There’s always a chance that brand new car you’ve had your eyes on will be a lemon. Hundreds of thousands of American vehicle consumers inadvertently purchase a “lemon” vehicle each year; the National Highway Traffic Safety Administration (NHTSA) estimates Americans unknowingly buy purchase 150,000 vehicles each year containing repeated, unrepairable defects. These defective vehicles, colloquially called “lemons,” can cost consumers thousands of dollars in repair costs, lost wages from being unable to work, alternative transportation costs, towing fees, and other expenses.
Automotive manufacturers across the world build lemons, including General Motors, Honda, Ford, Volkswagen and many more. Consumers stuck with lemons can feel stranded and isolated, but in fact they have a myriad of legal options for getting compensation. Each state has its own “lemon law” which protects consumers when they unknowingly buy a defective vehicle. These laws delineate what each state considers a lemon, what thresholds a consumer must prove their vehicle hits to start the lemon law process, and how long they can file those cases according to the state’s statutes of limitation.
There is one law that supersedes all state laws when it comes to breach of warranty: the Magnuson-Moss Warranty Act. This federal law follows the statute of limitations from the state in which the breach of warranty happened. If you buy a vehicle in Texas, for example, and you discover the defect while in Texas, your breach of warranty case would abide by Texas’s statute of limitations: four years.
The Act was first introduced in the U.S. Senate by Sen. Warren Magnuson (D-WA) on May 14, 1973. It passed the Senate on Sept. 12, 1973 before moving to the U.S. House of Representatives where it passed on Sept. 19, 1974. After going through committees, it was signed into law by U.S. President Gerald R. Ford on Jan. 4, 1975.
The Act requires companies make clear statements in their warranties, otherwise those ambiguities will be held against the company in court.
The Act, signed into law in 1975, in response to allegations of consumer rights violations by businesses in the 20th century. Throughout the 19th and early 20th centuries America’s main consumer law was caveat emptor: let the buyer beware. It was incumbent on the consumer themselves to take requisite caution when making purchase. However, as the economy grew more complex and more steps separated the producer from the end consumer, newer laws were needed.
The Uniform Commercial Code (UCC) originally tried harmonizing sales and commercial transaction laws across America. States can adopt the code into their statutes either fully or partially, even though the Code itself is not law. Every U.S. state but Louisiana adopted UCC rules, who instead opted to keep their own civil law traditions.
This didn’t go far enough in stemming manufacturers’ abuse of consumers, and as such consumers demanded change from their elected officials. They wanted government oversight for warranty law and legal support when they take manufacturers to court. The Magnuson-Moss Warranty Act provides consumers and their attorneys the tools and support they need.
The Magnuson-Moss Warranty Act makes manufacturers designate any warranties they offer as either “full” or “limited” and specify exactly what they cover in a single, clear, easy-to-read document. They must also make the warranty conspicuously available for consumer review, allowing consumers to shop for warranty coverage before making a purchase.
The Act also prohibits these companies from disclaiming or modifying implied warranties with their written ones. This means consumers are always entitled to the basic protections of “implied warranties of merchantability;” that a good sold must do what that good is supposed to. For example: a new car should operate and convey passengers and cargo from one place to another safely. A car that cannot do this does not conform to the implied warranty of merchantability.
Magnuson-Moss makes it easier for consumers to sue for breach of warranty by making it a violation of federal law, bringing the case out of the individual state’s hands and into the federal purview. It also lowers the amount of economic damages normally needed for federal jurisdiction.
The Act does allow for companies to require consumers first attempt an “informal dispute settlement procedure,” better known as arbitration, before filing a breach of warranty claim. Lemon law attorney Andrew Ross with Allen Stewart P.C. said arbitration rarely works out in favor of the consumer. Arbitration usually ends in a single day inside a conference room and not a courthouse, but often the “best case scenario” still ends relatively poorly for the consumer. Ross said the manufacturer often sends an engineer who is advised by a lawyer “behind the scenes.”
“It’s been my experience that those arbitrations are a waste of time,” Ross said. “Rarely does the BBB render a decision that satisfies the consumer.”
He said the best consumers can usually hope for in arbitration is a buyback, but there’s no guarantee that goes smoothly for the consumer.
“When they award a buyback, they don’t tell you what the figures are,” he said. “First you must accept the decision, and then they’ll tell you what the figures are. It’s a bad situation for the consumer.”
