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Why Manufacturers Deny Lemon Law Claims for a Defective New Car or Used Car

There are many reasons why an auto manufacturer may deny or ignore a legitimate lemon law claim. In this post, I cover practical reasons for claim denial, which are listed in no particular order. Please note that this information is based on my experience and opinion as a lemon law attorney, who previously represented automakers and now represents consumers.

1. Testing the Consumer’s resolve

Mercedes sports car - wheel viewThis is an ugly truth about customer service in general. Big manufacturers know that many people who have a valid claim don’t have time to pursue it or will give up in frustration if they are forced to wait long or work hard for a solution. Consequently, some manufacturers simply deny claims; while others are more passive-aggressive and delay claims to test consumers’ resolve.

2. Ignorance of facts

Some manufacturers have poor methods for gathering information and repair documents after a lemon law claim is made, let alone anticipating and proactively addressing a lemon law violation based on accruing repair opportunities. As a lemon law defense attorney, I often had to gather and summarize repair records myself, showing my clients what repairs their dealers had attempted, instead of it being the other way around.

Besides being unduly expensive at hourly billing rates, having an attorney do this work usually indicates that a manufacturer is less aware of — and less committed to — its obligations to consumers who purchased a defective new car or bought a defective used car. Obsolete methods of communication between manufacturers and dealers add to the problem.

If a lemon law claim is initially denied or ignored, it is highly likely that the manufacturer has not yet considered all of the facts and circumstances surrounding the claim. Ignorance is no excuse under lemon law, but it remains a fact of life for many manufacturers that receive claims from consumers who purchased a defective new car or bought a defective used car.

3. Ignorance of Law

As hard as it is to believe, some manufacturers still fail to train employees adequately regarding the requirements of consumer law and regulation. Turnover among employees in customer service and claims processing roles can be high, and some managers resort to training themselves in how to handle lemon law cases on the fly.

For instance, if the employee of a manufacturer mistakenly believes that a negligent repair by the dealership doesn’t count against the manufacturer for purposes of lemon law, the person may fail to take the necessary steps to comply with the law in a timely fashion.

4. Politics

This a big one. By politics, I’m referring not just to highly publicized issues like the Ford Powershift class action, Volkswagen’s Dieselgate, or important recalls, but also to internal politics that affect the daily lives of mid-level managers in large corporations. The large, publicized cases can lead to coordinated strategies for responding to, delaying, or denying claims from those who purchased a defective new car or bought a defective used car.

For example, if a company knows that a class action settlement will cut off the claims of many consumers, as is the case with the Ford Powershift class action settlement, there may be a financial Silver Porche - late modelbenefit for the company to avoid responding to claims until the class settlement opt-out deadline passes, and causes many class members to lose their right to make claims, without them realizing it. It’s quite mercenary from a customer relations standpoint, but it’s a reality.

An even more significant phenomenon is the effect of internal politics. There are incentives (and disincentives) for corporate representatives to make seemingly foolish actions on behalf of their company. For example, imagine that a mid-level manager is seeking a promotion or a bonus one year from now. She knows that litigation in California can easily last more than one year, especially if she asks the lawyers to vigorously defend cases.

This manager has an incentive to deny claims to reduce her budget spend during the year in which she seeks the promotion or bonus. She knows that reality won’t come to bear for her company until it no longer matters to her personal interests.

Here is another hypothetical example: A manager understands lemon law and wants to comply with it, but he receives pressure from a company mandate to reduce spending, including on consumer affairs issues. He may know the lemon claims he processes are valid, but that it will appear he isn’t helping the company if he recommends a full buyback for each vehicle from the start.

If he denies the claim and sends it to a defense attorney, there could be roughly three months of litigation before he receives an opinion memo from a lawyer stating that the vehicles should be bought back. Meanwhile, the cars depreciate, consumers suffer frustration, attorney fees on both sides add up, and a civil penalty is implicated for willful noncompliance with the law — all of which are paid for by the manufacturer. Nonetheless, the manager can rightfully show his superiors that he at least did his due diligence.

There are also other, subtler ways that politics can play a role in a manufacturer’s decision to deny a lemon claim from those who purchased a defective new car or bought a defective used car. The main point, however, is that car companies are run by individuals who have their own strengths, weaknesses, and personal goals to deal with. These individuals may face pressure and incentives that affect their decisions.

