LEMON LAW

The Song-Beverly California Consumer Warranty Act, also known as the California Lemon Law, contains many provisions regarding the content and enforceability of consumer goods warranties.

‘Consumer Goods’ means any new product or part thereof used, bought, or leased primarily for personal, family, or household purposes, except for clothing and consumables.

The California Lemon Law is a consumer protection law that has been liberally interpreted to empower consumers and make it easier for consumers to prove a warranty or statutory liability claim.

Further, the California Lemon Law regulates the terms of written warranties, imposes obligations on the warrantor to make available facilities for the service and repair of its consumer goods, requires that manufacturers provide adequate replacement parts for repair, and requires certain content in work orders and repair records, as well as reimbursement of costs incurred by a repairing dealer performing warranty work.

In addition, the California Lemon Law regulates the terms of written warranties, imposes an obligation on the warrantor to provide equipment to service and repair their consumer goods, requires manufacturers to provide appropriate replacement parts for repair, and requires specific content in work orders and repair records as well as reimbursement of costs incurred by the dealer performing warranty works. The law also provides special litigation remedies, including mandatory reimbursement of costs, expert expenses, attorney fees, and discretionary civil penalties for a successful plaintiff.

The statute of the limitation period under the California Lemons Law is four years. This means consumers have four years’ protection to sue under either theory of breach of warranty or a suit for violating the Song-Beverly Consumer Warranty Act.

ELEMENTS OF A LEMON LAW CLAIM

To file a suit under the California Lemon Law for a new vehicle (a passenger car, light truck, or SUV), must show:

1. plaintiff’s purchase or lease of a new motor vehicle from or warranted by the defendant,
2. defendant’s giving an express warranty covering the car, and essential terms of the warranty,
3. a defect (or defects) in the vehicle covered by the warranty that substantially impaired its use, value, or safety to a reasonable person in the plaintiff’s situation,
4. plaintiff’s delivery or tender of the vehicle to the defendant or its authorized repair facility,
5. a failure by the defendant or its authorized repair facility to repair the car to match the warranty after a reasonable number of opportunities to do so, and
6. defendant’s failure promptly to replace or buy back the vehicle. (Civ Code § 1793.2(d)(2).)

Some of the specific elements of new vehicle warranty claims under the California Lemons Law include the requirement that the repair problem must be material (which substantially impairs the use, value, or safety of the vehicle) and the “lemon presumption” – a vehicle-specific way to prove that the California Lemon Law plaintiff has complied with the proof that the defendant was given a reasonable number of attempts or remedies without a successful fix. Most California lemon law cases brought to court are those in which one or both of these elements are disputed, or a dispute arises as to whether a defect is covered by a warranty’s term or is expressly excluded.

SUBSTANTIALLY

In Lemon Law cases in California involving a new motor vehicle, the most commonly disputed issue is whether the alleged repair meets the requirement of substantial impairment.

The term “nonconformity” means “a nonconformity which substantially impairs the use, value, or safety of the new motor vehicle to the buyer or lessee.”  (Civ. Code § 1793.22 (e).) 

The California Court of Appeal, the Second District in Lundy v. Ford Motor Co. (2001) 104 Cal.Rptr.2d 545 clarified that the substantiality requirement “injects an element of degree; not every impairment is sufficient to satisfy the statute.”  “Whether the impairment is substantial is determined by an objective test, based on what a reasonable person would understand to be a defect… [but] applied, however, within the specific circumstances of the buyer.” (Id. at 478.)

The Judicial Council of California Civil Jury Instruction (CACI) directs juries to consider several factors in evaluating substantiality: the nature of the defects, the cost and length of time required for repair, whether past repair attempts have been successful, the degree to which the goods can be used while repairs are attempted, inconvenience to the buyer, and the availability and cost of alternative goods (i.e., loaner cars) pending repair.