Ross said 90 percent of lemon law claims never go to court, as even the manufacturer would prefer a speedy end to the situation. He said manufacturer almost always offer a settlement in lieu of going to trial; your attorney will work with you to determine whether the settlement is acceptable.
Ross said the time between signing on to represent the client and the client’s case resolving is generally 19 weeks.
The Magnuson-Moss Warranty Act does allow for class-action lawsuits against manufacturers for breach of warranty, though Ross said individual claims end with much higher settlement payouts than a class-action one.
Allen Stewart P.C. represented several clients affected by the Ford Focus and Ford Fiesta transmission problems caused by the “PowerShift” transmission system.
The PowerShift system, used in 1.5 million vehicles including the 2011-2016 Ford Fiesta and 2012-2016 Ford Focus, used a dual clutch system. One clutch operates the even numbered gears, while the other clutch operates the odd numbered gears. Both shared the same inner transmission shaft. The PowerShift gearbox apparently made the vehicle lunge, jerk, shudder, and hesitate during acceleration.
Ford issued two customer service programs throughout the years regarding the Powershift transmission, which extended warranty coverage for its input shafts, clutch, software calibration and transmission control module.
Owners of these vehicles could have participated in a class-action lawsuit against Ford or pursued individual claims. Ross said those clients who opted out of the class-action suit received much higher settlement payouts, ranging from $2,700 to $4,450.
“In the class action, the max cash someone could get was $2,325 in their pocket,” Ross said. “To get that amount, they had to have at least eight repairs to their transmission.”
Ross said individual claims, in addition to offering higher returns, require much less extensive documentation than class-action participation.
“It takes a whole lot of effort and verification,” Ross said. “Many people aren’t going to get much money. I can tell you none of the clients had close to eight repairs on their transmission.”
Your vehicle’s manufacturer is legally required to fix any recalled problems free of charge. If the dealership refuses to fix the part or tries to charge you for the repair, contact the manufacturer immediately. The Highway Safety Act of 1970, which created the NHTSA, requires car manufacturers to pay for the recall and replacement of a defective part.
The single best step you can take for the health of your lemon law claim is hiring a qualified, experienced lemon law attorney. Lemon law lawyers know the ins and outs of state and federal warranty law, and will explain to you if repurchase, replacement, or settling out of court is your best option. Your lawyer will work closely with you throughout the claims process, keeping you updated on the latest developments and requesting additional information or documentation when necessary.
Pursuing a lemon law claim without hiring a lemon law attorney will almost certainly end in disaster. Attorney and firm owner Allen Stewart himself said he’s personally witnessed a judge advise a claimant to please consider hiring an attorney before continuing with their case. He said he has never once seen a claimant representing themselves prevail in court.
“Even the simplest things in the law can be complicated because if you miss the timeline, you could lose it all,” Stewart said. “If you file the wrong paperwork, it could set you back time and money, and you might lose the case.”
Ross said a claimant representing themselves risks losing in court – or not even making it to court at all. Attorneys know how the court works, how its rules and deadlines work, and how to properly submit paperwork and make requests of the court.
“If you’re missing some of those things, or if you don’t follow certain rules, your claim can be completely tossed out,” Ross said. “You run the risk of having your case thrown out or getting a judgement that prevents you from trying to present your case again.”
If the manufacturer fails to repair, replace, repurchase, or provide your recalled vehicle’s loss value, they are violating the warranty and a lawyer may be able to assist you. Lemon law attorneys help their clients by dealing directly with the manufacturer on the clients’ behalf, working to promptly resolve the issue and get their clients back on the road. Thanks to the Magnuson-Moss Warranty Act, attorneys can seek their fees directly from the manufacturer, meaning a client can obtain legal counsel without having to pay attorneys’ fees directly out of pocket.
The lemon law attorneys of Allen Stewart P.C. have decades of experience with automotive breach of warranty claims and have fought for their clients and won. They aren’t afraid to take major manufacturers to court to get the justice their clients deserve and have the track record to prove it. If your vehicle’s manufacturer isn’t holding up their end of the warranty, the lemon law experts at Allen Stewart P.C. make sure you get the compensation you deserve. The longer you wait the less likely you are to secure a good outcome, so reach out to Allen Stewart P.C. today.