IN THE SUPREME COURT OF
CALIFORNIA
LISA NIEDERMEIER,
Plaintiff and Respondent,
v.
FCA US LLC,
Defendant and Appellant.
S266034
Second Appellate District, Division One
B293960
Los Angeles County Superior Court
BC638010
March 4, 2024
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.
NIEDERMEIER v. FCA US LLC
S266034
Opinion of the Court by Evans, J.
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.;1 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) (hereafter sometimes
1
All further statutory references are to the Civil Code
unless otherwise indicated.
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NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
referred to as the statutory restitution remedy) 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.2 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.
I. FACTUAL AND PROCEDURAL BACKGROUND
In January 2011, Lisa Niedermeier purchased a new Jeep
Wrangler (hereafter the vehicle) from FCA US LLC (hereafter
FCA) for approximately $40,000. Almost immediately, and
2
As Niedermeier had traded in her vehicle, the issue before
the Court of Appeal was limited to whether the restitution
remedy included the amount Niedermeier recovered by trading
in the vehicle. FCA US LLC, however, assumes the same
analysis applies to proceeds from the sale of a defective vehicle,
and we find that the outcome would remain the same regardless
of whether a buyer trades in or sells a defective vehicle. Our
analysis therefore encompasses both circumstances throughout.
2
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
throughout the warranty period, Niedermeier experienced a
variety of problems with the vehicle’s transmission, engine, and
exhaust. These problems caused the vehicle to jerk, make
rattling and grinding noises, and emit noxious gases. They
caused the floorboard of the vehicle to heat up and impaired the
vehicle’s braking, acceleration, and turning. Niedermeier
presented the vehicle to FCA’s authorized repair facilities a total
of 16 times over four years, but the facilities were unable to
remedy the defects. Niedermeier’s vehicle was out of
commission for 75 days during the failed repair attempts.
In April 2015, Niedermeier asked FCA to buy back the
vehicle, but FCA declined. Niedermeier renewed her request in
early June 2015, and made a third buyback demand in late June
2015. FCA, however, declined to repurchase the vehicle. By the
time Niedermeier made the third buyback request, she had
presented the vehicle for repair 14 times. In October 2015, after
additional repair attempts failed, Niedermeier traded in the
vehicle for a new GMC Yukon. The purchase price of the Yukon
was $80,000, and the dealership gave Niedermeier a $19,000
trade-in credit towards that purchase.
In October 2016, Niedermeier filed a lawsuit against FCA
asserting causes of action for breach of express warranty under
the Act, breach of implied warranty under the Act, fraudulent
inducement and concealment, and negligent repair. A jury
found in Niedermeier’s favor on her claims for breach of express
warranty and breach of implied warranty and awarded her
$98,961.08. The jury found against Niedermeier on her claim
for fraudulent inducement/concealment. The jury also found
that FCA willfully violated the Act. The damages award
included: the purchase price of the vehicle, including charges
for transportation and manufacturer-installed options, finance
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NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
charges, sales tax, license fees, and other official fees pursuant
to section 1793.2, subdivision (d)(2)(B), a total of $39,799;
incidental and consequential damages of $5,000; and a
deduction of $5,214.57, reflecting the amount attributable to
Niedermeier’s use of the vehicle before she first delivered it to
FCA’s authorized facilities for repairs pursuant to
section 1793.2, subdivision (d)(2)(C). The award also included a
penalty of $59,376.65 pursuant to section 1794, subdivision (c
due to FCA’s willful failure to repurchase the vehicle.
Following the verdict, FCA filed a postjudgment motion
requesting a $19,000 offset from the awarded damages (the
amount of the trade-in credit Niedermeier received on the
Yukon’s purchase price), to be imposed before the civil penalty
was assessed. This would have resulted in a total award of
$51,461.07. The trial court denied FCA’s motion. It reasoned
that reducing the jury’s award by the trade-in amount would be
inconsistent with the pro-consumer policy supporting the Act.
