April 6, 2020

U.S. Fish and Wildlife Service seeks public comments on use of e-bikes on the National Wildlife Refuge System

The U.S. Fish and Wildlife Service is seeking public comments on the use of e-bikes on the National Wildlife Refuge System. The National Wildlife Refuge System Administration Act closes national wildlife refuges in all States except Alaska to all uses until opened. This proposed rule only pertains to the National Wildlife Refuge System (map) and NOT to National Parks (map) nor general National Forrest service land (map). The Refuge System is a network of 568 national wildlife refuges and 38 wetland management districts. More than 59 million Americans visit refuges every year so the ebike companies may still be interested in this and it may affect decisions made on other federal land.

Department of the Interior (DOI) Secretary’s Order 3376 directs DOI bureaus to begin the process of obtaining public input on proposed new regulations that will clarify that operators of low-speed electric bicycles (e-bikes) should enjoy the same access as conventional bicycles, consistent with other Federal and State laws. Refuge managers will have the ability in the short term to utilize the flexibility they have under current regulations to accommodate this new technology, that assists riders as they pedal, in a way that allows them to enjoy the bicycling experience. DOI’s guidance will enable visitors to use these bicycles with a small electric motor (not more than 750 watts or 1 horsepower) power assist in the same manner as traditional bicycles. The operator of an e-bike may use the small electric motor only to assist pedal propulsion. The motor may not be used to propel an e-bike without the rider also pedaling.

The comments on the proposed rule below can be made most effectively using the government's regulations.gov portal. The direct link to comment is here. The comment period begins on or about April 7 2020 and ends 60 days after on June 7, 2020. 

The proposed amendment is set forth below:

50 CFR Part 27

Subpart C—Disturbing Violations: With Vehicles

2. Amend § 27.31 by redesignating paragraph (m) as paragraph (n) and adding a new
paragraph (m) to read as follows:

§ 27.31 General provisions regarding vehicles.

(m) If the refuge manager determines that electric bicycle (also known as an e-bike) use
is a compatible use on roads or trails, any person using the motorized features of an e-bike as an
assist to human propulsion shall be afforded all the rights and privileges, and be subject to all of
the duties, of the operators of non-motorized bicycles on roads and trails. An e-bike is a two- or
three-wheeled electric bicycle with fully operable pedals and an electric motor of not more than
750 watts (1 h.p.) that meets the requirements of one of the following three classes:

(1) Class 1 e-bike shall mean an electric bicycle equipped with a motor that provides
assistance only when the rider is pedaling, and that ceases to provide assistance when the bicycle
reaches the speed of 20 miles per hour.

(2) Class 2 e-bike shall mean an electric bicycle equipped with a motor that may be
used exclusively to propel the bicycle, and that is not capable of providing assistance when the
bicycle reaches the speed of 20 miles per hour.

(3) Class 3 e-bike shall mean an electric bicycle equipped with a motor that provides
assistance only when the rider is pedaling, and that ceases to provide assistance when the bicycle
reaches the speed of 28 miles per hour.


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

May 29, 2019

Hearings on round two of the 25% tariff increase set for June 17 2019

This appears to be round two of the 25% tariff increase. More categories of products are being included. The additional List 4 of goods valued at approximately $300 billion include but are not limited to livestock, foodstuffs, chemicals, plastics, garments, footwear, housewares, ceramics, glass, steel, iron, aluminum, tools, machinery, electronics, computers, toys, and exercise equipment. There are some bicycle related products in the list. If you wish to search for your harmonized tariff Schedule (HTS) subheading see this pdf starting on page 3.  Form more information on the hearings see this link.

In order to submit a written formal comment before June 17 2019 you can click the green button near the top of the page entitled "submit a formal comment" on this page

This is a list of bicycle products affected by this current proposed Tariff as attached in the request to testify by Matt More on behalf of QBP and BPSA regarding this current round of proposed Tariffs (Docket No. USTR-2019-0004)

There are now over 1200 letters officially on file (as of June 13 2019) with the USTR voicing opposition to the tariffs 
SUMMARY:
In accordance with the direction of the President, the U.S. Trade Representative (Trade Representative) proposes a modification of the action being taken in this Section 301 investigation of the acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation. The proposed modification is to take further action in the form of an additional ad valorem duty of up to 25 percent on products of China with an annual trade value of approximately $300 billion. The products subject to this proposed modification are classified in the HTSUS subheadings set out in the Annex to this notice. The Office of the U.S. Trade Representative (USTR) is seeking public comment and will hold a public hearing regarding this proposed modification.

