Latest news with #Song-BeverlyConsumerWarrantyAct
Los Angeles Times
2 days ago
- Automotive
- Los Angeles Times
When Life Gives You Lemons ...
Attorneys question whether California's 'lemon law' will affect car consumers as rules change Despite recent reforms aimed at reducing California courts' civil case backlog, changes to the state's so-called 'lemon law' appear to be doing little to stem the tide of vehicle warranty filings. Plaintiffs' attorneys say the changes have instead created a two-tiered system that diminishes consumer rights. Richard L. Stuhlbarg, a partner at Bowman and Brooke and leader of the firm's Warranty Practice Group who regularly defends vehicle manufacturers against warranty claims, said his firm had recorded 19,359 filings through June 2025, putting the year on pace to surpass 38,000 total filings, based on publicly available data. That would exceed the 30,190 filings recorded in 2024. By comparison, there were 22,655 filings in 2023, 14,892 in 2022 and 10,797 in 2021. 'Despite the lemon law changes, we have seen a big spike in filings,' he said. 'If the goal of the changes was to lessen the burden on the courts by reducing the number of filings and litigated cases, the objective data does not show that has happened.' The Song-Beverly Consumer Warranty Act, aka California's lemon law, entitles consumers to a refund or replacement if a new vehicle under warranty has substantial defects that the manufacturer or dealer cannot fix after a reasonable number of attempts. It also allows recovery of attorney fees and penalties against manufacturers. The historical spike in cases under the act was a key reason for the passage of Assembly Bill 1755 in 2024. The bill was notable for many reasons, not the least being the fact that it was cosponsored by the Consumer Attorneys of California (CAOC) and General Motors, in exchange for the Civil Justice Association of California (CJAC) abandoning any ballot initiative which would have placed a cap on contingency fees in the 2026 election cycle, an effort which CAOC said was being bankrolled by auto manufacturers. In turn, CAOC agreed to place a moratorium on any competing ballot measures. The California Judges Association also supported the reforms. While new procedures under the bill were designed to streamline cases and reduce filings, they only apply to manufacturers who choose to opt in to the new framework. That opt-in feature has become one of the law's most controversial elements, with critics arguing it has created confusion and inconsistency in how the lemon law is applied. The law introduced a new written notification requirement for vehicle owners seeking penalties against manufacturers for alleged warranty violations and requires them to retain possession of the defective vehicle while pursuing a claim, something which critics argued would shift the legal and financial burden of a defective vehicle to owners and away from manufacturers. Rosemary Shahan, president of advocacy group Consumers for Auto Reliability and Safety, said that the written requirements raise the issue of consumers not realizing they have to write directly to the manufacturer to assert their lemon law rights. 'AB 1755 allows manufacturers to ignore requests for warranty repairs from consumers who have not taken that additional step,' she said. Some of the changes, such as the pre-suit notification requirement and new 30- and 60-day response timelines for manufacturers, only came into effect on July 1. Others, such as a requirement that claims be filed within a year of the warranty's expiration but no longer than six years from the vehicle's purchase date, came into effect earlier this year. Richard Wirtz, whose firm Wirtz Law APC represents vehicle owners, said that the 'single biggest impact of AB 1755' was the reduction in time for consumers to bring a claim. While the previous legislation had allowed consumers to bring a claim within four years of a warranty's expiration, they now had one year and a maximum of six years from delivery of the vehicle, he explained. 'For warranties that are longer than six years, like Hyundai's basic 10-year warranty or some powertrain or emission warranties that are longer than six years, the automakers no longer have to actually fix anything under the warranty because there is no consequences to them and no remedy for the consumers after six years,' he said. It was too soon to fully assess the impact of the changes, given that some had only just gone into effect, said Joseph Kaufman, whose firm, Joseph Kaufman & Associates also represents car owners. However, it was already clear that the opt-in scheme was problematic. 'The biggest problem with the changes is that it creates a two-tier lemon law system, and this is confusing for consumers, and it's confusing for courts. And I'm not aware of any other consumer protection or any other statute really is optional at the election of the guilty party, so to speak. I think that that is a net negative,' he said. Another major issue, Kaufman said, is AB 1755's treatment of negative equity - the portion of a prior loan that exceeds the value of a trade-in. 'Negative equity was always considered to be an improper deduction in the context of lemon law repurchases and replacements. It was always considered to be part of the amount paid or payable,' Kaufman said. 