The court concluded an offset for the trade-in “would reward
defendant for its delay in replacing the car or refunding
plaintiff’s money when defendant had complete control over the
length of that delay, and an affirmative statutory duty to replace
or refund promptly. . . . ‘No one can take advantage of his own
wrong.’ (§ 3517.) Nor can principles of equity be used to avoid
a statutory mandate.”
FCA appealed. It made three arguments before the Court
of Appeal: (1) by obtaining a full refund under section 1793.2,
subdivision (d)(2) in addition to proceeds from the trade-in of the
vehicle, Niedermeier received a windfall, which is inconsistent
with the concept of restitution; (2) provisions of the California
Uniform Commercial Code incorporated into section 1794 of the
Act recognize that a buyer’s recovery is reduced by the amount
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NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
the buyer obtains by reselling the vehicle; and (3) allowing
Niedermeier a full refund on top of trade-in proceeds she
received would undermine legislative protections for
downstream consumers in the used car market by effectively
nullifying the Act’s requirement that manufacturers notify
subsequent purchasers of defects in reacquired vehicles.
The Court of Appeal agreed with FCA’s first and third
arguments and reversed. It declined to consider FCA’s second
argument. The Court of Appeal held, as a matter of first
impression, that the Act’s restitution remedy — “set at ‘an
amount equal to the actual price paid or payable’ for the
vehicle” — does not include any amount a plaintiff receives from
trading in the defective vehicle. (Niedermeier, supra, 56
Cal.App.5th at p. 1061.) The Court of Appeal reasoned that the
Legislature’s use of the word “restitution” in section 1793.2,
subdivision (d)(2)(B) indicates an intent to restore the status
quo ante as far as practicable and return buyers to the financial
position they would have been in had they not purchased the
vehicle. (Niedermeier, at p. 1071.) It concluded that allowing
Niedermeier the full restitution remedy after she received a
credit for trading in the vehicle would place her in a better
position than if she had never purchased the vehicle, a result
inimical to the concept of restitution. (Ibid.
The Court of Appeal also opined that allowing the full
restitution refund under section 1793.2, subdivision (d)(2)(B
would thwart the lemon law’s labeling and notification
requirements. It noted that the labeling and notification
provisions are only triggered when a manufacturer reacquires
the defective vehicle. It reasoned that allowing buyers to
recover the full restitution remedy after receiving trade-in
proceeds would incentivize buyers to reintroduce defective
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Opinion of the Court by Evans, J.
vehicles into the market without the statutorily required Lemon
notifications, rendering the labeling and notification provisions
“largely meaningless, a result contrary to the rules of statutory
construction.” (Niedermeier, supra, 56 Cal.App.5th at p. 1072.
We granted review. Since that time, another division of
the Second Appellate District has disagreed with Niedermeier
and held that a manufacturer is not entitled to a reduction in
restitution damages under section 1793.2, subdivision (d)(2) for
the net cash a plaintiff receives after selling a defective vehicle
to a third party. (Figueroa v. FCA US, LLC (2022
84 Cal.App.5th 708, 713–714 (Figueroa).) We granted review in
Figueroa on February 1, 2023, and deferred further action in
that matter until after this case is decided.
More recently, the Third Appellate District also disagreed
with Niedermeier. It agreed with Figueroa that a buyer’s
restitution under the Act does not exclude the credit a buyer
receives when trading in a defective vehicle. (Williams v. FCA
US LLC (2023) 88 Cal.App.5th 765, 772 (Williams).) The court
concluded that the jury impermissibly deducted the buyer’s
$29,500 trade-in credit when calculating the actual price paid or
payable as provided in the statutory restitution remedy. (Id. at
p. 786.) We granted review in Williams on May 3, 2023, and
deferred further action in that matter until after this case is
decided.
II. DISCUSSION
We are first asked to determine whether a consumer’s
restitution damages award, defined in section 1793.2,
subdivision (d)(2), must be reduced by the proceeds the
consumer receives after trading in or selling a defective vehicle.
This is a question of statutory construction, which we review de
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NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
novo. (Apple, Inc. v. Superior Court (2013) 56 Cal.4th 128, 135.
