Is Your Car a "Lemon" or a Duck?

As a litigator I sometimes brush up against "The Law of Warranty".  Like so many terms of art, clients often ask, "What does it mean?" and, "What can it do for me?" Warrant means, "It is what it is!" If it's duck, it must quack. As for what it can do, the easy answer is "Get your money back!" So, if you buy a duck that doesn't quack your money must be refunded. Particularly, if failure to quack is a result of any defect in material or workmanship.

So how does the law of warranty apply to you? Second only to your home, your car is your next biggest consumer investment. You've got "a lot riding on it" and California's pro-consumer "Lemon Law" is here to help. If you think your car is a lemon, you need to ask some VERY important questions. For example,  "Is there a non-conformity?" Just because you think something's wrong, doesn't mean a non-conformity exists. Sometimes a vehicle may be designed in a way you dislike. Maybe it doesn't feel as "solid" or the doors vibrate a little. The internet is rife with blogs and chat rooms about particular car models and their alleged "defects". If you see the same complaints for the same model, it's possibly a design issue. Just because one duck doesn't quack as loud another doesn't mean its defective.  A non-conformity is a problem that most, if not all, other exact models DO NOT experience. For example, if the front windshield separates from the frame, that's a non-conformity. No reasonable manufacturer would design a car that way. A windshield is supposed to stay attached to the body. In all likelihood, such a condition is a defect in material or workmanship.

The next question is whether the non-conformity is covered by warranty? Since most factory warranties are "bumper-to-bumper", the answer is often "Yes, it is covered by warranty".  Even if YES, there are the limitations are time and mileage. Most coverage lasts 3 years/36,000 miles, whichever comes first. If you have any doubts, look at the repair order when you pick up the car. If it says "(N/C)" for no charge or "warranty" next to an item being replaced, then the dealer decided the repair was serious enough invoke the warranty. Note - tires, aftermarket parts and "dealer upgrades" are almost NEVER covered by warranty.

Once the warranty covers a non-conformity, the question of "substantial impairment" comes into play. This is an issue of reasonableness that is best to think of a sliding scale. The more a defect impacts one's ability to drive the car, the more "substantial" the impairment to use, value or safety. For example, multiple transmission  failures!

On the other hand, the less adversely one's ability to drive is affected, the less "substantial" the impairment. For example, intermittent failure of your seat warmers. While an inconvenience, this does not severely impact the vehicle's purpose, which is getting you safely from point A to point B.  Unless the symptom represents a more serious problems with, say, the electrical system, you probably don't have a lemon. Maybe a duck? Well....

If it seems the defect substantially impairs use, safety or value, then the next question is whether we have a, "reasonable number of repair attempts"? The simple act of presenting a car for repair is enough to establish a "repair attempt". In fact, the dealer doesn't have to commence any work or generate a written repair order. However, the safest way to establish a repair attempt is the existence of a repair order. Request one.

California's "Lemon Law" presumes a reasonable number of repairs. If your car has been subject to at least four (4) repair attempts for the same non-safety issue within 18 months of delivery (i.e., purchase) or 18,000 miles, or two (2)  repair attempts for the same problem affecting safety; or been in the shop a total of 30 calendar days for any number of different issues, then the presumption is met, which means the repair attempt minimum has been met.

Okay, so you have four or more repair orders evidencing repair attempts for the same problem within 18,000 miles or 18 months. The problem appears to substantially impair use, safety or value. Do you have a case? Well, maybe.... So far, all you've done is meet the "Lemon Law" presumption. It's rebuttable, of course....

How does the manufacturer rebut the presumption? The most common way is "Customer Misuse". This is fairly broad covering a variety of activities. Normally attempts at self-repair. Other examples could include vehicle modification with aftermarket parts or unreasonable exposure to "outside influences". Be careful installing that alarm system yourself or storing the car outside. You can't claim a paint job defective when your car is parked under a mulberry tree - unless the manufacturer warrants the paint job impervious to falling mulberries, in which case you have an "outside influence". By the way mulberries will stain anything!