DATES:
To be assured of consideration, you must submit comments and responses in accordance with the following schedule:


June 10, 2019: Due date for filing requests to appear and a summary of expected testimony at the public hearing.


June 17, 2019: Due date for submission of written comments.


June 17, 2019: The Section 301 Committee will convene a public hearing in the main hearing room of the U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436, that begins at 9:30 a.m.
The earlier batch of products hit with the 25% tariff on May 10, 2019 are at this link


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

May 10, 2019

Official list of goods and items affected by Tariff increase on May 10 2019 (part of China trade war)

For those of you that have been looking this is the complete 194 page list of all items that will be affected by the 25% tariff that was announced to take effect on May 10, 2019. (Tariff List 83 FR 47974 as amended and modified by 83 FR 49153) No telling how long this tariff will last. This is a searchable list. For example search for "bicycle" or "tire" or "rubber". Try a few different terms as your item may not be described in here in the same way you would normally describe it. This was the list of bicycle related tariffs from last fall 2018 when the tariffs went to 10%. You can use this old list (compiled courtesy of BPSA Bicycle Products Suppliers Assn) to cross check against the new 25% list above. This was the official announcement for the 25% tariff effective May 10 2019.

Clearly this can't last for long without having a substantial negative effect on the economy. Oxford Economics reports that the tariff hike will cost U.S. economy $29 billion by 2020 and cost the global economy $105 billion.

Law Offices of Steven W. Hansen | www.swhlaw.com | 562 866 6228 © Copyright 1996-2019 Conditions of Use

July 30, 2018

CPSC asks for responses on a series of questions addressing direct notice and other forms of consumer recall notification

This notice below is directed at those companies who conduct recalls. The CPSC is trying to increase recall effectiveness (versus press releases and media notices which are for the most part not very good at reaching the affected consumers). Of course the best way to do that is to have consumers register with brands or their distributors so that if or when a product is ever recalled they can receive direct notice. The problem of course is ensuring that this data remains current over some uncertain time frame. That is a huge task and its not clear at this point whose job it is to do that. Also there could be lots of added or assumed responsibility on the recalling party to preserve this date for an indefinite period of time and to safeguard it like credit card data. As most of you know in states like California (and a few other states) product registration cannot be required in order to receive a full product warranty. Obviously some huge hurdles here. To comment before September 5, 2018 visit this link.

AGENCY:

U.S. Consumer Product Safety Commission.

ACTION:

Notice of request for information.

SUMMARY:

To advance the concepts discussed during the U.S. Consumer Product Safety Commission's (CPSC) Recall Effectiveness Workshop in 2017, the CPSC announces a Request for Information (RFI) from stakeholders to provide information critical to future work on Recall Effectiveness. CPSC asks for responses on a series of questions addressing direct notice and other forms of customer notice. The information provided will help inform CPSC's efforts to continue improving the effectiveness of recalls.

DATES:

Submit comments by September 5, 2018.

ADDRESSES:

You may submit comments, identified by Docket No. CPSC-2017-0027, by any of the following methods:
Electronic Submissions: Submit electronic comments to the Federal eRulemaking Portal at: www.regulations.gov. Follow the instructions for submitting comments. The Commission does not accept comments submitted by electronic mail (email), except through www.regulations.gov. The Commission encourages you to submit electronic comments by using the Federal eRulemaking Portal, as described above; however, please do not use this method if you are submitting confidential business information or other sensitive information that should not be made public.
Written Submissions: Submit written submissions by mail/hand delivery/courier to: Office of the Secretary, Consumer Product Safety Commission, Room 820, 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 comments received may be posted without change, including any personal identifiers, contact information, or other personal information provided, to: www.regulations.gov. If you submit confidential business information, trade secret information, or other sensitive or protected information that you do not want to be available to the public, do not submit it electronically, but send it in hard copy to the Office of the Secretary at the address indicated above. See also section III, below.
Docket: For access to the docket to read background documents or comments received, go to: www.regulations.gov, and insert the docket number CPSC-2017-0027, into the “Search” box, and follow the prompts.

