How do class actions affect lemon law, and vice versa?
Lemon law clients often feel validated when they learn other people had the same problems in the same model vehicle. This might be a symptom of the frustration of constantly being told them are imagining things by the manufacturer or dealer.
But how do Lemon Law and class actions affect each other? The answers can be both subtle and dramatic.
It’s important to remember that in a vacuum, other similar claims have no bearing on your Lemon Law claim. To prove your claim, you simply need to show that you had a substantial problem that was not repaired within a reasonable number of attempts, or that defeated the essential purpose for which you bought your vehicle. If you can do that, it doesn’t matter if your vehicle is the only one in the fleet that has the problem, or if all of them do.
However, what we often see is manufacturers denying problems they know are common in their vehicles on a general basis. If they know that nearly all their transmissions have a shifting defect, their defense that you must have been imagining it the 4 times you brought it into the shop becomes more suspect.
In fact, it may rise above the level of incompetence and into willfulness–and that has a big impact on your lemon law claim. First, it’s harder for them to deny. Second, the denying could lead to awards of civil penalties or punitive damages.
Further, if the problem is widespread, the manufacturer should generally know about it before the consumer does, and should issue a recall. (Read more here about the effects of recalls on your lemon law claim.) If they do not, or if the recall is ineffective, or provides too little too late, there could be cause for a class action.
If a widespread issue of defects in material and workmanship, it could lead to a class action claim. But what happens to your lemon law claim if it becomes part of a class action?
From bad to worse
First, you should know that the class action can take the place of your individual lemon law claim. If you have not opted out of the class, which usually requires that you take some sort of affirmative step like writing a letter (and keeping a copy of it–because trust us–the manufacturer is more likely to lose track of it), you may be left with whatever settlement or judgement is achieved by the class action suit.
Second, you should know that if you have a lemon law claim, most likely whatever you would gain under the class action suit will be worth less. Why is that? Because with a lemon law case, the threshold remedy is repurchase of the vehicle. Automotive consumer class actions rarely result in a repurchase. Most often they result in no more than a small amount of cash, or a coupon for a new purchase.
Third–and it just keeps getting worse–you should know that it’s entirely possible a class action settlement will have a result that gives you nothing in place of the repurchase you might be entitled to under Lemon Law. That’s right…it’s entirely possible you could get zero under the class action instead of all your money back under the individual lemon law claim.
For instance Fiat Chrysler recently had a class action settlement regarding modification of a component called the Totally Integrated Power Module (TIPM) in Jeep Grand Cherokee and Dodge Durango models. The component would fail, causing serious problems such as stalling or failing to start, and a host of other weird issues. These could easily be lemon law issues–but all the class settlement gave was a recall (which would have been required even without the suit) and compensation for towing, repair and rental charges–which again should be required as a minimum even without the suit. Finally, the claims period was so short, that may Jeep owners would actually not be provided those reimbursed towing charges until their car actually chose to stall, after the class settlement period. Score one for FCA, which all of a sudden has a legal defense to total lemons.1
Many class action results (usually settlements) have rules for compensation that stretch beyond what the law would require, damages awards which are far less, and perhaps worst of all–short claims periods that may slam shut before you even know you have a claim. Or even before you’ve experienced any problems!
Feel any differently about class actions now? You should. And you should also know that in the case of a chronic failure of a product, a weak class action can be a huge benefit to a manufacturer. This is because it may create a defense to a lemon law claim where one would not otherwise exist. So beware.
In summary, class actions can both help and hurt your lemon law claim. Their existence makes it harder to deny the class problem; but class action settlements will usually leave you in a worse spot than you would have been in with your own lemon law claim, and your own attorneys.
1 It is arguable that lemon law prevents a settlement like this, because it is against public policy and would tend to defeat the branding requirements of the ACNA. But don’t tell the manufacturers that–to them, the class settlement is a valid excuse to keep lemons on the road and unsuspecting consumers buying them.
Contact us today if we can answer any other questions about your claim.
Issue #1 – the lemon law does not require you to sign a release or settlement agreement.
If Ford, General Motors, FCA, Kia, Hyundai, Toyota, BMW, Mercedes, Tesla or any manufacturer has offered to repurchase or replace your vehicle, there are a few lemon law related issues to keep in mind.
Lemon law requires the manufacturer to repurchase or replace a qualifying vehicle. It does not require, or authorize the manufacturer to require, a signed settlement agreement or release. These agreements are often packed with extraneous provisions such as confidentiality clauses and waivers of claims you do not even know you have yet.
The manufacturer is not complying with the law if it requires you to sign one of these agreements as a condition before receiving your buyback or replacement remedy. Yet in our experience, manufacturers often state that an agreement must be signed.
Issue #2 – the manufacturer does not get to dictate the mileage offset.
As discussed elsewhere on this site, lemon law provides that for a breach of express warranty claim, the manufacturer may reduce your reimbursement for miles driven before the problems with the vehicle started. There is a formula in the statute for calculating this “mileage offset.” (See California Civil Code § 1793.2(d)(2)(C).)
One of the most problematic issues we see with manufacturer repurchase or replacement offers is that they make overly aggressive mileage offset calculations. They often try to dictate the offset and fail or even refuse to show how they calculated it. Sometimes they even cheat by applying the offset to the total odometer miles instead of the miles driven before the first problem, or by applying a lease overmileage calculation instead of using the formula written in the law!
