California Supreme Court Watch

#21-50 Niedermeier v. FCA US LLC, S266034. (B293960; 56 Cal.App.5th 1052; Los Angeles County Superior Court; BC638010.) Petition for review after the Court of Appeal modified and affirmed the judgment in a civil action. This case presents the following issues: (1) Does the statutory restitution remedy under the Song-Beverly Act (Civ. Code, § 1790 et seq.) necessarily include an offset for a trade-in credit? (2) If the amount that a consumer has received in a trade-in transaction must be subtracted from the consumer’s recovery, should that amount be subtracted from the statutory restitution remedy or from the consumer’s total recovery?

Review granted: 2/10/2021

Case fully briefed: 11/22/2021

Cause argued and submitted: 12/05/2023 (GMSR’s Cindy Tobisman appeared for the petitioner)

Opinion filed: Judgment reversed: 3/04/2024

See the Court of Appeal Opinion.

See the Petition for Review filed by Greines, Martin, Stein & Richland.

See the Opening Brief on the Merits filed by Greines, Martin, Stein & Richland.

See the Reply Brief on the Merits filed by Greines, Martin, Stein & Richland.

See the Oral Argument.

See the California Supreme Court Opinion.  (Niedermeier v. FCA US LLC (2024) 15 Cal.5th 792.)

“California’s lemon law protects consumers who purchase defective vehicles or other goods. The lemon law, officially known as the Song-Beverly Consumer Warranty Act (Civ. Code, § 1791 et seq.; hereafter the Act or the Song-Beverly Act), permits new vehicle buyers who have been damaged by a manufacturer’s failure to comply with the Act to sue under section 1794 for the recovery of damages and other relief. (§ 1794, subd. (a).) The measure of a buyer’s damages in such an action includes ‘replacement or reimbursement as set forth in subdivision (d) of Section 1793.2 . . . .’ (Id., subd. (b).) If a manufacturer is unable to repair a new vehicle after a reasonable number of attempts, section 1793.2, subdivision (d) requires the manufacturer to promptly replace the vehicle or promptly pay restitution ‘in an amount equal to the actual price paid or payable by the buyer,’ as specified. (Id., subd. (d)(2)(B).) The manufacturer is entitled to reduce the amount of restitution by the ‘amount directly attributable’ to the buyer’s use of the vehicle prior to the time the buyer first delivered the vehicle for repair. (Id., subd. (d)(1); see also id., subd. (d)(2)(C).)

The questions before us are whether, in an action under section 1794, the statutorily-defined measure of restitution set forth in section 1793.2, subdivision (d)(2) … must be reduced by proceeds a buyer has received when trading in or selling a defective vehicle and, if so, whether the reduction should be assessed before or after penalties are calculated. The Court of Appeal below held that the statutory restitution remedy did not include the amount a plaintiff recovered after trading in a defective vehicle, and thus reduced the plaintiff’s damages award by the trade-in amount (here, $19,000). (Niedermeier v. FCA US LLC (2020) 56 Cal.App.5th 1052, 1060, 1061 (Niedermeier).)

We conclude that in an action pursuant to section 1794, neither a trade-in credit nor sale proceeds reduce the statutory restitution remedy set forth in section 1793.2, subdivision (d)(2) at least where, as here, a consumer has been forced to trade in or sell a defective vehicle due to the manufacturer’s failure to comply with the Act. Given this conclusion, we do not reach the issue of when such a reduction, if it were authorized, should be assessed. Accordingly, we reverse the judgment of the Court of Appeal.” [fns. omitted]

Justice Evans authored the opinion of the Court, in which Chief Justice Guerrero and Justices Corrigan, Liu, Groban, and Jenkins concurred.

Justice Kruger filed a concurring opinion, in which Justices Groban and Jenkins concurred.

In the news: Atkins, Calif. Justices Rule Fiat Can’t Offset Lemon Law Restitution, Law360 (Mar. 4, 2024).

In the news: Recovery Under Lemon Law Not Reduced by Credit, Metropolitan News-Enterprise (Mar. 5, 2024).

In the news: Supreme Court Rules For Consumer In Lemon Law Case, Daily Journal (Mar. 5, 2024) (subscription required).

In the news: California Lemon Law Just Got a Little Sweeter for Consumers, Nat.L.Rev. (Mar. 7, 2024).