FOR FURTHER INFORMATION CONTACT:

Joseph F. Williams, Compliance Officer, the Office of Compliance and Field Operations, U.S. Consumer Product Safety Commission, 4330 East-West Hwy., Bethesda, MD 20814; telephone: 301-504-7585; email: jfwilliams@cpsc.gov.

SUPPLEMENTARY INFORMATION:

I. Background

A. Recall Effectiveness Workshop

On July 25, 2017, the CPSC hosted a Recall Effectiveness Workshop. The goal of the workshop was to explore and develop proactive measures that CPSC and stakeholders can undertake to improve recall effectiveness. Seventy-nine external stakeholders attended the workshop, including various retailers, manufacturers, law firms, consumer interest groups, third party recall contractors and consultants, testing laboratories, and other interested parties. CPSC staff facilitated an open discussion among these participants about ways to increase recall effectiveness and also gathered feedback on how CPSC can potentially improve its recall efforts. Additional details may be found here: https://www.cpsc.gov/​Recall-Effectiveness.

B. Recall Effectiveness Report

Following the workshop, CPSC staff prepared a report, which was released on February 22, 2018. The report stated that the CPSC staff intends to prioritize stakeholders' suggestions to:
  • Collaborate on ways to improve direct notice to consumers; and
  • collaborate with firms to explore how technology can be used to enhance recall response.
The report explained the reason for this focus:
“Direct notice recalls have proven to be the most effective recalls. We intend to work with consumer and industry stakeholders on registration methods or other improvements (e.g., retailer opt-in at checkout, home voice assistants, photo texting, QR codes, and incentives for product registration) to promote direct notice recalls.”
“We will continue to explore how technology can be used to enhance recall response in appropriate cases, including enhancing firms' recall marketing strategies, use of social media, and improved methods for in-store communication. We intend to identify and share examples of future recall marketing strategies that are innovative and/or successful.”

II. Information Requested

The CPSC seeks information on current methods and systems that recalling firms use to assist in providing direct notice to consumers. The CPSC also requests certain information regarding the use of targeted notices to reach consumers who may have purchased a recalled product.

A. Direct Notice

1. What methods are available for directly notifying consumers of recalls (e.g., mail, email, text)?
2. If you use direct notice for recalls, what response rates do you achieve? Do the response rates differ significantly for different recalls? If so, what factors appear to influence the response rates? Do you follow up with additional direct notice if a customer does not respond? How often? For how long?
3. Do other companies or your company use all available direct notice methods during every product recall? If not, why not?
4. Do e-commerce retailers/third party platforms use direct notice capabilities for every recall of products sold through their site/platform? If not, why not?
5. What costs are associated with direct notice? How do costs vary for different forms of notice? What other factors affect cost?
6. What challenges and barriers prevent companies from pursuing or improving direct notice? Please address:
a. Legal barriers
b. Technological challenges
c. Privacy challenges
d. Security challenges
e. Cost challenges
f. Other challenges
7. What technologies exist or are being developed that would assist a recalling company to acquire direct contact information or capabilities to contact purchasers and/or issue direct notice for recalls?
8. What methods do you use to collect direct contact information at the point of sale?
9. Does your attempt to collect direct contact information depend on the item(s) purchased? Is the cost of the item at all relevant?
10. Have you worked with a third-party entity (e.g., credit card or payment processing companies, product registries, data collection platforms, online retailers) to identify or contact consumers who previously purchased a product subject to a recall? If so, how, and with what types of companies did you work?
11. For retailers that have information on their customers (e.g., retail credit/debit cards, loyalty program, membership registration), can such information be accessed through purchase data to provide direct notice?
12. What would make direct notice more effective (e.g., notice type, number of touches)?
13. How can the CPSC help facilitate direct notice to consumers?
14. What can we learn from marketing efforts (e.g., needed resources, personnel qualifications, channels of communication, evaluating messaging effectiveness, etc.) to better reach consumers for recall purposes?

B. Product Registration

1. What product registration methods are used today to collect consumer information and track purchased/registered products?
2. Why do companies offer product registration? Are product registration programs due to mandatory requirements by CPSC or other agencies, or for other reasons?
3. What are participation rates in product registration? Do you see significant differences in the registration rates for different types of products?
4. What type of information is collected during product registration?
5. Is product registration more or less successful if marketing information is not collected at the same time? Why?
6. What methods are in use or are being developed to increase responses to product registration (e.g., warranties, incentives, voice assistant technology)?
7. When does the personal information collected for product registration get used for marketing purposes?
a. Are opt-in/opt-out choices provided to consumers for marketing? Describe.
8. What technologies exist or are being developed to advance product registration?
9. What would make product registration more effective?
10. How can the CPSC help facilitate or improve product registration rates?
11. Has the ability to register a product online or electronically had an effect on the volume of consumer response to product registration?