Calculating the mileage offset can be tricky, and it often requires some technical and legal analysis. For instance, if your car leaked coolant at 10,000 miles, had the water pump replaced at 20,000 miles, overheated at 30,000 miles and required an engine replacement at 40,000 miles, which is the correct mileage offset? We would probably argue 10,000 miles, because repeat cooling system problems starting there were the root cause of the eventual premature engine failure. We have seen many situations where manufacturer would argue that 40,000 miles should be the offset–and the difference can be thousands of dollars in reimbursement.
Issue #3 – beware of creative deductions.
We’ve been handling lemon law buybacks for 14 years, yet no two are alike, and we continue to see new and creative methods by manufacturers of deducting from your reimbursement. There are too many different methods to count them all. The short answer is that the method of determining how to repurchase or replace a vehicle under the lemon law is laid out at California Civil Code Section 1793.2. The longer answer is that the more creative the deduction, the more you may need an attorney experienced with all of the lemon law case precedent and surrounding regulation to argue against it.
Issue #4 – the manufacturer is not doing you a favor by buying back your vehicle.
This is a broader issue that actually covers the previous three. Manufacturers, especially when dealing directly with consumers who do not have attorneys, often act as though a lemon law buyback is some kind of good will gesture. It is not a favor–it’s a legal requirement.
That means they don’t get to tell you if your vehicle qualifies, they don’t get to dictate your compensation, and quite frankly, they don’t deserve credit or concessions for buying your vehicle back if it’s a lemon. The law requires them to do so. You will know excellent customer service when you see it. If you feel you are being pushed around, just remember that the manufacturer’s customer service department probably has a lot more experience with lemon law than you do.
The good news is, the California legislature anticipated this issue, and that’s why the lemon law requires the manufacturer to pay your legal fees. If you want a free second opinion, or are ready to have your own advocate, don’t hesitate to contact us today.
We have seen a variety of problems with 2013 and later model year Ford Escape model vehicles which have lead to lemon law claims.
Most of these involve problems with the engine and powertrain, including the following:
- Losing power while driving
- Check Engine Light
- Engine Failure
- Engine Fire
- Shuttering or bucking at idle
- Oil and other fluid leaks
- Replacement of the water pump
- Loss of Power
- Cooling System Problems
- Transmission Problems
- Transmission slip or jerk
- Transmission Replacement
- Transmission failure
- Transmission stuck in gear
- Transmission stuck in reverse
If you have had any of these problems, contact us for a fast, free and confidential consultation as to whether you may have a claim for compensation under the lemon law.
Stericycle Expert Solutions and Lemon Law
If you’ve tried to negotiate a lemon buyback or with a car maker before filing a lawsuit, you may have encountered a company called Stericycle Expert Solutions ( a.k.a. “Stericycle”).
What is Stericycle?
Based on the “About Us” section of its website, Stericycle provides services to businesses in the form of “recall, retrieval, return, and audit processes”. The name “Stericycle” may originate from the company’s history of providing compliance solutions related to medical waste management, but this is only a guess.
Relative to the automotive sector, Stericycle bills itself as providing the following core services for leading car makers: “reacquisition, recall, early resolution, data cleansing and analytics, funds management and disbursement, and verification and inspections programs”.
Stericycle News & Lemon Law
Our firm has encountered Stericycle handling the lemon buyback and replacement process for car makers such as BMW, FCA (Dodge, Jeep, Chrysler, Ram), Honda, Kia, Suzuki, Lexus, Toyota, Mazda, Mercedes, Volvo, Porsche, and Mitsubishi.
It seems that these auto manufacturers and distributors will pass on the negotiation of lemon claims, along with the lemon buyback or replacement process, including the payment to consumers of money and the vehicle turn-in process.
In most cases, it appears that car makers intend for Stericycle to handle lemon law resolutions before the consumer has brought litigation — and typically before the consumer is represented by an attorney. This is important Stericycle news to remember for anyone who pursues a lemon law buyback or replacement from a car maker that uses Stericycle’s services.
Problems We Have Noticed
So, why are automakers passing their lemon law buyback responsibilities to a third party — and a party that is possibly named for medical waste management, no less? We can only speculate, but we have noticed issues that affect consumers.
Stericycle seems to insulate car makers from the buyback process. Stericycle can make arguments, demands, or requirements of consumers, while allowing the manufacturer to stand out of the way. We have seen Stericycle misinterpret the law — and, as you might guess, those misinterpretations have always been in favor of the company’s manufacturer clients.
Perhaps the worst part for most consumers is that the Stericycle middleman process contributes to the delay of resolving a lemon buyback or compensation agreement — a type of stonewalling that manufacturers use to induce consumers to accept less and be done with the frustration.
Advice for Dealing with Stericycle
Our firm has noticed is that Stericycle is not affable when dealing with consumer lawyers. They apparently like to dish out “compliance” in one direction, without taking any pushback.
If you are forced to deal with Stericycle in the course of a lemon buyback, and you have any doubts or discomfort about the process, the amount of payment offered, or the length of time it is taking to resolve your situation, contact Goldsmith West for a free review your case. It is always wise to have your own expert advocate, just like the automakers have in Stericycle.