5. Overreaching Claims

This is a consumer-oriented blog, but we have to be fair. With my background in lemon law defense and working in-house at an automaker, I can tell you that any company receives overreaching claims from consumers who may not fully understand the law, or who may simply have unreasonable demands. In my opinion, most claims are reasonable, and all claims should be fairly evaluated, but it is true that certain claims overreach.

In one example, a claimant demanded many millions of dollars, in addition to a lemon law buyback, for claimed loss of use of the vehicle as a limousine rental. Loss of use damages are typically not allowed under lemon law (see Bishop v. Hyundai Motor America, 44 Cal. App. 4th 750, 754-758 (1996)), to say nothing of the fact that lemon law is a form of consumer protection law that isn’t designed for commercial remedies. The amounts the claimant sought far exceeded the value of the underlying lemon law remedy.

This is an extreme example. Unfortunately, though, situations like this can make life harder for frustrated consumers who make reasonable claims in good faith. The extreme cases may case a manufacturer to become skeptical of almost all cases, regardless of their merit.

6. Legitimate legal defenses

late model red sports carAgain, to be fair to manufacturers, we must admit that some lemon law claims are denied based on legitimate legal defenses. However, in my opinion, the legal defenses to lemon law claims are typically crafted by defense lawyers, after the manufacturer decides — for practical reasons — whether it will buy back or replace a defective new car or a defective used car.

Was Your Claim Denied?

If you purchased a new or used lemon car, and you have unsuccessfully tried to seek a remedy from the manufacturer, the law may still entitle you to compensation. To explore your legal options under lemon law, contact us to schedule a free consultation. We know how auto manufacturers handle lemon claims. After all, there was a time when we helped them do it.

 

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Lemon Vehicles: Why Do I Have Car Transmission Issues?

The use of different — but not strictly “new” — motor vehicle transmission technologies has increasingly been at the root of lemon law and other consumer claims over the past several years. These claims involve a variety of complaints that could indicate a car with transmission problems, a vehicle that could experience, among other things: delayed acceleration, lunging and lurching, disengagement, and illumination of the check transmission light.

We have come to expect technology to improve over time, so what is behind this troublesome trend? This post takes a look at the issue.

What is a transmission?

First, it’s helpful to understand what a transmission is — especially if you are an engineering layman like me. Because engines turn over at a high rate, there is a need to vary the speed and torque converted to the wheels for starting, stopping, driving at slower speeds, and driving in reverse. The transmission is a set of gears (or gear ratios) that allows for this, as well as a disconnection, during which the engine runs “at idle.”

Manual transmissions accomplish the disconnection by the driver’s use of a clutch, and the manual selection of a new gear with the gear shift lever. The traditional automatic transmission, introduced almost 80 years ago, changed gears by exchange of fluid through a hydraulic coupling—essentially two turbines facing each other—that occurred proportionally to how fast the engine was turned over by application of throttle (i.e., pressing the gas pedal.)

This mechanical engineering blog describes this process as being akin to one powered fan blowing air into the face of an unpowered fan, and so causing the fan blades to move, except that in place of air, you have transmission fluid.

If it ain’t broke, why fix it?

The traditional automatic transmission generally runs evenly from starting and through the gear shifts. So why change it? The answer lies in fuel efficiency. The traditional automatic transmission consumes more fuel than manual transmissions due to a loss of efficiency during the coupling process, as well as added weight, and sometimes, fewer gears.

Manufacturers have sought to retain the convenience of automatic shifting while improving upon fuel efficiency in a couple of different types of automatic transmission technologies, described below. If you have a car with transmission issues, it may involve one of these transmissions.

Dual-Clutch Automated Manual Transmission

This is the more widespread of the newer automatic transmission types. It is described as an “automated manual” system because it basically functions the way a manual transmission does, except that the gear shifts are run by computer controls. “Dual-clutch” refers to the fact that this system incorporates a second clutch, which is intended to make shifting operation smoother than with a single clutch. These systems often also sometimes allow gear shifts by the driver using paddle shifters, but without manual application of a clutch.

This system is known by several branded names, such as Ford’s Powershift Transmission, the Volkswagen Group’s DSG (“Dual-Shift Gearbox”) system, and the third party ZF transmissions used in some Jeep, Chrysler Dodge and Fiat models.

Continuously Variable Transmission (CVT)

Rather than using a set number of gears, CVTs use a belt driven system that allows for continuously variable transmission of power from the engine. These systems may or may not use a clutch. They might have some of the loss of efficiency associated with gear change that is seen in the traditional automatic transmission, but they make up for it by allowing the engine to run at the most efficient speeds while shifting to adjust to road conditions.