C. Targeted Notice

A targeted notice is a notice aimed at a particular group of likely affected consumers, but not at a known purchaser or consumer like direct notice (e.g., targeted search engine ads, paid social media, micro marketing, such as internet radio and targeted use of voice assistant technologies).
1. Have you used any of the targeted methods listed above or others to reach consumers? What success have you seen?
2. Do companies use the information previously collected to assist in issuing targeted recall notices when announcing recalls?
3. What costs are generally associated with targeted methods, including targeted search engine ads, paid social media, micro marketing, such as internet radio, and voice assistant technologies?
4. What challenges and barriers prevent companies from pursuing targeted notices for recalls? Please address:
a. Legal barriers
b. Technological challenges
c. Privacy challenges
d. Security challenges
e. Cost challenges
f. Other challenges
5. What technologies exist or are being developed that can improve the effectiveness of targeted notice?
6. How can the CPSC help facilitate new or improved targeted recall notice campaigns?
7. Are there other forms of recall notice that are worth exploring for more discussion?

D. For Consumers and Other Stakeholders

1. Would you be interested in working directly with the CPSC to explore best practices for implementing product registration, improving current direct notice capabilities, or developing targeted notices?
2. Are there data showing what forms, types, and frequency of messaging consumers are most likely to respond to in direct and targeted notices?
3. How can companies incentivize consumers to register their products or to provide the information needed for direct notice in the event of a recall?
4. What concerns do consumers have regarding the use of their personal information for recall notification purposes? What can firms do to overcome these concerns?

III. Confidentiality

All data submitted is subject to Section 6 of the Consumer Product Safety Act (15 U.S.C. Section 2055) and may be considered confidential, except to the extent otherwise provided by law. Please identify any portion of your submission that you believe is confidential.
Alberta E. Mills,
Secretary, Consumer Product Safety Commission.
[FR Doc. 2018-13388 Filed 6-21-18; 8:45 am]

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

February 9, 2018

In what may be the first "gig economy" case to be fully decided on the merits a California federal court finds that an independent contractor is not an employee [ Lawson v Grubhub Inc. Case No.15-cv-05128-JSC ]

The case involved Grubhub in a labor lawsuit filed by one of its former drivers (plaintiff Lawson) In a long and detailed court opinion released February 8, 2018 by US Magistrate Judge Jacqueline Scott Corley, who ruled: "the Court [found] that Grubhub [had] satisfied its burden of showing that Mr. Lawson was properly classified as an independent contractor." The plaintiff Lawson was an aspiring actor who made ends meet with various day jobs and sued Grubhub in 2015. He argued that he should have been classified as an employee, not a contractor. The case was originally filed as a proposed class-action lawsuit, but that class action status was never allowed by the court. It is important to note that this case was a judge (court) trial not a jury trial and was NOT a motion for summary judgment. Closing arguments in this trial were heard in October 2017.

I highly recommend reading the full decision here as it's a good road map to follow in making the independent contractor employee determination. However part of why it's important not to read too much into individual cases was the judges finding that the Plaintiff was fundamentally "not credible.". Lawson, by his own admission, "gamed the Grubhub driver app". This credibility finding may have hurt the plaintiff in many ways.
On the other hand the judge ruled "Grubhub did control some aspects of Mr. Lawson's work," by "determin[ing] the rates Mr. Lawson would be paid and the fee customers would pay for delivery services. While the Agreement states that a driver may negotiate his own rate, this right is hypothetical rather than real. The Court finds that Mr. Lawson could not negotiate his pay in any meaningful way and therefore this fact weighs in favor of an employment relationship."

This is a good example of the uncertainty involved in trying to determine employment status which is governed in California by the multi-factor test set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal.3d 341 (1989). 

The Grubhub case likely has limited precedential value as each employee vs independent contractor determination relies heavily on the specific facts unique to the relationship between the worker and the employer/company. This is what makes these cases so difficult. They literally must all be decided by a trier of fact making the process very expensive and very uncertain for any employer who quite frankly has the deck stacked against it as well as large financial disincentives for litigating these matters.