'Now AB 1755 says if there was negative equity rolled into the deal by the selling dealership, the car company can subtract from the restitution amount the amount of that negative equity.' AB 1755 also requires the early exchange of discovery documents, expedited depositions and mandatory mediation, all within six months, for those manufacturers who choose to opt in. Stuhlbarg, who said that some of his clients had elected to opt in to the new scheme, said that these measures had delivered mixed results. 'Initial disclosures, there is a benefit to exchanging information early. My clients who have opted (in) have set up processes to comply with the document disclosure requirements,' he said, though he noted, 'There is confusion because some plaintiffs' firms argue against a protective order.' Kaufman said he supports the early mediation requirements and believes that 'requiring plaintiffs and defendants to both appear for deposition within four months of defendant's answer will help good lawyers and law firms and weed out the bad ones.' He said that he was still seeing manufacturers struggle to comply with disclosure and deposition requirements, while some refused 'to produce certain documents that they are now statutorily required to disclose.' While having agreed matters of examination helped streamline the deposition process for both sides, Stuhlbarg said, 'The early depositions have created scheduling demands because there are limited number of qualified witnesses.' He also raised concerns about consumer attorneys potentially using the new procedures to their advantage. 'Unfortunately, I expect consumer attorneys to request further depositions on multiple categories to drive up their fees. I routinely see over 50 matters for examination in a single deposition notice,' he said. Kaufman, Wirtz and Stuhlbarg all agreed the Song-Beverly Act would likely require further reforms. For Kaufman and Wirtz, the priority is addressing the California Supreme Court's decision in Rodriguez v. FCA US, which held that used cars sold with an unexpired portion of a manufacturer's warranty do not qualify as new motor vehicles under the law. 'What the California legislature really needs to focus on is making the Lemon Law clear that it applies to any vehicle that has any part of a new car warranty remaining. That is what the consumers in California need,' Wirtz said. Kaufman said, 'The California Supreme Court invited the legislature to take up the issue by changing the definition of 'new motor vehicle' to include used vehicles sold with a balance remaining on the original manufacturer warranty. We would like to see Sacramento address the Rodriguez case by including used vehicles in the definition of 'new motor vehicles.'' Stuhlbarg agreed that further lemon law reform was needed, though for different reasons. Judging by the current data on filings and AB 1755's aim to reduce backlogs, 'Further reform is needed to decrease the number of lawsuits,' he said. The Los Angeles/San Francisco Daily Journal is a publication for lawyers practicing in California, featuring updates on the courts, regulatory changes, the State Bar and the legal community at large.
Miami Herald
23-05-2025
- Automotive
- Miami Herald
Ford files shocking $300 million RICO lawsuit
Back in 1970, California passed the Song-Beverly Consumer Warranty Act. The law protects California car buyers, and other consumer types, from buying faulty vehicles. The law ensures that every retail sale of consumer goods in the state is accompanied by certain implied warranties and limits retailers from voiding those warranties. Related: Elon Musk confirms Tesla's summer plans Song-Beverly is one of the strongest consumer protection laws in the country. Retailers sued under the law must reimburse litigation costs and attorneys' fees. So if you buy a car from Ford that is a lemon, the car manufacturer could be required to buy back or replace your vehicle if, after a "reasonable" number of repair attempts, no solution is found. As one might imagine, people looking to game the system can sometimes abuse such a strong consumer protection bill. The number of Lemon Law claims filed has soared in recent years. "These numbers are even more dramatic in California due to the Song-Beverly Act and its fee-shifting provisions (which creative plaintiffs' attorneys may use as leverage against manufacturers)," according to The auto industry, which comprises most of the Song-Beverly Act claims, faced nearly 15,000 warranty complaints in 2022 and even more in 2023. This week, Ford decided to fight back against this rising tide with a shocking lawsuit. On Friday, Ford filed a civil racketeering lawsuit against lemon-law firms and lawyers in California. Ford alleges that three law firms led by the Knight Law Group LLP and six affiliated attorneys and staff members violated the Racketeer Influenced and Corrupt Organizations Act, overbilling for legal fees by submitting court timesheets recording more than 24 hours worked in a single day. "Ford's civil RICO suit against a number of lawyers and law firms is a result of a comprehensive investigation that uncovered what's alleged to be a massive