As with all cases of statutory interpretation, “[w]e first examine
the statutory language, giving it a plain and commonsense
meaning. [Citation.] We do not consider statutory language in
isolation; instead, we examine the entire statute to construe the
words in context. [Citation.] If the language is unambiguous,
‘then the Legislature is presumed to have meant what it said,
and the plain meaning of the language governs.’ ” (Kirzhner
v. Mercedes–Benz USA, LLC (2020) 9 Cal.5th 966, 972
(Kirzhner).) Further, “there is no need for construction, nor is it
necessary to resort to indicia of the intent of the Legislature” to
interpret the statute. (Lungren v. Deukmejian (1988) 45 Cal.3d
727, 735.
On the other hand, “ ‘[i]f the statutory language permits
more than one reasonable interpretation, courts may consider
other aids, such as the statute’s purpose, legislative history, and
public policy.’ ” (Kirzhner, supra, 9 Cal.5th at p. 972.) When
more than one statutory construction is arguably possible, our
policy is “ ‘to favor the construction that leads to the more
reasonable result.’ [Citation.] This policy derives largely from
the presumption that the Legislature intends reasonable results
consistent with the apparent purpose of the legislation.
[Citation.] Thus, our task is to select the construction that
comports most closely with the Legislature’s apparent intent,
with a view to promoting rather than defeating the statutes’
general purpose, and to avoid a construction that would lead to
unreasonable, impractical, or arbitrary results.” (Imperial
Merchant Services, Inc. v. Hunt (2009) 47 Cal.4th 381, 388.) We
also keep in mind that the Act is “ ‘manifestly a remedial
measure, intended for the protection of the consumer; it should
be given a construction calculated to bring its benefits into
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NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
action.’ ” (Murillo v. Fleetwood Enterprises, Inc. (1998
17 Cal.4th 985, 990 (Murillo); see also People ex rel. Lungren v.
Superior Court (1996) 14 Cal.4th 294, 313 [“civil statutes for the
protection of the public are, generally, broadly construed in
favor of that protective purpose”]; see Pineda v. Williams-
Sonoma Stores, Inc. (2011) 51 Cal.4th 524, 530 (Pineda
[liberally construing § 1747.08 of the Song-Beverly Credit Card
Act].
A. The Plain Text of Section 1794 and the
Statutory Restitution Remedy Do Not Support
an Offset for a Trade-in Credit or Sale Proceeds
Resolution of the first issue before us requires us to
interpret several interrelated provisions of the Act. First,
section 1794, subdivision (a) permits a buyer who “is damaged
by a failure to comply with any obligation” under the Act or
under an implied or express warranty or service contract to
“bring an action for the recovery of damages and other legal and
equitable relief.” (§ 1794, subd. (a).) “The measure of the
buyer’s damages in an action under this section shall include the
rights of replacement or reimbursement as set forth in
subdivision (d) of Section 1793.2, and the following:
[¶] (1) Where the buyer has rightfully rejected or justifiably
revoked acceptance of the goods or has exercised any right to
cancel the sale, Sections 2711, 2712, and 2713 of the
Commercial Code shall apply. [¶] (2) Where the buyer has
accepted the goods, Sections 2714 and 2715 of the Commercial
Code shall apply, and the measure of damages shall include the
cost of repairs necessary to make the goods conform.” (Id., subd.
(b).
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In turn, section 1793.2, subdivision (d)(2) of the Act
provides that if a manufacturer or its representative “is unable
to service or repair a new motor vehicle . . . to conform to the
applicable express warranties after a reasonable number of
attempts, the manufacturer shall either promptly replace the
new motor vehicle in accordance with subparagraph (A) or
promptly make restitution to the buyer in accordance with
subparagraph (B). However, the buyer shall be free to elect
restitution in lieu of replacement, and in no event shall the
buyer be required by the manufacturer to accept a replacement
vehicle.”3
The Act provides a specific formula for calculating the
amount of restitution. According to the Act, “the manufacturer
shall make restitution in an amount equal to the actual price
paid or payable by the buyer, including any charges for
transportation and manufacturer-installed options, but
3
Section 1793.2, subdivision (d)(2) has dual purposes.