Plaintiff's counsel did indicate there would be an appeal and was surprised that the federal court did not wait for the California Supreme Court in its anticipated decision in Dynamex Operations West, Inc. v. Superior Court. There the California Supreme Court has agreed to review a Court of Appeal decision that expanded the definition of “employee.” The lower Court of Appeal in Dynamex adopted the much-broader definition of “employ,” meaning “to engage, suffer or permit to work.” expanding the meaning of the term “employee,” to nearly every labor relationship a company would be likely to have.

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

August 17, 2017

California Proposition 65 regulations amended to require more specificity on warnings

On August 30, 2016, (yes a year ago) the California Office of Administrative Law approved the adoption of amendments to Article 6, "Clear and Reasonable Warnings", of the California Code of Regulations.  This was a regulatory "repeal and replace" and not a legislative one so as a result it was further off the news "radar". The new regulations provide, among other things, methods of transmission and content of warnings deemed to be compliant with the Safe Drinking Water and Toxic Enforcement Act of 1986 (Prop. 65). Prop 65 regulations are promulgated by the Office of Environmental Health Hazard Assessment (OEHHA) which also maintains the Prop 65 chemical list and is one of 6 agencies under the California Environmental Protection Agency (CalEPA).

Most companies already know that any consumer product sold in California must comply with Proposition 65, meaning that their products sold in California cannot contain harmful amounts of the chemicals on its notorious 800 chemical list (and growing). Its important to keep in mind that this list continues to grow and is much more extensive than the EU REACH law/regulation (which currently lists only about 200 chemicals). Its also much more extensive that the US Consumer Product Safety Commission's (CPSC) regulations which are mostly confined to lead and Phthalates. There has been quite a bit of publicity surrounding Monsanto's futile legal efforts to keep RoundUp weed killer off the Prop 65 list.

The difficulty with the new warning requirement (which does not go into effect until August 30, 2018) is that if you test and if you find something on the list in your product you must now have specific "safe harbor" warnings that include any of the 800 chemicals on the list that might be in your product in harmful amounts. Under the old abolished regulations you could utilize a "safe harbor" (provision of a statute or a regulation that specifies that certain conduct will be deemed not to violate a given rule) warning that did not need to specify which of the 800 chemicals on the list might exist in the product. Now of course one can debate the merits of warnings generally, especially the efficacy of one that lists the offending complex chemical name over one that does not, but we don't have enough space on this post to have that debate. The point is this is now the current state of the law and my advice is to try to steer clear of Prop. 65 suits (just like ADA suits and host of others). Also these warnings cannot exist solely in user's manuals unless you are a vehicle manufacturer who got special dispensation under the new regulations (but even they still must have stand alone warnings)

The other interesting issue is that if your company was part of a settlement of a Prop 65 suit. Under the new law a company that is a party to a court-ordered settlement or final judgment establishing a warning method or content, is deemed to be providing a “clear and reasonable” warning for that exposure for purposes of the new law, if the warning fully complies with the order or judgment. This covers a few companies in the bicycle arena. It's not known how many total companies are exempted by this as that would depend a lot on the terms of the settlement and (I assume) the chemicals ("the exposure") involved in that particular suit.

Clearly there is going to be lots of work ahead in the next year for all consumer product manufacturers, brands, distributors, resellers, and retailers (on line and off). You can be sure Amazon, Walmart and all the big retailers are well aware of these issues and they will surely come up in contract negotiations with sellers to most large retailers.

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

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 | www.swhlaw.com | 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 swhlaw.com.

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 | www.swhlaw.com | 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 | www.swhlaw.com | 562 866 6228 © Copyright 1996-2013 Conditions of Use

April 19, 2015

UPDATE California mandatory bicycle helmet law and retroreflective clothing bill [Senate Bill 192 2015]

As for the California Senate Bill 192 introduced in February 2015 discussed in our earlier post a number of bicycle advocacy groups came out of the woodwork against this bill much like the mandatory motorcycle helmet bills. The changes are set forth below as of this posting, so it looks like the clothing part is gone as well. The revised bill language is now asking the state’s Office of Traffic Study (OTS) to work with the California Highway Patrol (CHP) to investigate helmet use and report back the findings in early 2017. Robert Oakes, the legislative director of the bill sponsor stated that "The hope is that OTS and the CHP can examine current bicycle helmet use and accident reports to determine what percentage of adults do not wear a helmet when they ride a bike, and also determine how many deaths and injuries would have been prevented if those riders had been required to wear helmets". The "theory" is that many injuries or deaths in car vs bike scenarios would not be prevented with just helmets but of course what really needs to be examined closely at are long term traumatic brain injuries (but not necessarily fatal) that occur due to the lack of a helmet regardless of the circumstances of the crash or other injuries that would not be prevented using a helmet (such as injuries to other body parts). 

