California Supreme Court Limits Scope of Lemon Law in Rodriguez v. FCA US, LLC
On October 31, 2024, the California Supreme Court issued its decision in Rodriguez v. FCA US, LLC. This ruling significantly narrows the types of vehicles and cases covered by California’s lemon law, the Song-Beverly Consumer Warranty Act.
In its decision, the court held that a used car sold with the balance of the original manufacturer’s warranty does not qualify for replacement or reimbursement under the Song-Beverly Act.
My firm has handled numerous cases where consumers purchased used cars with the remainder of the manufacturer’s warranty. Until now, we were able to negotiate favorable reimbursement settlements with manufacturers in these situations. Unfortunately, the Rodriguez decision changes that, making such outcomes far less likely.
Alternative Options Under Federal Law
While Rodriguez limits remedies under California law, all is not lost. If you purchase a used car with the balance of a manufacturer’s warranty, we can still represent you under the federal Magnuson-Moss Warranty Act. However, the remedies available are different.
In most cases under Magnuson-Moss, your compensation will be a cash payment based on the reduction in the vehicle’s value due to the defects, plus attorney’s fees. You will not be entitled to a replacement vehicle or a full reimbursement of your purchase price.
Alternative Options as Consumer Fraud
We may also be able to pursue a claim based on the Consumers Legal Remedies Act, Civil Code § 1750 et seq. This claim would follow misrepresentations or omissions made by the dealer selling the vehicle. Perhaps the dealer informed you that they had thoroughly inspected the vehicle prior to sale; however, if they had thoroughly inspected the vehicle then they would have or should have known about the defects or problems you experienced. Each situation needs to be evaluated on a case-by-case basis.
Guidance on Vehicle Types and Remedies
Below is a quick reference memo I prepared for my team on how the Rodriguez decision affects the various types of lemon law cases we handle:
1. New Cars with New Car Warranties:
- Song-Beverly applies. We can pursue refund or replacement remedies.
2. Demonstrator Vehicles with New Car Warranties:
- Song-Beverly applies. We can pursue refund or replacement remedies.
- Note: Dealer demonstrators, often called “Brass Hats,” are vehicles driven by dealership executives (usually under 10,000 miles) to showcase the model. These vehicles are considered “new” under Song-Beverly when sold to the first retail buyer because they include the manufacturer’s warranty.
3. Certified Pre-Owned (CPO) Vehicles with Manufacturer-Issued Warranties:
- Song-Beverly applies. If the CPO warranty is issued by the manufacturer at the time of sale, we can pursue refund or replacement remedies.
4. Non-CPO Used Cars with the Balance of the Manufacturer’s Warranty:
- Song-Beverly does NOT apply.
- We can file under Magnuson-Moss for diminution in value plus attorney’s fees. Clients must understand that we are seeking compensation for reduced value, not replacement or reimbursement.
5. Used Cars with Dealer-Issued Warranties:
- These vehicles are not eligible for replacement or reimbursement remedies from the manufacturer under Song-Beverly.
- Depending on the circumstances, we may pursue remedies against the selling dealer (e.g., undisclosed collision damage, elder financial abuse, or falsified financing applications).
This ruling underscores the importance of educating clients about their legal options and setting realistic expectations about potential outcomes. While Rodriguez represents a setback, we remain committed to advocating for our clients within the scope of the law.
The Dealership Cheated Me and is Now Out of Business