scheme to submit phantom invoices filled with 'ghost hours' for work that was never performed to deceive California judges, dupe their own clients and to defraud auto manufacturers, Doug Lampo, Ford counsel," said in a statement to The Detroit News. Ford says it has identified hundreds of cases in which at least $100 million of legal bills were fraudulently charged to manufacturers by lemon-law lawyers. Related: Shocking China news sends Detroit Big 3 shares roaring In one instance, one attorney billed as many as 57.5 hours on November 30 across multiple cases. That same lawyer billed more than 20 hours on at least 66 occasions. Ford also says The Knight Law Group routinely brought in other law firms and attorneys as co-counsel to handle trial work, often overstaffing cases with 10 to 15 lawyers. Ford is seeking at least $100 million in damages, but RICO statutes could triple those damages. Ford says these law firms are taking advantage of a law meant to protect consumers to fraudulently enrich themselves. "Defendants abused their positions of trust as members of the Bar to deceive the courts," said Daniel Saunders, the Ford attorney who filed the lawsuit. Ford says that at least half of the legal fee applications on behalf of vehicle buyers over the last decade were inflated. More Ford news Ford CEO Jim Farley has strong take on tariffs Ford makes a drastic decision in the face of tariff overhangFord CEO Jim Farley flags concerning behavior from new car buyers The lawsuit also suggests that Ford wasn't the only victim of this scheme. "Ford has identified hundreds of cases in which not less than $100 million of legal bills were unlawfully sought and collected," Saunders wrote, according to The Detroit News. "A review of fee claims in multiple cases takes one on a magical mystery tour of fictitious billings, including individual attorneys who supposedly worked more than 24 hours per day or simultaneously attended different trials or depositions in geographically distant jurisdictions." Related: Veteran fund manager unveils eye-popping S&P 500 forecast The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
22-05-2025
- Automotive
- Yahoo
Ford files $100-million suit over alleged 'Lemon Law' scheme by L.A. lawyers
Ford Motor Co. has filed suit against multiple prominent Southern California law firms and attorneys, alleging that they engaged in a vast and sophisticated fraud scheme to collect at least $100 million in "phantom legal fees' under the state's Lemon Law. In a complaint filed early Wednesday in Los Angeles federal court, the Dearborn, Mich.-based car manufacturer claimed the lawyers violated the Racketeering Influenced and Corrupt Organizations (RICO) Act by working together to carry out the alleged fraud for years. Describing the invoices it received from California lawyers as a 'magical mystery tour of fictitious billings,' Ford claimed that attorneys named in the lawsuit took advantage of a statute designed to protect consumers from faulty products, including cars. Under the Song-Beverly Consumer Warranty Act, commonly known as California's Lemon Law, automakers are required to pay for legal work, court fees and related expenses associated with defective vehicles. That requirement, Ford alleged, has created an opportunity for lawyers to pad their bottom line by claiming more hours than they actually worked or reporting having been in more than one place at the same time. The complaint alleged that Steve B. Mikhov was the 'ringleader of the criminal enterprise' and that he and Knight Law Group, the Los Angeles-based firm where he was a founding partner, 'orchestrated' the scheme. Emails and phone messages seeking comment from Knight Law Group were not immediately returned Wednesday, nor were requests for comment made via email addresses and cellphone numbers for Mikhov listed in online databases. Ford, which is being represented by New York-based Kasowitz Benson Torres LLP, claimed in the complaint that an investigation uncovered payments of legal fees that reflected work that never could have happened. For instance, the auto giant alleged that Knight partner Amy Morse 'billed more than 20 hours per day on at least 66 occasions, 34 of which exceeded 24 hours, including an ostensibly heroic but physically impossible 57.5-hour workday in November 2016." Morse did not immediately respond to an email seeking comment Wednesday. Edward McNally, a former federal prosecutor and lawyer for Ford at Kasowitz Benson Torres, described how the alleged scheme worked in an emailed statement. 'When you look at any single legal bill for a single case it might show only one or two hours for a given lawyer on a given day—nothing to draw suspicion," he said. "However, when Ford searched across public filings, as alleged in the complaint, the conduct in this case was carried out through a sophisticated and unlawful enterprise of attorneys and law firms that spread their fraudulent and inflated bills across thousands of cases and against many auto makers.' The other defendants who benefited from the alleged conspiracy, Ford claimed, include Knight partner Roger Kirnos and former Knight paralegal Dorothy Becerra; L.A.