Amended  IN  Senate  April 09, 2015


CALIFORNIA LEGISLATURE— 2015–2016 REGULAR SESSION

Senate Bill No. 192


Introduced by Senator Liu

February 10, 2015


An act to amend Section 21212 of add and repeal Section 21213 of the Vehicle Code, relating to bicycles.


LEGISLATIVE COUNSEL'S DIGEST


SB 192, as amended, Liu. Bicycles: helmets.

Existing law prohibits a person under 18 years of age from operating a bicycle, riding on a bicycle as a passenger, or riding in a trailer towed by a bicycle unless the person is wearing a bicycle helmet meeting specified standards. A violation of those provisions is an infraction punishable by a fine of not more than $25.
This bill would require every person, regardless of age, to wear a bicycle helmet when operating a bicycle, riding on a bicycle as a passenger, or riding in a trailer towed by a bicycle. The bill would also require a person engaged in these activities in the darkness to wear retroreflective high-visibility safety apparel, as specified. Because a violation of this requirement would be a crime, the bill would impose a state-mandated local program. require the Office of Traffic Study, in coordination with the Department of the California Highway Patrol, to conduct a comprehensive study of bicycle helmet use, including specified information, and to report the study’s findings to the Senate Committee on Transportation and Housing and the Assembly Committee on Transportation by January 1, 2017.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YESNO  



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

SECTION 1.

 Section 21213 is added to the Vehicle Code, to read:
21213.
 (a) The Office of Traffic Study, in coordination with the department, shall conduct a comprehensive study of bicycle helmet use, including, but not limited to, determining the percentage of California bicyclists who do not wear helmets, and the fatalities or serious injuries that could have been avoided if helmets had been worn. A report of the study’s findings shall be submitted to the Senate Committee on Transportation and Housing and the Assembly Committee on Transportation by January 1, 2017.
(b) Pursuant to Section 10231.5 of the Government Code, this section is repealed on January, 1, 2021.
SECTION 1.Section 21212 of the Vehicle Code is amended to read:21212.
(a)(1)A person shall not operate a bicycle, or ride upon a bicycle as a passenger, upon a street, bikeway, as defined in Section 890.4 of the Streets and Highways Code, or any other public bicycle path or trail unless that person is wearing a properly fitted and fastened bicycle helmet that meets the standards of either the American Society for Testing and Materials (ASTM) or the United States Consumer Product Safety Commission (CPSC), or standards subsequently established by those entities. This requirement also applies to a person who rides upon a bicycle while in a restraining seat that is attached to the bicycle or in a trailer towed by the bicycle.
(2)A person shall not engage in the activities described in paragraph (1) in the darkness, as defined in Section 280, unless that person is wearing high-visibility safety apparel, which may include a vest, jacket, or shirt, that is retroreflective and meets the requirements of the American National Standard for High-Visibility Safety Apparel and Headwear, published by the American National Standards Institute/International Safety Equipment Association or standards subsequently established by those entities.
(b)A person under 18 years of age shall not operate a nonmotorized scooter or a skateboard, nor wear in-line or roller skates, nor ride upon a nonmotorized scooter or a skateboard as a passenger, upon a street, bikeway, as defined in Section 890.4 of the Streets and Highways Code, or any other public bicycle path or trail unless that person is wearing a properly fitted and fastened bicycle helmet that meets the safety standards described in subdivision (a).
(c)Any helmet sold or offered for sale for use by operators and passengers of bicycles, nonmotorized scooters, skateboards, or in-line or roller skates shall be conspicuously labeled in accordance with the standard described in subdivision (a) which shall constitute the manufacturer’s certification that the helmet conforms to the applicable safety standards.
(d)No person shall sell, or offer for sale, for use by an operator or passenger of a bicycle, nonmotorized scooter, skateboard, or in-line or roller skates any safety helmet is not of a type meeting requirements established by this section.
(e)Any charge under this subdivision shall be dismissed when the person charged alleges in court, under oath, that the charge against the person is the first charge against that person under this subdivision, unless it is otherwise established in court that the charge is not the first charge against the person.
(f)(1)Except as provided in subdivision (e), a violation of this section is an infraction punishable by a fine of not more than twenty-five dollars ($25).
(2)The parent or legal guardian having control or custody of an unemancipated minor whose conduct violates this section shall be jointly and severally liable with the minor for the amount of the fine imposed pursuant to this subdivision.
(g)Notwithstanding Section 1463 of the Penal Code or any other provision of law, the fines collected for a violation of this section shall be allocated as follows:
(1)Seventy-two and one-half percent of the amount collected shall be deposited in a special account of the county health department, to be used for bicycle, nonmotorized scooter, skateboard, and in-line and roller skate safety education and for assisting low-income families in obtaining approved bicycle helmets for children under 18 years of age, either on a loan or purchase basis. The county may contract for the implementation of this program, which, to the extent practicable, shall be operated in conjunction with the child passenger restraint program pursuant to Section 27360.
(2)Two and one-half percent of the amount collected shall be deposited in the county treasury to be used by the county to administer the program described in paragraph (1).
(3)If the violation occurred within a city, 25 percent of the amount collected shall be transferred to and deposited in the treasury of that city. If the violation occurred in an unincorporated area, this 25 percent shall be deposited and used pursuant to paragraph (1).
SEC. 2.
No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