CVTs are also run largely by computer systems. Their software uses dynamic inputs, such as speed, and rate and position of gas pedal application, to determine which gear ratios to employ.
We see CVTs today in a wide range of brands, mostly in smaller and lower-powered vehicles, notably in Nissan’s XTRONIC system.

Why do these systems cause problems?

You can go into deep technical discussions of the possible causes of problems in dual clutch and CVT systems that afflict a car with transmission issues, but, in a nutshell, most problems boil down to a failure of the computer system in the car to accurately anticipate and select the appropriate gear ratios in between shifts. However, if these systems make lemon cars with transmission problems, why don’t manufacturers change them?

This is where problems in corporate culture take effect. There is tremendous sales and marketing pressure to build more fuel-efficient vehicles that still deliver the features customers want. It is also true that federal Corporate Average Fuel Economy (CAFE) standards absolutely require that automobile manufacturers limit emissions across their product line-ups.

However, there is no excuse for putting out products that have a quality level so low as to produce something like the Ford Powershift issues or the similar problems in Jeep Cherokee, Dodge Dart, Fiat 500L, Acura TLX, Nissan Pathfinder and Altima, among many others.

It would be one thing if these problems were isolated, but the prevalence across different brands — even as other brands seem to have employed these technologies with a higher degree of quality — suggests that some of these automakers may be willing to accept that they are distributing a car with transmission issues, if it allows them to meet their sales targets, even if they have to fight or settle some lawsuits along the way. The only way this behavior can change is if enough consumers stand up against it.

Follow-up

Here is a list of automotive products employing dual clutch transmissions or similar systems:

  • Volkswagen Group “DSG”
  • Audi TT
  • Audi A3
  • Audi S3
  • Audi A4
  • Audi S4
  • Audi S5
  • Audi A5
  • Audi A7
  • Audi A8
  • Audi Q3
  • Audi Q5
  • Audi R8
  • Bentley Continental GT
  • Bentley Bentayga
  • Bentley Flying Spur
  • Volkswagen Golf, GTI, GTD, GTE, TDI, R32, R
  • Volkswagen Jetta GLI, TDI
  • Volkswagen Eos
  • Volkswagen New Beetle
  • Volkswagen New Beetle Convertible
  • Volkswagen Passat
  • Volkswagen CC
  • Volkswagen Tiguan 2011
  • ZF 9-Speed Acura NSX
  • Acura TLX
  • Acura MDX
  • Fiat 500X
  • Chrysler 200
  • Range Rover Evoque
  • Land Rover Discovery
  • Sport Honda Pilot
  • Honda Odyssey
  • Honda CR-V
  • Jaguar E-Pace
  • Dodge Dart
  • Jeep Cherokee
  • Jeep Grand Cherokee
  • Dodge Ram Promaster
  • Lamborghini Huracán LP610-4 (2014–present)
  • BMW 335is
  • BMW M3
  • BMW M4
  • BMW Z4 Sdrive35i
  • Ferrari California
  • Ferrari 458
  • Italia LaFerrari
  • Mercedes-Benz SLS AMG
  • Mercedes-Benz CLA 250
  • Mercedes-Benz GLA 25033
  • Dodge Dart
  • Fiat 500
  • Ford Focus
  • Ford Fiesta
  • Volvo S60
  • Volvo V50
  • Volvo C30
  • Hyundai EcoShift Dual Clutch
  • Hyundai Veloster
  • Mitsubishi Lancer Evolution
  • Nissan GTR
  • Porsche PDR System
  • Porsche Cayman
  • Porsche Boxster
  • Porsche Panamera
  • Porsche Macan
  • Porsche Carrera
  • Porsche 911

Here is a list of automotive products employing CVTs or similar systems:

  • Nissan XTRONIC system
  • Nissan Altima
  • Nissan Cube
  • Nissan Maxima
  • Nissan Pathfinder
  • Nissan Rogue
  • Nissan Sentra
  • Nissan Versa
  • Nissan Murano
  • Infiniti QX60
  • Infiniti JX35

Having Car Transmission Issues?

If so, it may be because your can came from the manufacturer with a defective transmission. If so, lemon law entitle you to compensation for the vehicle, depending on the details of your case.

For assistance understanding complex car transmission issues and determining whether your car is a lemon, please contact Goldsmith West for a free consultation. Our experienced attorneys are here to help.