-based Altman Law Group and its founder and former member attorney, Bryan C. Altman; and San Diego-based Wirtz Law APC and Richard Wirtz, its founder and managing partner. Emails and phone messages seeking comment from Kirnos, Altman Group, Wirtz Law, Altman and Wirtz were not immediately returned Wednesday. Contact information for Becerra could not be located immediately Wednesday. Daniel J. Fetterman, a former federal prosecutor and partner at Kasowitz Benson Torres, said the firm's automaker client has been in contact with federal authorities. 'Ford reported this conduct to the United States Attorney's Office and has been cooperating with a grand jury subpoena served on it in the fall of 2021," Fetterman said. Ciaran McEvoy, a spokesman for the U.S. Attorney's Office in L.A., declined to comment Wednesday. Sherman 'Tiger" Joyce, president of the American Tort Reform Assn., said via email that the alleged fraudulent scheme "is an affront to the civil justice system and these lawyers who have harmed consumers by needlessly dragging out and driving up costs of litigation should be held accountable." Ford claimed in its filing that the scheme 'has an informal governing structure that at certain times operates as a command hierarchy," meaning it had a chain of command. The arrangement, Ford alleged, violated the RICO Act, which has played a central role in cases against high-profile organizations including Italian crime families, Mexican drug cartels and the Hells Angels motorcycle gang. Ford argues it is owed civil damages under the federal racketeering law. The automaker's lawsuit said the attorneys involved "associated with one another in the Enterprise for the common purposes of preparing and filing fraudulent fee applications and billing records, negotiating fraudulent settlements, splitting inflated fees, and funneling fraud proceeds into attorney distributions and extravagant purchases.' Ford said the nine-figure damage total it is seeking would recoup what it lost in allegedly bogus payouts, along with thousands of hours investigating the alleged scheme and what the company described as the harm to its reputation it sustained as a result of representations the lawyers allegedly made in court and online about the amounts they recovered from the automaker. Kyla Christoffersen Powell, president and chief executive of the Civil Justice Assn. of California, said in an emailed statement that the alleged fraud scheme highlighted longstanding problems with the state's Lemon Law. "The shocking attorney conduct outlined in today's filing by Ford underscores the need for the Legislature to consider additional reforms to the lemon law that remove perverse incentives for attorneys," she wrote. Sign up for Essential California for news, features and recommendations from the L.A. Times and beyond in your inbox six days a week. This story originally appeared in Los Angeles Times.
Los Angeles Times
22-05-2025
- Automotive
- Los Angeles Times
Ford files $100-million suit over alleged ‘Lemon Law' scheme by L.A. lawyers
Ford Motor Co. has filed suit against multiple prominent Southern California law firms and attorneys, alleging that they engaged in a vast and sophisticated fraud scheme to collect at least $100 million in 'phantom legal fees' under the state's Lemon Law. In a complaint filed early Wednesday in Los Angeles federal court, the Dearborn, Mich.-based car manufacturer claimed the lawyers violated the Racketeering Influenced and Corrupt Organizations (RICO) Act by working together to carry out the alleged fraud for years. Describing the invoices it received from California lawyers as a 'magical mystery tour of fictitious billings,' Ford claimed that attorneys named in the lawsuit took advantage of a statute designed to protect consumers from faulty products, including cars. Under the Song-Beverly Consumer Warranty Act, commonly known as California's Lemon Law, automakers are required to pay for legal work, court fees and related expenses associated with defective vehicles. That requirement, Ford alleged, has created an opportunity for lawyers to pad their bottom line by claiming more hours than they actually worked or reporting having been in more than one place at the same time. The complaint alleged that Steve B. Mikhov was the 'ringleader of the criminal enterprise' and that he and Knight Law Group, the Los Angeles-based firm where he was a founding partner, 'orchestrated' the scheme. Emails and phone messages seeking comment from Knight Law Group were not immediately returned Wednesday, nor were requests for comment made via email addresses and cellphone numbers for Mikhov listed in online databases. Ford, which is being represented by New York-based Kasowitz Benson Torres LLP, claimed in the complaint that an investigation uncovered payments of legal fees that reflected work that never could have happened. For instance, the auto giant alleged that Knight partner Amy Morse 'billed more than 20 hours per day on at least 66 occasions, 34 of which exceeded 24 hours, including an ostensibly heroic but physically impossible 57.5-hour workday in November 2016.' Morse did not immediately respond to an email seeking comment Wednesday. Edward McNally, a former federal prosecutor and lawyer for Ford at Kasowitz Benson Torres, described how the alleged scheme worked in an emailed statement. 