First, it (along with the other subdivisions of § 1793.2) instructs
manufacturers about what they must do to comply with the Act
when a vehicle proves defective. (See generally Kirzhner, supra,
9 Cal.5th at p. 971 [§ 1793.2, subd. (d)(2) “sets forth the
manufacturer’s affirmative obligation to ‘promptly’ repurchase
or replace a defective vehicle it is unable to repair” and describes
how manufacturers must offer replacement or restitution in
order to comply with the Act].) Second, section 1793.2,
subdivision (d)(2) includes the right to reimbursement as a
measure of damages in an action pursuant to section 1794. (See
Kirzhner, at pp. 971–972 [§ 1794 is “the Act’s general damages
provision” and permits buyers to seek damages, “the measure of
which includes the restitution and replacement remedies”].
The question before us today involves the latter purpose of
section 1793.2, subdivision (d)(2), and our analysis is therefore
limited to the issue of the calculation of damages in a lawsuit
under section 1794.
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Opinion of the Court by Evans, J.
excluding nonmanufacturer items installed by a dealer or the
buyer, and including any collateral charges such as sales or use
tax, license fees, registration fees, and other official fees, plus
any incidental damages to which the buyer is entitled under
Section 1794, including, but not limited to, reasonable repair,
towing, and rental car costs actually incurred by the buyer.”
(§ 1793.2, subd. (d)(2)(B).) The amount to be paid to the buyer
may also “be reduced by the manufacturer by that amount
directly attributable to use by the buyer prior to the time the
buyer first delivered the vehicle to the manufacturer or
distributor, or its authorized service and repair facility for
correction of the problem that gave rise to the nonconformity.”
(§ 1793.2, subd. (d)(2)(C).) Offsets for nonmanufacturer items
installed by a dealer or buyer and the buyer’s predelivery use of
the vehicle are the only reductions to the restitution remedy
enumerated in section 1793.2, subdivision (d).
1. The Statutory Restitution Remedy Does Not Allow
a Restitution Award to Be Reduced by a Trade-in
Credit or Sale Proceeds
The parties disagree how the restitution remedy in
section 1793.2, subdivision (d)(2) should be interpreted. The
parties specifically disagree whether the amount Niedermeier
received when she traded in the defective vehicle should be
excluded from the statutory restitution remedy. Niedermeier
argues the Act’s plain language lays out the precise measure and
scope of restitution and does not permit any reduction in the
restitution award by the amount of a trade-in credit.
Notwithstanding the Act’s defined restitution formula,
including its express reference to specific permissible offsets,
FCA argues that restitution should be given the same meaning
as provided in common law. According to FCA, Niedermeier’s
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Opinion of the Court by Evans, J.
restitution award should be reduced by the amount she
recovered when trading in the vehicle in order to avoid a double
recovery.
We agree with Niedermeier and conclude the plain
language of the Act does not support FCA’s construction of
section 1793.2. As noted above, the Act’s plain language lays
out a specific formula for calculating the amount of restitution
to be paid by the manufacturer as damages in an action
pursuant to section 1794. The statutory restitution remedy has
clearly enumerated exceptions, none of which includes the offset
requested by FCA. (Accord, Figueroa, supra, 84 Cal.App.5th at
p. 712 [“[t]he statute is clear and unequivocal”]; Williams,
supra, 88 Cal.App.5th at p. 780 [“[a]lthough the Legislature
used the word ‘restitution’ in section 1793.2, subdivision (d), it
clearly defined that term in the restitution provision by stating
it is ‘an amount equal to the actual price paid or payable by the
buyer,’ a calculus that includes and excludes specified costs”
(original italics)].