 

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Why Lemons Happen: What to do if You Bought a Lemon Car

We expect products to improve over time due to advancements in technology and engineering. So, why do lemon law cases continue to happen? It’s a question you would probably like to have answered if you’re wondering what to do if you bought a lemon car.

supercarFirst, it’s helpful to consider what a lemon actually is. A lemon can be described as a low-quality product. In business or manufacturing terms, “quality” is defined as a measure of the state of being free from defects and deficiencies. However, if you bought a lemon, it’s important to realize that lemon law cases do not arise only from quality defects.

Sometimes, a car doesn’t conform to the manufacturer’s warranty, even when it’s manufactured exactly as designed. We see this in cases involving widespread vehicle problems, such as Volkswagen’s Dieselgate and Ford’s Powershift cases. Increasingly, it seems, the discrepancy between proper design and improper functionality is a major source of consumers’ lemon law frustrations. Here are four reasons we believe are behind the trend.

1. Increasing Reliance on Computers and Software.

Computers and software are the source of most new advancements in automotive technology, bringing about delightful new features and taking control of traditional systems in ways that can improve efficiency and performance. However, vehicles that are run by computers are also subject to new types of problems — a fact you be intimately familiar with if you bought a lemon.

Volkswagen’s dieselgate scandal, for instance, was caused by a “cheat” system in vehicle software, and many of the nontraditional transmission systems have problems because the software now relied on to anticipate gear shift changes fails. Infotainment systems, along with transmission systems, are known to be a major source of reliability concerns for consumers.

There have been well-publicized questions about problematic software in cars, such as in the reports of sudden and unintended acceleration in Toyota vehicles. While it isn’t clear whether computers caused the reported incidents of unintended acceleration, it is undoubtedly true that Toyota’s electronic “drive-by-wire” system didn’t incorporate a brake override system, which existed in other brands and would have answered relevant safety concerns. In the wake of the scandal, Toyota began building vehicles with the brake override system.

In the absence of a sensible roll-out of new technologies, the auto industry treats the new car you buy as a “beta” model, in the same way that Apple sometimes issues a software update that contains bugs. The difference is that there can be disastrous consequences when the product is a motor vehicle rather than a smartphone. This leads to new lemon law cases. If you’re wondering what to do if you bought a lemon car, one of the cases may be your own.

2. Lack of Qualified Technicians

Within the auto industry, it’s well-known that there is a nationwide lack of qualified technicians. This issue in related to the one above. As vehicles become increasingly reliant on computers, cartraditionally trained mechanics are no longer able to diagnose and repair vehicles using their senses and knowledge learned while standing over the shoulder of another mechanic. Instead, they require specialized training in digital technology.

Unfortunately, there is a lack of sufficient vocational training in high schools to meet the demand, and the auto industry has failed to create a system for producing new, more qualified technicians. If the industry lacks the technicians needed to fix vehicles, new lemon law cases — and a bevy of consumers wondering what to do if they bought a lemon — will be the result.

3. Corporate Greed

A major source of the auto industry’s problems — including lemon law issues — comes from the sometimes ridiculous and usually arbitrary sales targets that major auto manufacturers set. Evidence exists that there is already a greater supply of cars than consumers demand. Greater supply generally means lower prices for consumers. How is this bad?

While it’s true that oversupply leads to price discounts, it ultimately cuts into manufacturers’ profits. This, in turn, leads manufacturers to cut corners, and make aggressive claims about their products.

For example, in order to sell X number of vehicles at Y price, a manufacturer may know that it needs to advertise certain competitive performance characteristics and fuel economy. If the manufacturer can’t meet these standards after investing hundreds of millions of dollars in designing a new engine or transmission system, it may cut corners by releasing products that are unable to conform to warranties, as we have seen with CVT and dual-clutch transmission systems.

In addition, lower profitability and missed sales targets leads to budget cuts, which can lead a manufacturer to use more aggressive policies in denying lemon law claims. Ultimately, it creates a positive feedback loop that creates more — and resolves fewer — lemon law cases. If you’re wondering what to do if you bought a lemon car, such a manufacturer won’t be much help.

4. Poor Business Relationship with Dealers

This issue is covered further in my blog about how auto dealers view lemon law claims. But to elaborate, dealers and manufacturers must have a good working relationship to avoid the creation of new lemon law cases. If manufacturers fail to properly train and communicate with dealership service personnel on repair issues, the consumer is the one that suffers.

Likewise, if dealerships focus solely on their own bottom line and shift the burden of difficult repair issues to manufacturers, vehicles will not be repaired in a timely, proper manner, and new lemon law cases will appear.