Assuming you haven't made attempts at self-repair, used the vehicle for some purpose other than that for which it was intended (no "off-roading" in the station wagon) or unreasonably exposed it to outside influences, what should you do?

Step 1. Send a certified letter to the manufacturer at the address listed on the last page of your owner's manual. State that you believe you have a lemon and include copies of all repair orders.

A few days after receipt, someone from their corporate offices will contact you. They may ask if you want to participate in their own INTERNAL dispute resolution system and, "file a lemon law claim". You don't have to do this and there are good reasons you shouldn't. First, the purpose of this process is to find out what is going on with dealer. Maybe there has been miscommunication. Maybe this is a "problem dealer" with a history of customer service issues. Unbeknownst to many, the dealers and their repair facilities are not local offices for the manufacturer. Telling the dealer you think you have a lemon does not put the manufacturer on notice. Second, the manufacturer wants to gather as much information to start building its case against you. Third, consider this: Why would someone who works for the manufacturer admit the product is a lemon? Predictably, these "internal" claims are often denied.  If you do elect to pursue arbitration, the manufacturer's representative will bring this up time and again if you do not avail yourself of their internal process. Don't worry, such arguments have nothing to do with the merits of your case!

Next you will be be asked if you're willing to let a Field Technical Specialist ("FTS") inspect the car. This is someone who may be more knowledgeable than a dealer tech and able to order the right repairs. If you are so fed up with another hour at the dealer you may want to skip this step. The manufacturer is likely to use your decision not to allow an FTS to inspect your car as an example of your unreasonableness. Again, this has nothing to do with the merits of your case! Before you decide, however, keep in mind a skilled FTS may correctly identify the problem and order the right repair. It just might work for you.

Step 2. Decide whether to hire an attorney specializing in lemon law claims. Most people are concerned with cost when hiring an attorney. However, many competent lemon law attorneys will evaluate your situation for little or no charge, often taking these matters on contingency. Also, some attorneys may "shadow" you through the arbitration process for a flat fee.

If you go it alone, there are three major arbitration providers in California. Depending on the manufacturer, they are: The National Center for Dispute Settlement/California Dispute Settlement Project, The Better Business Bureau Autoline Program and DeMars & Associates - CAP Motors Program. Each has its own internal procedures but all basically operate the same way. The Better Business Bureau even allows you to file online.

The first decision in pursuing arbitration is whether you want an "in-person" or "documents only" hearing. Each has its pros and cons. Documents only will save you time. However, unless the non-conformity clearly affects "drive-ability" the arbitrator won't be able to evaluate the severity of the problem. Often, the arbitrator will recommend a test-drive to determine what exactly is occurring. An in-person hearing usually involves time away from work and family, but a well presented case can sway even the most curmudgeonly of arbitrators.

Step 3. File for arbitration. Most arbitration forms are relatively easy to fill out. Like I said, the BBB allows you to file online. The key is to identify each non-conformity and reference the appropriate repair order. Be sure to indicate the remedy you are requesting, i.e., "repurchase" or "replacement". Repurchase means you want your money back. Replacement means you want a new car of the same year, make and model. There are two other minor remedies "repair" and "reimbursement". These are rarely requested. A "repair remedy" is simply asking the arbitrator to order the manufacturer to fix the problem. "Reimbursement" is a request for moneys expended for repairs which should have been covered by the warranty. Depending on the program you can either ask for any combination of remedies or just one.

All California's arbitration providers must set cases for hearing within 40 days from filing, so you will hear from a case administrator relatively quickly. This person's job is to compile the case file with documents the parties wish to present and schedule a hearing date. They are not responsible for or allowed to make judgments. There will be some back and forth depending on your schedule and the manufacturer's. You will get a hearing date within 40 days. Normally, most hearings last about an hour.

Step 4. Present your case. You will do this either on your own or with the help of an attorney if you've chosen to hire one.