Whether an impairment is substantial or not is a question of fact for the jury.  Thus, even though the test is objective, it is evaluated from the standpoint of a reasonable buyer in the position and circumstances of the plaintiff.

PRESENTATION & REPAIR OPPORTUNITY

Another frequently litigated element of the plaintiff’s burden of proof is the obligation of the buyer or lessee to give the manufacturer or dealer a fair chance to fix the customer’s complaint.

Civil Code Section 1793.2(c) imposes a duty on the buyer to deliver defective or otherwise nonconforming goods to the manufacturer’s authorized service or repair facility or to give written notice of nonconformity if delivery to the repair facility is not practicable.

Appellate Court’s decisions instruct that “the only affirmative step the Act imposes on consumers is to ‘permit the manufacturer a reasonable opportunity to repair the vehicle.'” (Oregel v. American Isuzu Motors, Inc. (2001) 109 Cal.Rptr.2d 583.)

WHAT CONSTITUTES A REASONABLE OPPORTUNITY?

This again is an issue for the trier of fact in most instances. CACI 3202 directs juries to consider that “each time” the consumer good or new motor vehicle “was given to” the manufacturer or its authorized repair facility “for repair counts as an opportunity to repair, even if [it/they] did not do any repair work.” The jury is also instructed to consider “all the circumstances surrounding each repair visit.”

Expert witnesses in lemon law trials will often create a repair chronology that includes a column in which the number of repair visits or days is tabulated to qualify for the repair of substantially impairing defects.

A minimum of two opportunities must be given to qualify as satisfying the presentation element unless only a single attempt at repair was possible because of a subsequent malfunction and destruction of the vehicle or when the manufacturer refuses to attempt to repair the vehicle.

THE LEMON PRESUMPTION

The lemon presumption is a shortcut for a plaintiff to satisfy the presentation element. It specifies that the reasonable-number-of-repair-attempts element has been established by plaintiff’s proof of any of three different parameters, all within the first 18 months or 18,000 miles of the vehicle’s repair history:

1. that the same serious safety defect has been subject to repair two or more times,
2. a less serious but still substantial defect has been subject to repair four or more times, or
3. any collection of substantial defects has been subject to repair for a cumulative total of more than 30 days.

For parameters (a) and (b), the plaintiff also must have directly notified the manufacturer and not just the authorized repair facility of the need for repair. The language in the first two lemon presumption parameters concerning notice made directly to the manufacturer are applicable only if “the manufacturer has clearly and conspicuously disclosed to the buyer, with the warranty or the owner’s manual,” the terms of the lemon presumption, including the requirement that the buyer must notify the manufacturer, not merely its dealership, directly. (Civ. Code § 1793.22(b)(3).)

When the facts giving rise to the lemon presumption exist, a plaintiff cannot only argue that a presumption case is a “slam dunk” case of liability, but a plaintiff also will be able to argue for a double-damages civil penalty without proof of a willful violation of the law according to Civil Code Section 1794(e).  The lemon presumption is a rebuttable one, such as by proof that one more repair attempt would have resulted in the vehicle being fixed, or that some of the repair visits should not be counted as reasonable opportunities such as where the plaintiff is contriving repair visits by visiting different dealerships without mentioning previous visits where the problem could not be replicated in the shop.

Note that a plaintiff who declines to use an available lemon arbitration program established for use by California buyers and lessees is barred from relying on the lemon presumption.

WARRANTY & IMPLIED WARRANTY OF MERCHANTABILITY CLAIMS

Part of the prima facie case is proof that the applicable warranty covers the repair complaint, symptom, or problem. While a plaintiff does not need to prove the cause of the defect, the usual obligation of a tort plaintiff to prove causation – a causal connection between the symptom or repair complaint and the damage claimed by the plaintiff – is contained in the element of a plaintiff’s burden to prove the existence of a defect covered by the warranty.

