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Federal Lemon Law: The Magnusson-Moss Warranty Act

The Magnusson-Moss Warranty Act is a United States federal law (15 U.S.C. § 2301 et seq.) that governs consumer product warranties. It can be thought of as the “federal lemon law.” Like most state lemon laws, the act provides for relief in the event that a product under warranty is not repaired within a reasonable number of attempts. Also, like most state laws, it provides for the payment of the consumer’s legal fees.

Magnusson-Moss vs. Song Beverly

Claims under the Magnusson-Moss Warranty Act can be brought alongside — or instead of — claims under the relevant state lemon law. Quite often, attorneys plead causes of action (i.e., formal lawsuit allegations) under both laws simultaneously.

The California state lemon law — also known as the Song Beverly Consumer Warranty Act — has more teeth than federal lemon law for the following reasons:

  1. It allows for a presumption that the vehicle is a lemon, shifting the burden to prove otherwise to the manufacturer or other warrantor;
  2. It makes available civil penalty damages of up to two times the actual damages;
  3. It has an undisputed threshold remedy of repurchase or replacement of the vehicle or other product.

Point #1 means that, instead of the consumer having to prove the vehicle is a lemon in court, the manufacturer has the burden of disproving the vehicle is a lemon, so long as certain numbers of repair attempts or time in the shop is available. In practice, if the presumption is clearly available, there will often be a quick settlement.

Point #2 means that the manufacturer is potentially on the hook for a much greater amount of damages. In addition to increasing the value of the case, in practice, the potential of a civil penalty also provides a greater incentive for the manufacturer to settle.

Point #3 is complex. As with Song Beverly, a violation is established under federal lemon law when the product is not repurchased or replaced after a reasonable number of repair opportunities. However, case law says that, in the event of a violation, the measure of damages under Magnusson-Moss should be “diminution in value”, which is the difference in value between the product as sold and the product as warranted. This would theoretically assign a cash value to the defect, rather than simply requiring the warrantor to buy back or replace the product.

To summarize, if both the state law and the federal law are options in a lemon case, the state law will often be preferable because it may be easier to prove a violation, and also because the damages are greater and easier to prove under state law.

Additional Considerations

Magnusson-Moss also makes it possible for manufacturers to require consumers to (a) make a written notification of a violation and (b) make prior resort to a qualified third party dispute resolution program (usually private arbitration) prior to filing a lemon lawsuit. Lemon law attorneys on both sides should pay attention to these requirements, as they are frequently misunderstood. Under Song Beverly, these are requirements for use of the presumption but not the lemon law itself.

If the Magnusson-Moss Warranty Act has more requirements, may make a lemon case harder to prove, and may provide less in recoverable damages, why would someone file a federal lemon law claim instead of a state lemon law claim?

The answer is that Magnusson-Moss is often broader in application than state lemon law. Because it is a federal law, it does not require purchase in any particular state, whereas case law says that Song Beverly requires delivery in the state of California. Magnusson-Moss is more readily available to used car purchases, and it may be available even after time requirements under certain state lemon laws have elapsed.

Need Lemon Case Advice?

Deciding whether to pursue a lemon claim under state or federal law can be difficult without the help of an attorney. If you think you have a lemon and need advice on which statutes to pursue a case under, the experienced lemon lawyers at Goldsmith West are here to help. Contact us today for a free consultation.

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