California lawmakers scramble to fix ‘lemon' vehicle law — again

Associated Press

21-02-2025

For more than half a century, California's 'lemon' law was considered one of the best in the nation at giving consumers the legal right to demand car companies fix or replace defective vehicles still under warranty.
Now, California lawmakers are scrambling to repair recent changes they made to the law to satisfy the very car companies accused of making so many lemon vehicles that their lawsuits have been clogging the state's courts.
But the 'fixes' lawmakers are considering have angered consumer groups, frustrated legislators and seemingly divided the car makers between ones that face a lot of lemon lawsuits and the ones that don't.
'I think what we have is a messy and frankly — all due respect — illogical resulting situation,' Sen. Roger Niello, a Republican whose family owns several car dealerships in the Sacramento area, said at a hearing last week. 'I feel like I'm in Alice in Wonderland, quite frankly. What's up is down and what's down is up.'
With hope of granting relief to the courts, Gov. Gavin Newsom signed legislation last year intended to speed up the process, in part, by cutting years off the time consumers can exercise their rights to get their defective vehicles fixed or replaced. The law also puts more responsibilities on car owners to initiate claims instead of on the car companies.
But that law divided car makers because those that face fewer lawsuits wanted more time to prepare their best defense, and they felt it was too friendly to lemon law attorneys. So when he signed the bill, Newsom told lawmakers to act quickly this year to allow car makers to opt out of the new process and continue to work under the old rules.
Now, legislators are racing to pass the changes before the new law takes effect April 1. And they need a two-thirds vote of the Legislature to make the bill effective immediately.
Meanwhile, they're hearing concerns about a confusing two-tier lemon law with fewer consumer protections that is primarily intended to help the companies facing the most lawsuits. Just four companies are responsible for more than 70% of California's lemon law cases: GM, Stellantis (formerly Fiat Chrysler), Nissan and Ford, according to consumer group s.
It makes Susan Giesberg furious.
She spent almost a decade working on lemon law issues at the California Department of Justice. Now retired, she says she and her husband had to invoke their rights under the state's lemon law under the old rules when their Chevy Volt broke down last summer.
'This lemon law has gone through Republican and Democratic (attorneys general) and governors with support over the years,' she said in an interview. 'It's just so shocking that under Democratic leadership that this would have gotten through.'
So how did it?
To answer that you have to go back to August, in the final chaotic days of the legislative session.
How lawmakers jammed through new lemon law
As lawmakers were rushing through hundreds of pending bills – most of which had been under discussion for months – two Democrats, Sen. Tom Umberg of Santa Ana and Assemblymember Ash Kalra of San Jose, changed a stalled child-support bill into new, never-vetted legislation that sought to reform how lemon law disputes are resolved. Stripping out stalled legislation, replacing it with a completely different bill and jamming it through at the last minute is disparagingly known in the Capitol as a 'gut-and-amend.'
The lawmakers acknowledged that the bill, Assembly 1755, was the product of months of secret negotiations between U.S. car companies – primarily General Motors – consumer attorneys and judges who were frustrated that their courtrooms have become clogged with lemon law cases.
Between 2018 and 2021, GM's 9,800 lemon law suits accounted for nearly one in three lemon law suits filed in California, according to the most recent stats from consumer groups. A company spokesperson in a written statement to CalMatters defended its record and the new California law.
'General Motors is continuously recognized by top consumer intelligence groups for vehicle reliability, quality, and customer loyalty,' GM spokesperson Colleen Oberc said in an email. She called the legislation 'a pro-consumer bill that will help drivers get back on the road sooner, while also helping clear court backlogs, benefitting both customers and the auto industry.'
California defines a 'lemon' vehicle as one that has serious warranty defects that the manufacturer can't fix, even after multiple attempts. The lemon law applies only to disputes involving the manufacturer's new vehicle warranty.
If the manufacturer or dealer is unable to repair a serious warranty defect in a vehicle after what the law says is a 'reasonable' number of attempts, the manufacturer must either replace it or refund its purchase price, whichever the customer prefers, according to the California Department of Consumer Affairs.
Disputes can be resolved through arbitration or in court if a buyer sues.
