The California Supreme Court on October 31, 2024 issued its ruling in Rodriguez v. FCA US, LLC. This decision severely limits the types of cases, and cars, that are covered by California’s lemon law, the Song-Beverly Act.
The Rodriguez decision holds 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 several cases where consumers buy used cars with the balance of the original manufacturer’s warranty. Until now, we were able to get good reimbursement figures in settlement from the manufacturers. This is no longer true thanks to the Rodriguez decision.
All is not lost, however. If you buy a used car with the balance of a manufacturer’s warranty, my firm can still represent you under the federal Magnuson-Moss Act. However, 99% of the time your remedy will be a cash payment based on the reduction in value of the vehicle because of the defects, plus attorney’s fees. You will not get a replacement vehicle or anything close to a full reimbursement of your purchase price.
Here’s a short memo I wrote to my office staff about this decision and how it affects the different types of lemon law vehicles we regularly see in my office:
- New cars sold with new car warranties—Song-Beverly applies and we can claim the refund/replacement remedies.
- Demonstrator cars sold with new car warranties—Song-Beverly applies and we can claim the refund/replacement remedies. Dealer demonstrators, also called “Brass Hats,” are used cars that the dealer’s owners or executives drive for usually less than 10,000 miles, just to show off the new line of cars and hopefully to generate interest in them. Dealer demonstrators are protected by Song-Beverly because they come with the manufacturer’s warranty to the first retail buyer.
- CPO (certified pre-owned) cars—if the CPO warranties come from the manufacturer and are issued when the buyer buys the CPO vehicle, then Song-Beverly applies and we can claim the refund/replacement remedies.
- Non-CPO used cars bought with the balance of the manufacturer’s warranty: Song Beverly DOES NOT apply but we can sue for diminution in value under Magnuson-Moss, and I am fine with signing up these cases so long as the client knows that we’re suing for diminution in value plus fees. We are not suing for replacement or reimbursement.
- Used cars sold with a dealer warranty: these cars are definitely not eligible for a replacement/reimbursement remedy from the manufacturer. There may be remedies against the selling dealer, depending on the facts of the case. In general, my firm looks for some additional angle other than the just defects in the car, such as undisclosed serious collision damage, elder financial abuse or falsifying a finance application without the consumer’s knowledge or consent.