Nowhere does section 1793.2 provide that a restitution
award must be reduced by any amount a buyer receives when
trading in or selling the defective vehicle to a third party. In
order to adopt FCA’s statutory construction, we would have to
ignore the words following “restitution” in section 1793.2,
subdivision (d)(2)(B), including “paid or payable” and the
enumerated exceptions. “[O]ur office is simply to ascertain and
declare what the statute contains, not to change its scope by
reading into it language it does not contain or by reading out of
it language it does. We may not rewrite the statute to conform
to an assumed intention that does not appear in its language.”
(Vasquez v. State of California (2008) 45 Cal.4th 243, 253; see
also Jiagbogu v. Mercedes–Benz USA (2004) 118 Cal.App.4th
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Opinion of the Court by Evans, J.
1235, 1241 (Jiagbogu) [“We may not rewrite the section to
conform to that unexpressed, supposed intent”]; see also
Figueroa, supra, 84 Cal.App.5th at p. 712 [“We cannot add
words to a clear and unequivocal statute”].
As noted above, the statute excludes nonmanufacturer-
installed options from the restitution calculation (§ 1793.2,
subd. (d)(2)(B)) and permits the restitution award to be reduced
by the amount of a buyer’s predelivery use of the vehicle (id.,
subd. (d)(2)(C)). The choice to include these exceptions, and no
others, indicates that the Legislature intended to specify how
restitution awards for new motor vehicles must be calculated,
including limiting the number and type of offsets to those
explicitly enumerated.4 The Legislature recognized there were
multiple sources of potential offsets to the restitution remedy
yet did not include trade-in credits or sales proceeds in the
statute. The Legislature could have stated that trade-in or sale
amounts were to be offset or reduced from the statutory
restitution remedy. It did not do so. “We will not create an
4
Indeed, in section 1793.2, subdivision (d), the measure of
restitution is defined differently for “goods” and “new motor
vehicles.” For “goods,” restitution is defined as, “the purchase
price paid by the buyer, less that amount directly attributable
to use by the buyer prior to the discovery of the nonconformity.”
(§ 1793.2, subd. (d)(1).) We have thus held that section 1793.2,
subdivision (d) “treats the special provisions applicable to new
motor vehicles in subdivision (d)(2) as an exception to the
general provision applicable to all consumer goods in
subdivision (d)(1)[,]” as subdivision (d)(2) “provides additional
specifications for both the refund and restitution remedies.”
(Cummins, Inc. v. Superior Court (2005) 36 Cal.4th 478, 490–
491, italics added; see also id. at p. 491 [“If restitution is
selected, the amount is to be calculated as specified by the
statute”].
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exception the Legislature did not enact.” (Lopez v. Sony
Electronics, Inc. (2018) 5 Cal.5th 627, 636.
Moreover, trade-in or sale proceeds obtained years after
the purchase of a defective vehicle are not part of “the actual
price paid or payable” because they are separate and apart from
the settled purchase price of the vehicle at the time of
contracting. In our recent opinion in Kirzhner, we explained
that the “actual price paid or payable” is determined at the time
of the vehicle’s purchase. (Kirzhner, supra, 9 Cal.5th at
pp. 974–975.) In Kirzhner, we were tasked with determining
whether vehicle registration renewal and nonoperation fees
plaintiff paid after initially leasing his vehicle were recoverable
as collateral charges or as incidental damages under
section 1793.2, subdivision (d)(2)(B). We held that the charges
were not recoverable as collateral charges because they “are not
auxiliary to and do not supplement the price paid [for the
vehicle] because they are not paid as part of the total cost of the
vehicle and in exchange for the vehicle.” (Kirzhner, supra,
9 Cal.5th at p. 975.
We rejected Kirzhner’s argument that the phrase “actual
price paid or payable” indicated a legislative intent to ensure the
manufacturer paid the consumer what the consumer actually
paid as of the time of the repurchase rather than at the time of
contracting. We explained, “[t]he word ‘price’ means ‘[t]he cost
at which something is obtained’ or ‘[t]he consideration given for
the purchase of a thing.’ ” (Kirzhner, supra, 9 Cal.5th at
pp. 972–973, citing Black’s Law Dict. (6th ed. 1990) p. 1188,
col. 2); see also Black’s Law Dict. (11th ed. 2019) [price means
“[t]he amount of money or other consideration asked for or given
in exchange for something else; the cost at which something is
bought or sold”].) We noted the word “ ‘payable’ ” in
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Opinion of the Court by Evans, J.
section 1793.2, subdivision (d)(2)(B) modifies the word “ ‘price’ ”
and simply acknowledges that some buyers do not pay the full
cost of the vehicle at the time of the initial purchase or lease, but
does not demonstrate that all later-incurred charges or expenses
connected to ownership or use of vehicle are recoverable.
