Newsom wants a do-over on the lemon car law he just signed. Will it hurt buyers?

CalMatters

In the chaotic final days of the legislative session, lawmakers jammed through major changes to California’s “Lemon Law ” that protects consumers from defective cars even as members complained that the complex legislation was rushed too quickly.

Gov. Gavin Newsom nonetheless signed the measure into law earlier this week, saying it was important to address a rising number of lemon law cases clogging the state’s court system.

But he did so reluctantly, only after lawmakers agreed to reconsider the legislation next year and make the reforms voluntary for automakers.

“This bill has drawn substantive opposition from several consumer groups and the majority of automakers, who were not party to the negotiations,” Newsom wrote in a statement to legislators. “While AB 1755 aims to speed resolution of lemon law claims and reduce litigation, many automakers … have expressed serious concerns.”

The last-minute bill and the governor’s demand for changes could create confusion for consumers and automakers while leaving some uncertainty about how much impact it will have on court workloads.

The bill adds new timetables and rules for consumers seeking reimbursement or a replacement for a defective vehicle.

When and if Newsom’s changes are made next year, automakers would be allowed to opt out of the reforms, creating two different legal courses for consumers, depending on their vehicle.

The impact on court caseloads also would be uncertain. But proponents said General Motors was the bill’s strongest supporter, and that company has the most lemon law cases, nearly 26 times more than Toyota, which opposed the legislation. Proponents say that since GM agreed to the reforms, that alone should ease the burden on California’s courts, even if other companies opt out.

Still, the confusion around Assembly Bill 1755 comes after several lawmakers said they were troubled that the bill was the product of secret negotiations between lobbyists who pressured legislators to pass the bill just days before the session adjourned Aug. 31.

“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 on Aug. 30. “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.”

Critics say Newsom calling for changes to the bill he just signed is further proof that lawmakers should have pumped the brakes on AB 1755 instead of racing to change the popular 54-year-old Lemon Law.

“The companies that make the most lemons and fail to invest in what it takes to build quality cars and address problems early on are the ones that are being rewarded by this bill,” said Rosemary Shahan of Consumers for Auto Reliability and Safety.

Newsom’s office declined to answer CalMatters’ questions about why he signed the bill instead of vetoing it. A spokesperson referred CalMatters to the message he included when he signed it — one of just 18 such messages Newsom included with the 1,017 bills he signed this year.

It could take several months before lawmakers pass the changes Newsom wants. In the meantime, the provisions of AB 1755 take effect next year.

Will the lemon law changes help car buyers?

The bill by Assemblymember Ash Kalra of San Jose and Sen. Tom Umberg of Santa Ana, both Democrats, passed easily despite a handful of lawmakers from both parties saying they were troubled by the last-minute rush. Some also questioned whether the bill would help consumers.

“I want to make sure that consumers are protected as well,” Downey Democratic Assemblymember Blanca Pachecosaid. “Those are our constituents. And so that is what we really should be caring about. And I don’t know if consumers are really protected.”

Kalra and Umberg had pitched their bill as a compromise between U.S. automakers, consumer attorneys and judges who came together to address a troubling backlog of lemon law cases in the courts.

The number of such cases in California courts climbed from nearly 15,000 in 2022 to more than 22,000 last year. In Los Angeles County, nearly 10% of all civil filings are now Lemon Law cases.

Proponents argue the bill will speed up the process of getting consumers a working vehicle, while also setting new procedural rules for the litigation process that will ease the burden on the courts.

“We are grateful to Gov. Newsom for adding his signature on AB 1755, which implements new fast-track deadlines and procedures that will make our lemon law easier for consumers to use while ensuring California continues to lead the nation in safeguarding consumers’ rights,” Nancy Drabble, CEO of Consumer Attorneys of California, said in a written statement.

Under the new law, auto companies must respond to a written consumer complaint in 30 days, and car companies would have to fix a defective vehicle or replace it within 30 days after that. Previously, proponents said there was no set timeline, and the new deadlines would resolve most cases before they go to court.

“The consumer can wait for months,” Drabble told lawmakers in August. “They may not get an answer. They may be ghosted.”

But critics, such as Shahan of Consumers for Auto Reliability and Safety, say the law Newsom signed contains other provisions that would harm car buyers.

She said it will shorten the time in which a customer can sue, reduce how much money they can receive in rebates and shrink the period they can use the lemon law to just six years instead of the entire life of a vehicle’s warranty, which can last longer.

Shahan said the real winners from AB 1755 are the U.S. car companies that backed the bill since they’re the ones most commonly sued under the state’s lemon law.

Between 2018 and 2021, General Motors had the highest rate of lemon law cases filed against it, one case for every 78 vehicles sold in California. Fiat Chrysler had one for every 107 vehicles; Ford had one for every 148 of its cars and trucks, according to figures Shahan’s organization compiled with other consumer groups.

By comparison, there was just one lemon suit filed for every 304 Volkswagens sold, one for every 476 Hondas and one for every 2,029 Toyotas.

Those figures are why nearly every foreign-owned auto company opposed AB 1755.

The foreign car companies wanted reforms to the state’s lemon laws, but they said the tighter schedule for litigation helps a company like GM that has hundreds of cases to resolve. They said it could prevent the companies that have fewer suits from taking the time to prepare their best case. The foreign car companies also said they were cut out of the negotiations.

“We shared a litany of concerns with the proponents that we believe exasperate, not alleviate, many of the current problems,” Kerry Fowler, a lawyer for Honda, told the Assembly Judiciary Committee on Aug. 30. “But those concerns have been ignored.”

Another example of a rushed bill?

If the point of the law was to address a massive uptick in lemon law cases jamming up the state’s court system, how will Newsom’s plan of giving a group of auto companies the right to opt out of the new rules solve the problem?

Assemblymember Kalra, the bill’s coauthor, told CalMatters he’s confident that the auto companies that pushed for the measure will embrace the new rules. General Motors, Stellantis (formerly Chrysler) and Ford supported the bill.

“I don’t see it as a major issue for (foreign companies) to opt out, since we’re going to be having the major manufacturers with most of the cases moving forward with it,” Kalra said. “I think that will really help to unclog the courts and get resolution to consumers much more quickly.”

Sen. Umberg, the bill’s coauthor, suggested that even companies that opposed the bill will comply with the reforms since, if they don’t, it would make them an easier target for the attorneys behind the massive uptick in lemon-law suits.

“If the manufacturers decide to opt out, I mean, the lemon law lawyers would love it, love it, love it, love it,” he said. “They have been very vigorous in their opposition.”

Kalra said he felt moving quickly on the bill was important and not waiting until the next session begins in January.

“In those few months, things can fall apart,” he said. “We (could have) lost the opportunity to update this important consumer-protection law.”

Critics, however, say that AB 1755 was the latest example of lawmakers rushing a consequential bill, leaving little time to fully understand, vet or debate a measure that will have broad impact for years across California.

“Part of the point of having a full-time Legislature … is taking the time to deliberate and to really comb over these bills and make informed decisions,” said Scott Kaufman, a lobbyist for the Howard Jarvis Taxpayers Association. “That doesn’t seem to be happening in way too many cases.”

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This story was originally published by CalMatters and distributed through a partnership with The Associated Press.