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

February 12, 2015

California mandatory bicycle helmet law and retroreflective clothing bill [Senate Bill 192 2015]

Read the update to this posting here.

This is an interesting bill (reprinted below as of this posting) just introduced February 10, 2015 here in the California Legislature. Most states bicycle helmet laws only require helmets for minors (under 18). This proposed law goes well beyond that requiring helmets for all riders. Typically the motorcycle helmet laws in various states cover riders of all years and those don't seem to be well received by riders. The fine proposed in this bill is $25.00 but with all the penalty assessments tacked on to fines these days the fine amount is usually 1/3 of the total price of the violation. There is also a "retroreflective" clothing requirement in here. That of course is going to be tricky as well as most bike clothing that is "highly visible" still may not comply with the American National Standard (ANSI) for High-Visibility Safety Apparel and Headwear.  So I don't see this going anywhere fast but who knows. They finally got the Three Foot Passing law passed after 2 or three attempts.

Also below the California bill, a Wyoming bill (HB 0206 introduced 2015) now also has its own take on what clothing ("...high visibility fluorescent orange, green or pink color clothing...") should be worn. Fortunately the two states are not right next to each other otherwise you would have to change clothing as you crossed state lines ! Better call the Fashion Police.

California Senate Bill No. 192
Introduced by Senator Liu

February 10, 2015
An act to amend Section 21212 of the Vehicle Code, relating to bicycles.

LEGISLATIVE COUNSEL'S DIGEST



Existing law prohibits a person under 18 years of age from operating a bicycle, riding on a bicycle as a passenger, or riding in a trailer towed by a bicycle unless the person is wearing a bicycle helmet meeting specified standards. A violation of those provisions is an infraction punishable by a fine of not more than $25.
This bill would require every person, regardless of age, to wear a bicycle helmet when operating a bicycle, riding on a bicycle as a passenger, or riding in a trailer towed by a bicycle. The bill would also require a person engaged in these activities in the darkness to wear retroreflective high-visibility safety apparel, as specified. Because a violation of this requirement would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  



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

SECTION 1.

 Section 21212 of the Vehicle Code is amended to read:
21212.
 (a) (1) A person under shall not operate a bicycle, or ride upon a bicycle as a passenger, upon a street, bikeway, as defined in Section 890.4 of the Streets and Highways Code, or any other public bicycle path or trail unless that person is wearing a properly fitted and fastened bicycle helmet that meets the standards of either the American Society for Testing and Materials (ASTM) or the United States Consumer Product Safety Commission (CPSC), or standards subsequently established by those entities. This requirement also applies to a person who rides upon a bicycle while in a restraining seat that is attached to the bicycle or in a trailer towed by the bicycle.