(Kirzhner, at p. 974.) We concluded, however, that the charges
would be recoverable as incidental damages if they were
incurred as a result of the manufacturer’s failure to promptly
provide a replacement vehicle or restitution under section
1793.2, subdivision (d)(2). (Kirzhner, at p. 977.
The Court of Appeal here acknowledged section 1793.2,
subdivision (d)(2)(B) defines restitution as “the actual price paid
or payable,” but declined to follow a plain language reading of
the statute. Relying on Mitchell v. Blue Bird Body Co. (2000
80 Cal.App.4th 32 (Mitchell), it found the Legislature’s choice of
the word “restitution” significant in this case and reasoned that
a literal interpretation of the statute would disregard the
Legislature’s word choice, allow Niedermeier “to recover far
more from [FCA] than her actual economic loss[,]” and result in
an unjustified windfall to Niedermeier. (Niedermeier, supra,
56 Cal.App.5th at p. 1071.
We find the Court of Appeal’s reliance on Mitchell to be
misplaced. In Mitchell, the court considered whether the “actual
price paid or payable” in section 1793.2, subdivision (d)(2)(B
included interest payments paid after a vehicle was purchased.
It held the payments were part of the actual price paid or
payable, and properly recoverable as restitution under the Act,
because consumers become legally obligated to pay the
payments at the time the vehicle is purchased or leased.
(Mitchell, supra, 80 Cal.App.4th at p. 38.) It is true that the
Mitchell court interpreted “restitution” as designating a remedy
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Opinion of the Court by Evans, J.
meant “to restore ‘the status quo ante as far as is
practicable . . . .’ ” (Id. at p. 36, italics omitted.) But Mitchell
did not consider whether it was appropriate to reduce the
statutory restitution remedy by the amount of a trade-in credit
or sale proceeds in order to restore the status quo. Contrary to
the Court of Appeal’s conclusion, Mitchell’s analysis suggests
that reducing the restitution remedy by an amount not
enumerated in section 1793.2, subdivision (d) would be
inappropriate. The Mitchell court emphasized the remedial
nature of the Act and explained that restoring the status quo
was intended to afford “ ‘complete relief, including restitution of
benefits . . . and any consequential damages to which [the
purchaser] is entitled . . . .’ ” (Mitchell, supra, 80 Cal.App.4th at
p. 36.) It thus concluded that “the Legislature intended to allow
a buyer to recover the entire amount actually expended for a
new motor vehicle, including paid finance charges, less any of
the expenses expressly excluded by the statute.” (Id. at p. 37,
italics added.
In interpreting “restitution,” the Mitchell court relied on
Alder v. Drudis (1947) 30 Cal.2d 372, 384, in which we observed,
“The purpose of restitution as a remedy for breach is the
restoration of the status quo ante as far as is practicable, and in
the absence of qualifying circumstances, the plaintiff must
return any consideration he has received in order to obtain
specific restitution.” (Italics omitted.) Alder, however, predates
the Act’s enactment by more than 20 years, did not concern
breach of a product warranty, and considers only common law
restitution and rules of equity. The plain language of
section 1793.2, subdivision (d)(2), by contrast, indicates that the
Legislature intended “restitution” to be “a term of art separate
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Opinion of the Court by Evans, J.
from the evolving common law concept that shares the name.”5
(Scholes v. Lambirth Trucking Co. (2020) 8 Cal.5th 1094, 1111;
see also Metropolitan Water Dist. v. Superior Court (2004
32 Cal.4th 491, 500 [courts generally apply common law when a
statute refers to a term without defining the term]; People v.
