California Lawmakers Scramble To Fix ‘Lemon’ Vehicle Law

A mechanic works on a vehicle in Fresno in 2022. California’s lawmakers are scrambling to update California’s lemon law that gives car owners the right to demand car companies fix or replace defective vehicles under warranty. Photo by Larry Valenzuela, CalMatters/CatchLight Local

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 groups.

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.

CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.