The number of lemon law cases in California courts climbed dramatically since 2021. There were nearly 15,000 filings in 2022 and more than 22,000 in 2023. In Los Angeles County, nearly 10% of all civil filings are now lemon law cases.
Kalra and Umberg pitched their legislation last year as a way for auto companies and car buyers to settle their disputes quicker and without needing as much time in court.
But Tesla and several foreign auto companies including Volkswagen and Toyota that aren't sued nearly as much said they were cut out of negotiations. They opposed the legislation.
Consumer groups, meanwhile, called the legislation a blatant and shameless attempt at weakening the lemon law by the very companies that get sued the most because they sell the most defective vehicles.
There was a lot more in the bill, which was about 4,200 words long (the equivalent of a 16-page double-spaced term paper). What's more, the bill's legislative analysis, intended to explain the context and impact of a bill in non-legal language for lawmakers, was more than 10,000 words.
The bill passed easily even though some lawmakers complained they were uncomfortable with having to decide such a complicated, confusing piece of legislation so quickly.
'There wasn't a single person who represents the people of California who knew about this and was a part of those conversations – for months,' Democratic San Ramon Assemblymember Rebecca Bauer-Kahan told her colleagues on the Assembly Judiciary Committee in the final days of the 2024 legislative session. 'They dropped this in our lap, and they expect us to buy an argument related to the urgency that feels, to be honest, not real. And we're supposed to move this in a week's time.'
Newsom signed the bill in September, with an accompanying letter to lawmakers demanding they fix the law.
Meanwhile, just a few weeks after Newsom signed the bill, the California Supreme Court weakened California's lemon law even more. The court ruled that the state's lemon law doesn't require manufacturers to honor a car's warranty when it's re-sold as a used vehicle.
Before the Supreme Court's ruling, courts had interpreted the lemon law to require manufacturers to replace or repair a defective used car or truck if the clunker was sold within the window of its original new-vehicle warranty.
Uncomfortable lawmakers pass bill anyway
Fast forward to last week and the Senate Judiciary Committee's first hearing of the new two-year session. There was one bill on the agenda: Senate Bill 26, the legislation that Newsom requested. The new bill does not address the state Supreme Court ruling.
And again the clock is ticking toward a new deadline.
The bill frustrated Sen. Aisha Wahab, a Democratic senator from Fremont. She told her colleagues she was worried the two-track legal system for different car companies would make an already confusing scenario for desperate car owners more difficult to understand.
'I'm very concerned about those first-time buyers, those immigrant communities, those people that don't have the privilege to understand half of the stuff that was mentioned here,' she said. 'It makes it too hard to begin with.'
Umberg, the bill's author, suggested that after lawmakers pass this bill to meet the April deadline, they might need to pass other legislation to address lawmakers' concerns as well as the Supreme Court's used-vehicle ruling.
That didn't sit well either.
'It's unfortunate that protections for the consumers have gotten so complicated that we can't more easily explain this law or the previous law, and I thought this was a clean-up (bill),' said Sen. María Elena Durazo, a Democrat from Los Angeles. 'Now it seems like there may be a clean-up to the clean-up, maybe another clean-up, you know, after that.'
Nonetheless, the bill ended up easily passing the 13-member committee. Wahab declined to vote, and Democratic Sen. Angelique Ashby of Sacramento cast the only 'no' vote. Ashby was one of the lawmakers who opposed last summer's bill as well.
'I still believe that it does not do enough to remove unsafe vehicles from our communities,' she said of this latest bill. 'In fact, I argue that this might have more unsafe vehicles in our communities, and I think I would not be alone in that assessment. I don't think it holds manufacturers accountable.'
Sen. Niello said he had to reluctantly vote for Umberg's bill since it would help negate – at least for some auto companies – the legislation he also opposed last summer. He said he wished lawmakers would just scrap the bill Newsom signed last year 'and bring all of the interested parties together' to re-negotiate reforms to the lemon law, which he said probably could use some after five decades.
Instead, he had to hold his nose and vote for another rushed bill.
'This is a perfect example of why we should not be approving legislation that is a gut and amend at the last minute of the end of session,' Niello said.
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