'When you look at any single legal bill for a single case it might show only one or two hours for a given lawyer on a given day—nothing to draw suspicion,' he said. 'However, when Ford searched across public filings, as alleged in the complaint, the conduct in this case was carried out through a sophisticated and unlawful enterprise of attorneys and law firms that spread their fraudulent and inflated bills across thousands of cases and against many auto makers.' The other defendants who benefited from the alleged conspiracy, Ford claimed, include Knight partner Roger Kirnos and former Knight paralegal Dorothy Becerra; L.A.-based Altman Law Group and its founder and former member attorney, Bryan C. Altman; and San Diego-based Wirtz Law APC and Richard Wirtz, its founder and managing partner. Emails and phone messages seeking comment from Kirnos, Altman Group, Wirtz Law, Altman and Wirtz were not immediately returned Wednesday. Contact information for Becerra could not be located immediately Wednesday. Daniel J. Fetterman, a former federal prosecutor and partner at Kasowitz Benson Torres, said the firm's automaker client has been in contact with federal authorities. 'Ford reported this conduct to the United States Attorney's Office and has been cooperating with a grand jury subpoena served on it in the fall of 2021,' Fetterman said. Ciaran McEvoy, a spokesman for the U.S. Attorney's Office in L.A., declined to comment Wednesday. Sherman 'Tiger' Joyce, president of the American Tort Reform Assn., said via email that the alleged fraudulent scheme 'is an affront to the civil justice system and these lawyers who have harmed consumers by needlessly dragging out and driving up costs of litigation should be held accountable.' Ford claimed in its filing that the scheme 'has an informal governing structure that at certain times operates as a command hierarchy,' meaning it had a chain of command. The arrangement, Ford alleged, violated the RICO Act, which has played a central role in cases against high-profile organizations including Italian crime families, Mexican drug cartels and the Hells Angels motorcycle gang. Ford argues it is owed civil damages under the federal racketeering law. The automaker's lawsuit said the attorneys involved 'associated with one another in the Enterprise for the common purposes of preparing and filing fraudulent fee applications and billing records, negotiating fraudulent settlements, splitting inflated fees, and funneling fraud proceeds into attorney distributions and extravagant purchases.' Ford said the nine-figure damage total it is seeking would recoup what it lost in allegedly bogus payouts, along with thousands of hours investigating the alleged scheme and what the company described as the harm to its reputation it sustained as a result of representations the lawyers allegedly made in court and online about the amounts they recovered from the automaker. Kyla Christoffersen Powell, president and chief executive of the Civil Justice Assn. of California, said in an emailed statement that the alleged fraud scheme highlighted longstanding problems with the state's Lemon Law. 'The shocking attorney conduct outlined in today's filing by Ford underscores the need for the Legislature to consider additional reforms to the lemon law that remove perverse incentives for attorneys,' she wrote.
Yahoo
21-05-2025
- Automotive
- Yahoo
Ford accuses law firms of fraudulent overbilling, including a 57-1/2 hour workday
By Jonathan Stempel (Reuters) - Ford sued several California lawyers and law firms on Wednesday, accusing them of fraudulently inflating their legal fees under that state's Lemon Law, including one instance where a lawyer allegedly billed 57-1/2 hours in one day. In a complaint filed in Los Angeles federal court against nine defendants, Ford called the alleged improper billings a "magical mystery tour" of bogus work and time entries, spread across thousands of cases against several automakers so they would go undetected. Ford said the law firm Knight Law Group anchored the scheme, regularly bringing in other law firms to overstaff cases, sometimes with 10 to 15 lawyers. The Dearborn, Michigan-based automaker said it lost at least $100 million from the scheme over five years. It is seeking at least $300 million in damages for alleged violations of the federal anti-racketeering law known as RICO. Requests for comment on behalf of the defendants were not immediately returned. The complaint identified "numerous" alleged instances of lawyers billing more than 24 hours in a single day. Ford said the 57-1/2 hours that Knight partner Amy Morse allegedly billed on November 30, 2016 included 12.9 hours on "requests for admission," where parties ask opponents to admit that facts are true or documents are authentic. The automaker said another lawyer allegedly billed 29 hours to prepare for, travel to and attend two trials on the same day in Los Angeles and near San Francisco, about 400 miles apart. California's Lemon Law, the Song-Beverly Consumer Warranty Act, lets lawyers collect legal fees based on reasonably incurred time spent representing vehicle owners. The case is Ford Motor Co v Knight Law Group LLP et al, U.S. District Court, Central District of California, No. 25-04550.