A lemon law plaintiff need not prove how the defect occurred or whether the malfunctioning component or system is defective in manufacture, design, or warning. The burden is thus effectively on the manufacturer to demonstrate that exclusion from warranty coverage applies or that the repair complaint does not fit within the words of the warranty’s coverage.

To the consumer or their counsel, an implied warranty of merchantability claim often provides an easier path to a successful trial verdict than a claim for breach of express warranty because there is no need to prove substantiality or a reasonable number of repair opportunities. The implied warranty of merchantability provides a minimum level of quality that essentially means the product is in a safe condition substantially free of defects. The buyer cannot waive this type of warranty except in an as-is sale that is highlighted in a “conspicuous writing attached to the goods.” (Civ. Code § 1792.4(a).)

REMEDIES FOR SONG-BEVERLY CONSUMER WARRANTY ACT VIOLATIONS

The usual remedy sought for a Song-Beverly violation is the replacement of the consumer good or a refund of the purchase price in addition to incidental and consequential damages and attorney’s fees.

Civil Code § 1794(b)  states that the measure of damages shall include the rights of replacement or reimbursement, plus the UCC measures of damages in Com. Code §§ 2711- 2713 applicable to goods as to which the buyer has justifiably revoked acceptance, and where the buyer has accepted the goods, the buyer may recover the cost of repair as well as the measures of damages in Com. Code §§ 2714 – 2715. When the product is a motor vehicle, the Song-Beverly Consumer Warranty Act specifies that the refund amount includes finance charges, transportation costs for which the consumer was charged at the point of sale or lease, plus tax, license, registration, and other official fees.

Incidental damages may be covered if actually charged, are reasonable in amount, and caused by the breach of the Song-Beverly Consumer Warranty Act applicable to the case, including repair expenses paid by the consumer, as well as towing and rental costs.

If the buyer elects a replacement remedy, the manufacturer cannot be required to offer a replacement (for example, when the model is no longer made). However, if a replacement vehicle is sought, it must be substantially the same as the subject vehicle, carrying the same warranties as to the original product.

The only amount the consumer is required to contribute to a refund or replacement is the dollar amount attributable to the use of the consumer good before it was first delivered for repair and in the case of a new motor vehicle delivered for repair, of the problem that gave rise to the substantially impairing defect warranting the remedy.

THE MILEAGE OFFSET CALCULATION

The law contains a formula predicated on an assumed 120,000-mile useful life of a motor vehicle as to the denominator, and the numerator is the miles driven before the plaintiff first presented the vehicle to an authorized service and repair facility for repair of the substantially impairing defect or collection of defects that gave rise to the claim. The resulting fraction is multiplied by the recoverable purchase price of the vehicle.

California’s Song-Beverly Consumer Warranty Act also permits the successful plaintiff in breach of express warranty claims to recover a quasi-punitive double-damages civil penalty for willful violations of the law.  However, no civil penalty is available for a claim based solely on breach of an implied warranty.  (Civ. Code § 1794(c).)

Regarding new motor vehicles, a civil penalty is also available for a violation that is not willful when the circumstances of the lemon presumption are met, and the manufacture fails to promptly pay restitution or offer a replacement after written notice of the need for repair. In this context, “willful” means the defendant acted intentionally, akin to the Penal Code definition.

“A decision made without the use of reasonably available information germane to that decision is not a reasonable, good faith decision.” No willful civil penalty can be awarded if the defendant reasonably and in good faith believed that it had complied with its statutory obligations. (Kwan v. Mercedes-Benz of North America, Inc. (1994) 28 Cal.Rptr.2d 371.)

Among other factors, the jury may consider in making a willful finding are whether the manufacturer had a written policy on the requirement to repair or replace if the parameters of the law were met, whether the defendant honestly and reasonably believed the warranty did not cover the repair complaint, that it was not a substantially impairing problem, that the plaintiff did not permit a reasonable number of repair opportunities, or whether the defendant’s offer of a replace or refund remedy was prompt.