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.