Conclusion

lemon law claimThe issues above do not work in isolation. Rather, they multiply lemon law issues. Adopting computer technology — possibly due to corporate greed and adherence to sales targets — before it is ready for use will cause nonconformities to warranty. Furthermore, the lack of qualified technicians will result in increased repair attempts and shop downtime for lemon vehicles.

The failure of manufacturers to communicate repair solutions, and the disinterest of dealers in taking responsibility for repairing cars, will virtually ensure that repair attempts are not reasonable. In addition, the industry’s unrealistic business model naturally leads to budget cuts and shortfalls, which incentivize manufacturers to use aggressive policies to deny lemon law claims.

Think You Bought a Lemon?

If so, trying to address the problem solely with the help of the manufacturer could prove harder than ever. If you’re wondering what to do if you bought a lemon car, and the manufacturer doesn’t seem to be on your side, contact Goldsmith West to schedule a free consultation. We will help you decide what to do if you bought a lemon car by explaining all available options.

 

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How Auto Dealers View a Lemon Law Claim

An interesting aspect of U.S. lemon law is that it makes auto manufacturers liable for lemon vehicles, but it doesn’t hold auto dealers liable. This can be confusing, even for automakers.

In most parts of the world where you can file a lemon law claim, dealers are held responsible for selling defective automobiles because a “privity of contract” (i.e. a direct contractual relationship) exists between dealer and consumer. However, it does not exist between manufacturer and consumer. When worked as an attorney for major auto manufacturers, I routinely explained this feature of the law to dealership managers who were located outside the U.S.

Difference Between U.S. and Other Countries

Maserati car tireIn most countries, when auto dealers are liable, they must respond to lemon law claims not only in the interest of customer service, but also in their own legal interest. By contrast, under U.S. federal lemon law and California lemon law for cars, a dealer can fail to reasonably repair a vehicle and face zero liability under the law. The manufacturer is responsible for the actions of its dealerships and must properly train, equip, and entice dealers to repair vehicles properly.

I use the term, “entice”, because under U.S. franchise law, it is difficult for manufacturers to control the actions of their dealerships. It is important to remember that manufacturers and their dealerships are entirely separate entities. Practically speaking, their alliance is far less easy than the general public understands.

A manufacturer wants its dealers to sell its brands. But dealers usually sell other brands, too, which may include ones from the manufacturer’s competitors. This is because dealerships are primarily profit-driven. Because a lemon law claim by itself doesn’t hold their feet to the fire, when it comes to either helping a manufacturer fix difficult cars or performing the daily business of selling cars, parts, and service to customers, why wouldn’t dealers focus on the latter?

Understanding the Perspective of Dealerships

Think about it for a moment: If you are a dealership service manager, and you have an angry customer complaining about a car that’s hard to repair, do you care if the customer brings a lemon law claim? Not necessarily. In fact, you might even hope that she files a lemon law claim — because, at that point, the car becomes the problem of the manufacturer and not the dealer.

The manufacturer pays the dealer for making the warranty repairs, but the manufacturer may tire of repeatedly paying for the same repair attempt. If so, the manufacturer may even refuse to pay for repair attempts and blame the dealer for incompetence. At this point you, have a dealer who may be blaming the manufacturer for building a low-quality car, and a manufacturer who may blame the dealer for not fixing it. Meanwhile, the consumer is stuck in the middle.

How Dealerships May Respond to the Situation

Because the dealer has no skin to lose, they may passive aggressively allow a lemon law claim to fester, rather than investing extra time, at lower pay, to fix the car’s problem.Corvette car tire with mag rim

It’s not always that simple, of course, and there are reasons — including business interests — that motivate dealerships to work with manufacturers to repair vehicles in a timely fashion. However, it’s important to remember that manufacturers and dealers are separate entities, and that federal and California lemon law for cars is enforced only against manufacturers.

If you’re confused about an inconsistent response from your dealership service advisor and the manufacturer’s customer service department, you may be caught in the middle of one of these passive aggressive quagmires that frequently occur between dealers and manufacturers.

Need Legal Help With Your Lemon law Claim?

If you keep waiting for the dealer and manufacturer to work out a solution for addressing your lemon car, the answer is probably yes. For expert advice on federal and California lemon law for cars, contact Goldsmith West to schedule a free consultation. We will help you explore your options, explain them in-depth, and help you choose the right course of action for your case.

 

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