(2) A person shall not engage in the activities described in paragraph (1) in the darkness, as defined in Section 280, unless that person is wearing high-visibility safety apparel, which may include a vest, jacket, or shirt, that is retroreflective and meets the requirements of the American National Standard for High-Visibility Safety Apparel and Headwear, published by the American National Standards Institute/International Safety Equipment Association or standards subsequently established by those entities.

(b) A person under 18 years of age shall not operate a bicycle, a nonmotorized scooter, or a skateboard, nor shall they wear in-line or roller skates, nor ride upon a bicycle, a nonmotorized scooter, or a skateboard as a passenger, upon a street, bikeway, as defined in Section 890.4 of the Streets and Highways Code, or any other public bicycle path or trail unless that person is wearing a properly fitted and fastened bicycle helmet that meets the standards of either the American Society for Testing and Materials (ASTM) or the United States Consumer Product Safety Commission (CPSC), or standards subsequently established by those entities. This requirement also applies to a person who rides upon a bicycle while in a restraining seat that is attached to the bicycle or in a trailer towed by the bicycle safety standards described in subdivision (a).

(b)

(c) Any helmet sold or offered for sale for use by operators and passengers of bicycles, nonmotorized scooters, skateboards, or in-line or roller skates shall be conspicuously labeled in accordance with the standard described in subdivision (a) which shall constitute the manufacturer’s certification that the helmet conforms to the applicable safety standards.

(c)

(d) No person shall sell, or offer for sale, for use by an operator or passenger of a bicycle, nonmotorized scooter, skateboard, or in-line or roller skates any safety helmet which is not of a type meeting requirements established by this section.

(d)

(e) Any charge under this subdivision shall be dismissed when the person charged alleges in court, under oath, that the charge against the person is the first charge against that person under this subdivision, unless it is otherwise established in court that the charge is not the first charge against the person.

(e)

(f) (1) Except as provided in subdivision (d) (e), a violation of this section is an infraction punishable by a fine of not more than twenty-five dollars ($25).
(2) The parent or legal guardian having control or custody of an unemancipated minor whose conduct violates this section shall be jointly and severally liable with the minor for the amount of the fine imposed pursuant to this subdivision.

(f)

(g) Notwithstanding Section 1463 of the Penal Code or any other provision of law, the fines collected for a violation of this section shall be allocated as follows:
(1) Seventy-two and one-half percent of the amount collected shall be deposited in a special account of the county health department, to be used for bicycle, nonmotorized scooter, skateboard, and in-line and roller skate safety education and for assisting low-income families in obtaining approved bicycle helmets for children under the age of 18 years of age, either on a loan or purchase basis. The county may contract for the implementation of this program, which, to the extent practicable, shall be operated in conjunction with the child passenger restraint program pursuant to Section 27360.
(2) Two and one-half percent of the amount collected shall be deposited in the county treasury to be used by the county to administer the program described in paragraph (1).
(3) If the violation occurred within a city, 25 percent of the amount collected shall be transferred to and deposited in the treasury of that city. If the violation occurred in an unincorporated area, this 25 percent shall be deposited and used pursuant to paragraph (1).

SEC. 2.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.
 2015 STATE OF WYOMING 15LSO-0538

HOUSE BILL NO. HB0206
Bicycles on roadways.
Sponsored by: Representative(s) Northrup, Burkhart, Hunt, Jaggi, Paxton and Steinmetz 

A BILL for AN ACT relating to regulation of traffic on roadways; requiring bicyclists using roadways to wear colored clothing and carry photo identification; requiring lights on the rear of the bicycle as specified; and providing for an effective date.
Be It Enacted by the Legislature of the State of Wyoming: 

Section 1. W.S. 31-5-704 by creating new subsections (d) and (e) and 31-5-706 by creating a new subsection (d) are amended to read: 
31-5-704. Riding on roadways and designated paths.

(d) Persons riding bicycles upon a roadway shall wear not less than two hundred (200) square inches of high visibility fluorescent orange, green or pink color clothing visible from the front and the rear of the bicycle.

(e) Persons riding bicycles upon a roadway shall carry a government issued form of photo identification that includes the person's name, address and date of birth.

31-5-706. Lamps and other equipment.

(d) In addition to the lamps and reflectors required under this section, every bicycle shall be equipped at all times with a light emitting device, such as a strobe light or flashing light, on the rear of the bicycle.
Section 2. This act is effective July 1, 2015.