Here's where the rubber hits the road! Or, the Duck begins to quack!! Two rules: "keep it simple" and "less is more".  The arbitrator wants to hear what you have to say. BUT, DO NOT cloud your presentation with irrelevant data. The arbitrator is not your priest, therapist or guru! She doesn't care if your feelings are hurt, whether you "need time to heal" or are "getting help." Rather there are two questions on the arbitrator's mind, "Why are you here?" and "What do you want me to do?" Your presentation should answer these questions.  For example, "I'm here because I've taken my car in five times for the same problem." Or, "I'm here because it was in the shop 36 days." And, "this problem affects my ability to drive because..." Finally, "I would like my money back or a new car." Period, end of story. Really, your presentation can never be too short as long as you've answered these simple questions thoroughly. 

After your presentation, the manufacture's rep may ask you some questions. Depending on the severity of your concerns, you could be put on the spot. Simply answer any questions truthfully and to the best of your ability. Do not take anything personally! The manufacturer's job is to poke holes in your case. Sometimes, "I don't know" is the best answer anyone can give. Don't be evasive, do not make anything up, just be factual. Or better yet, refer to the repair orders.

Next, the manufacturer will present its side of the case. No matter what, do not interrupt. This may be difficult. You will have received the manufacturer's written response prior to the hearing, and trust me, not much has changed. Some manufacturer's reps restate "verbatim" what is contained in their answer. Some reps resort to logical fallacies like, "the FTS inspector found nothing wrong." Or, the repair order said, "unable to duplicate." Really? Then why did the dealer invoke the warranty and repair the same problem the second go around? You get the picture. Again, be respectful and then the others will show you respect as well.

Next, you will have an opportunity to question the manufacturer's rep. The operative word here is "question". Don't rehash your story. Don't make wild accusations. And, don't ask questions like, "Would you let your mother drive this car?" In fact, unless there's something glaringly missing from the manufacturer's story, don't bother. The arbitrator will appreciate it. Besides, as they teach us in law school, NEVER question a witness unless you know what he'll say.

After taking testimony, the arbitrator will conduct an inspection and possibly recommend a test-drive. Inspection is mandatory, the test-drive is optional. So, you or the manufacturer may ask, but the arbitrator can say no. Similarly, the arbitrator may recommend a test-drive and you as the customer may say no.

The purpose of inspection is to verify the VIN and current mileage. It is also an opportunity to demonstrate the non-conformity if apparent by visual inspection. Remember, an arbitrator is not a mind reader. You MUST be clear about the problem and point it out. The same goes for any test-drive. Tell the arbitrator and manufacturer's rep, "here is the problem!" as you begin the test drive. Don't question the arbitrator by saying, "Did you hear that?" You won't get an answer. He must show neutrality. Also, be prepared that the arbitrator must allow the manufacturer's rep or expert to comment on the alleged problem once you have identified it. Just listen to the comment and do not argue.

After inspection and possibly a test-drive, you will resume the hearing and give closing statements. The manufacturer will go first and you as the customer get the final word. Again, don't rehash your case. Be factual. For example, "I took my car in five times; as you can see with the test-drive my problem isn't fixed. I want my money back."

Step 5.  The Decision.

All California arbitration providers are required to issue a written decision. This means you will not receive an answer right away. Ordinarily you will receive it in the mail five to seven days after the hearing. A well crafted decision is always written to clearly explain the outcome of the hearing and the arbitrator's final decision. You will be asked to sign paperwork acknowledging your acceptance of the decision.

If the decision is in your favor, the manufacturer will be ordered to repair, refund or repurchase depending upon your remedy request (within 30 days).

If the decision in not in your favor, take comfort as it is a non-binding decision and you can still take the manufacturer to court. Most reasons for denial include failure to establish a non-conformity, failure to meet the "lemon law" presumption, lack of substantial impairment to use, safety or value, or "customer misuse". If you lost, go back to Step 2. But remember, if it quacks like a duck....

MARK T. RISNER is an attorney in private practice in Irvine, California. He litigates complex business and employment disputes. A seasoned lecturer on preventative transactions, trial, negotiation and settlement, he has served as an adjunct professor at Whittier College of Law in Orange County. [email protected]