hearing notice'') announcing that the Commission would hold a public hearing pursuant to section 101(a) of the CPSIA. The hearing notice stated that the Commission was seeking information on specific issues, such as whether any product or product category already complies with the 100 ppm limit and what factors or considerations we should evaluate in deciding whether a technology is ``commercially available.''

We held the hearing on February 16, 2011. We heard presentations by and received comments from consumer groups, manufacturers, associations, and laboratories regarding the technological feasibility of meeting the 100 ppm lead content limit. At the hearing, individual Commissioners requested that certain participants respond to additional questions in writing and submit relevant studies and additional data. Through this notice, we are announcing that we have placed individual Commissioner's additional questions into the docket and will place any responses into the docket. The questions submitted and responses that are received will be made available on http://www.regulations.gov under Docket No. CPSC-2010-0080, Supporting and Related Material. The Commission will consider any additional material received during the reopening of the hearing record, in addition to information collected at the hearing, in the course of evaluating its response. The Commission is reopening the hearing record to add individual Commissioner's questions to the docket and allow for responses to those questions, and so the hearing record will remain open until March 24, 2011.

Dated: March 3, 2011. Todd A. Stevenson, Secretary, Consumer Product Safety Commission. [FR Doc. 2011-5231 Filed 3-8-11; 8:45 am] BILLING CODE 6355-01-P

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