It's well known that if you've purchased a defective vehicle, you might be able to receive a replacement or a refund under state or federal "lemon laws." As was shown in Wisconsin, however, some extreme cases can even bring about larger reward payments, although they require patience on the part of the consumer.
Just ask Marco Marquez. He bought a new Mercedes-Benz E320 in 2005, but experienced major issues with the vehicle. His dealer was unable to repair the car even after numerous service calls. Launching his lemon law claim didn't initially bear fruit, but later a judge ordered Mercedes-Benz to pay $482,000 in damages and legal fees – an amount roughly 10 times the price of the vehicle when new.
Despite its attention-grabbing award, Marquez's case might not be the ideal lemon law precedent. After initially reporting problems with his vehicle, two years passed before a judge ruled in Marquez's favor, but the carmaker appealed, winning a judgment that saw his initial award overturned. It wasn't until some five years later that a different court overturned that decision, agreeing with Vince Megna, Marquez's attorney, that the jury verdict overturning the judge's ruling was not supported by the evidence. Had Mercedes-Benz paid Marquez after the first verdict the company would have been out only $200,000 and change. Only $168,000 of the current award actually represented the vehicle's price (doubled, in keeping with Wisconsin's stringent lemon laws), with the rest going towards legal fees.
What to do
If you get stuck with a lemon, here are some recommended steps for filing a claim. Keep in mind that while a federal law covers you, lemon laws change from state to state. Use this as a basic guide and follow up with your own state's attorney general for further guidance:
1. Make sure you have your paperwork in order. This should include all correspondence with the dealer and manufacturer, plus sales and service records. On that note, make sure you have followed the warranty requirements and have proof of doing so. If you've reached the point where you're thinking about filing a lemon law claim, communication should be done in writing, sent via certified mail with return receipt. Save copies of everything for your records.
2. Find an experienced lemon law lawyer. Face what should be an obvious fact: you're not going to be able to do this yourself. Don't hire a lawyer who asks for a retainer or fee, or one who operates on a contingency basis. Bob Silverman notes that any good lemon law firm works on the "fee-shifting" basis; that is, if you win your case the court typically orders the defendant (the carmaker) to pay your legal fees. And if you lose, you shouldn't have to pay the lawyer anything.
3. Lemon laws require that you notify the company that you intend to file a lemon law case against it. Your state's lemon law will spell out how and when you need to make this notification, but typically you need to send the manufacturer a letter explaining the problem, and what you want to do about it. It is generally recommended that you request that it buy the car back from you or replace it.
The late Clarence Ditlow, who served as executive director of the Center for Auto Safety, stressed that "lemon laws are important, because cars are the second-largest purchase a consumer makes (after a house). Our objective is to make it as easy to return a lemon car as a lemon coaster. Cars are also the primary means of transportation in this country, so consumers can and do lose their jobs if they have a lemon and can't get to work."
Lemon laws differ from state to state, and Wisconsin's is one of the strongest. The state's law allows lemon buyers to demand a replacement or refund, with carmakers given only 30 days to respond. The automaker can face the cost of the repairs or, in some cases, will have to pay up to twice or triple (what's known as a treble damage) the amount of the purchase price as well as paying the car owner's legal fees if the carmaker is found guilty.
Bob Silverman, a partner at the Ambler, PA, law firm of Kimmel & Silverman and a leading lemon law attorney, said that the Wisconsin award was one of the biggest he has seen. But more important than the amount of the award, said Silverman, the Wisconsin judgment was a victory for consumers, and "sent a signal" to carmakers who sell a customer a defective car and then don't make good on their responsibility to repair it, replace it, or promptly give the customer a refund.
"When car companies act with impunity and don't pay, it not only angers the customers, it angers the judges," noted Silverman. "The judges want to prevent this from happening again, and one way to keep manufacturers from disregarding lemon laws is to hit them with damages like this. So the carmakers will think twice about not complying with lemon laws in the future."
Ditlow agreed that the award was "appropriate, because, in most states auto companies benefit by delaying, because consumers will give up out of frustration." Strong laws like the one in Wisconsin "change the calculus of delay by putting the economic burden of delay on the manufacturer," he said. Mercedes-Benz, on the other hand, does not consider the issue a closed case.
"We pride ourselves on resolving most issues to the satisfaction of our customers," said Donna Boland, a Mercedes spokesperson. "However, every once and a while, no matter how long or hard we try, it's just not possible. This was one such case. We do not agree with the court's decision to vacate the jury's verdict (which was in favor of Mercedes-Benz) and instead impose a verdict in favor of plaintiff. So we are appealing on the grounds that the trial court abused its discretion by substituting its opinion for that of the jury."
As for the amount of the award, "keep in mind that it's largely a function of Wisconsin law and the interpretations therein, which, along with other factors, contributes to it not being your typical lemon law case," said Boland.
How much satisfaction (and monetary reward) consumers get will depend in large part on where they live. Besides Wisconsin, California and Ohio have some of the stronger lemon laws, according to Silverman. "The judges in those states are aggressive when it comes to hitting violators with judgments that act as a disincentive for other carmakers to violate the laws," he said.
New Jersey and Pennsylvania also have strong laws, but the courts in these states don't usually award double or treble-damage damages, said Silverman. "It's those treble-damage awards that really send the strongest signal to the carmakers not to violate the state's lemon law."
Some of the weakest lemon laws in the U.S. are in Maryland, New York and Delaware, according to Silverman. Ditlow added that Arizona, Colorado and Illinois also have weak lemon laws.
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