A look at California's proposed lemon law
The proposal would make it harder for defective-car owners and their lawyers to sue automakers for civil penalties.
Last week, details of a new deal to rewrite California’s lemon law between plaintiffs attorneys and General Motors emerged, revealing efforts to limit high-end litigation costs and avoiding a broader tort war.
The language hammered out by the Consumer Attorneys of California and GM was expected to appear in a legislative bill by Wednesday. An advance copy of amendments reviewed Tuesday showed new prelawsuit requirements for plaintiffs seeking civil penalties, as well as discovery mandates and new deadlines for actions by both parties in litigation.
In exchange for the new litigation hurdles in the 42-year-old law, the business-backed Civil Justice Association of California has agreed that, if the bill is signed by the governor, it will not pursue a threatened ballot initiative to cap attorneys’ contingency fees in 2026. A CJAC-sponsored ballot measure committee reported $4 million on hand at the end of July, with Ford Motor Co. and GM combined contributing more than half of that amount.
Kyla Christoffersen Powell, president and chief executive officer of CJAC, said the negotiated amendments are “aimed at breaking the cycle of abuse” through requirements such as prelawsuit notices to auto manufacturers.
“We are encouraged by CAOC’s willingness to discuss and agree to reforms in direct response to the pressure created by CJAC’s ballot efforts,” Powell said.
CAOC leaders have said that their organization, too, will refrain from any ballot-box battle targeting CJAC as part of the agreement.
Other vehicle manufacturers and consumer groups were still reviewing the bill language and had not taken public positions on the legislation Tuesday.
An information sheet circulated by the CAOC said the proposed changes will “get consumers faster relief while penalizing delay tactics.” Rosemary Shahan, founder of Consumers for Auto Reliability and Safety and a longtime supporter of the lemon law, said the amendments “would drastically weaken protections for millions of California vehicle owners.”
Here’s a look at some of the bill’s provisions.
Prelitigation requirements. Consumers who don’t want to pursue civil penalties can sue an automaker immediately for replacement or repurchase of a defective vehicle plus attorney fees. Those seeking civil penalties for willful violations of the lemon law, an amount that can total double the actual damages to a consumer, must send a demand for repair or replacement by mail or email to the manufacturer.
Shahan said the language shifts compliance with California’s lemon law from carmakers to consumers, who may not know of their responsibilities.
Prelitigation disputes over attorney fees and costs will be sent to arbitration.
New deadlines. The amendments give automakers 30 days to respond to a defective-car owner who has sent notice, plus another 30 days to actually buy it back or replace it. Consumers must still have the vehicle in their possession when they notify the manufacturer in writing.
Backers of the deal say the requirement ensures lemons are taken off the road. Shahan said it hurts owners who traded in a clunker because they needed a functioning vehicle right away, as well as those who had their defective car towed by their insurance company.
Car owners will have up to one year after the expiration date of their warranty and six years after the delivery of their vehicle to sue under the lemon law.
Manufacturers who offer to buy back or replace a lemon and pay “reasonable” attorney fees can escape civil penalties if they complete the terms of the offer within 60 days.
Litigation requirements and mediation. The amendments set specific deadlines for filing an answer to a consumer complaint (60 days), completing depositions of the owner and manufacturer’s representative (120 days) and scheduling an early mediation (90 days after filing an answer).
The legislation also mandates two-hour time caps on initial depositions and specifies what documents have to be exchanged between parties. Discovery procedures won’t apply to litigants who don’t have lawyers.
Proponents say the deadlines will ensure that lemon owners receive restitution faster while removing incentives for some lawyers to extend litigation to receive higher attorney fees.
The Legislature must approve any legislation by the end of session on Aug. 31 to send it to the governor’s desk.
Updated to added comments from CJAC President and Chief Executive Officer Kyla Christoffersen Powell.