The California Supreme Court has upheld an appellate ruling that holds people who buy used cars must explicitly purchase an original manufacturer’s warranty to be able to demand coverage of their vehicle under a state consumer protection law.
Justice Goodwin Liu wrote the 7-0 opinion, resolving a longstanding dispute from named plaintiff Everardo Rodriguez against FCA US regarding the terms of the California Song-Beverly Consumer Warranty Act.
The complaint originated in Riverside County Superior Court and advanced to the California Fourth District Appellate Court. The root issue was Rodriguez’s 2013 purchase of a 2011 Dodge Ram truck from Pacific Auto Center in Fontana. Although the vehicle’s original three-year, 36,000-mile bumper-to-bumper warranty had expired — the odometer had passed 55,000 miles — a five-year, 100,000-mile powertrain warranty from FCA remained intact.
Rodriguez sued in April 2018 because FCA wouldn’t refund or replace the truck despite six service visits for engine issues from March 2014 through May 2015. The county judge granted summary judgment to FCA, which the appeals panel affirmed.
The key legal language, at the initial ruling from Judge Jackson Lucky, was determining the Song-Beverly Act phrase “other motor vehicle sold with a manufacturer’s new car warranty” doesn’t cover sales of “previously owned vehicles with some balance remaining on the manufacturer’s express warranty.”
Liu said the court found certain used cars can meet the legal definition of “new motor vehicles” under the law, such as those owned by dealers for use as demo models or if the sale terms expressly include a manufacturer’s new car warranty. Liu quoted the appellate opinion explaining: “What makes these vehicles unique is that even though they aren’t technically new, manufacturers (or their dealer-representatives) treat them as such upon sale by providing the same type of manufacturer’s warranty that accompany new cars.”
FCA argued that these sales are distinguishable because although vehicles have been driven before an initial retail consumer purchase, “demonstrators are not warranted prior to sale. In every case, the first customer to purchase or lease a demonstrator or dealer-owned vehicle receives a new warranty arising in that transaction, directly from the manufacturer.”
In other words, no warranty exists while the manufacturer or dealer owns the vehicle. Liu said the fact lawmakers singled out such a narrow class of inventory when drafting the Song-Beverly Act shows an intent to separate those transactions from secondary purchases of vehicles with unexpired warranties.
“Like the Court of Appeal,” Liu wrote, “we think that if the Legislature had intended to define ‘ “new motor vehicle” to include a potentially vast category of used cars’ with unexpired new car warranties, ‘it would have been done so more clearly and explicitly than tucking it into a reference to demonstrators and dealer-owned vehicles.’ ”
Liu further explained that position in the larger context of the law and its distinctions between new and used products. He noted the original law dates to 1970, with motor vehicle provisions added in 1982 and the “refund or replace” provision incorporated in 1987.
“The Legislature has not otherwise adjusted the distinction between new and used cars in any manner that impacts our assessment of the question presented,” Liu wrote, despite subsequent tweaks affecting things like drive-train coverage for recreational vehicles, a 1998 amendment extending retail consumer protections to small businesses and a 2000 change limiting application to vehicles weighing less than 10,000 pounds.
Rejecting an argument those changes showed lawmakers’ consistent effort to expand protections, Liu explained the exclusion of used vehicles from the amendments underscores FCA’s position.
“The Legislature has maintained a distinction between ‘new’ and ‘used’ products and has specified the warranty protections applicable to each category,” Liu wrote. “The Legislature has shown it knows how to legislate on ‘used’ products, and it has employed clear language when it wants to make a ‘used’ product subject to the warranty protections that apply to the product when new.”
Rodriguez is represented by attorneys from the firm of Greines, Martin, Stein & Richland, along with Knight Law Group. The company did not respond to a request for comment.
FCA is represented by attorneys with the firms of Clark Hill and Horvitz & Levy.
“This is a huge win for all automakers and will eliminate thousands of potential lawsuits,” said attorney Brian Hom, of Clark Hill, in response to questions from The Record. “The ruling also validates the arguments we have been asserting for decades.”
“After six years, it is very satisfying to receive a unanimous ruling on a key issue in the automotive industry,” said attorney David Brandon, also of Clark Hill. “Our team is thrilled for FCA and we are proud to have helped make a significant impact in how these cases will be decided in the future.”