Lopez (2003) 31 Cal.4th 1051, 1060 [“if a term known to the
common law has not otherwise been defined by statute, it is
assumed that the common law meaning was intended” (italics
added)]; Williams, supra, 88 Cal.App.5th at p. 780 [same].
Moreover, “ ‘principles of equity [cannot] be used to avoid a
statutory mandate.’ ” (Martinez v. Kia Motors America, Inc.
(2011) 193 Cal.App.4th 187, 199 (Martinez), citing Jiagbogu,
5
Notably, the statutory restitution remedy is consistently
referenced throughout the Act by specific reference to
section 1793.2, subdivision (d)(2) and its directive for
calculating restitution. (See, e.g., §§ 1793.23, subd. (c) [labeling
requirements
include
circumstances
in
which
“the
manufacturer knew or should have known that the vehicle is
required by law to be replaced [or] accepted for restitution due
to the failure of the manufacturer to conform the vehicle to
applicable warranties pursuant to paragraph (2) of
subdivision (d) of Section 1793.2”], 1793.25, subd. (a) [“State
Board of Equalization shall reimburse the manufacturer of a
new motor vehicle for an amount equal to the sales tax or use
tax which the manufacturer . . . includes in making restitution
to the buyer or lessee pursuant to subparagraph (B) of
paragraph (2) of subdivision (d) of Section 1793.2”], 1794,
subd. (b) [“The measure of the buyer’s damages in an action
under this section shall include the rights of replacement or
reimbursement
as
set
forth
in
subdivision (d
of
Section 1793.2”].) These repeated references to subdivision
(d)(2) further indicate a legislative intent to attribute a specific
statutory restitution formula to the term “restitution” distinct
from the common law definition.
16
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
supra, 118 Cal.App.4th at p. 1244.) The plain language of
section 1793.2, subdivision (d)(2) does not contemplate an
unenumerated reduction to the statutory restitution remedy for
a trade-in credit or sale proceeds received after the purchase of
a defective vehicle.
2. Section 1794’s Reference to the California Uniform
Commercial Code Does Not Provide a Basis to
Reduce Restitution Damages by a Trade-in Credit
or Sale Proceeds
FCA next contends that Niedermeier’s damages must be
reduced by the amount she received when she traded in the
defective vehicle since section 1794, subdivision (b) incorporates
California Uniform Commercial Code sections 2711 through
2715. These provisions prohibit a double recovery and set forth
a reduced measure of damages when a buyer resells goods. FCA
argues that because section 1794, subdivision (b) states that the
measure of damages “shall include the rights of replacement or
reimbursement . . . and” (italics added) the California Uniform
Commercial Code remedies, the remedies identified in
section 1793.2, subdivision (d) and the remedies identified in
the California Uniform Commercial Code are not merely
alternate measures of damages. Rather, FCA urges, the
measure of damages must consider both the statutory
restitution remedy and the relevant provisions of the California
Uniform Commercial Code. Citing Kwan v. Mercedes-Benz of
North America, Inc. (1994) 23 Cal.App.4th 174 (Kwan), Bishop
v. Hyundai Motor America (1996) 44 Cal.App.4th 750 (Bishop),
and Kirzhner, FCA argues the Legislature has made it clear that
damages — including the restitution remedy — are measured in
the same manner as, and subject to the general rules applicable
to, ordinary contracts.
17
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
We conclude that the Act’s restitution and replacement
remedies are distinct from the available California Uniform
Commercial Code remedies referenced in section 1794, and the
California Uniform Commercial Code remedies do not reduce
the Act’s statutory restitution remedy. We also find that any
attempt to reduce the statutory restitution remedy by the
remedies set forth in the California Uniform Commercial Code
would conflict with the Act, and the Act’s restitution remedy
thus controls. (See § 1790.3.
“[A]s the conjunctive language in Civil Code section 1794
indicates, the statute itself provides an additional measure of
damages beyond replacement or reimbursement (Civ. Code,
§ 1793.2, subd. (d)) and permits, at the option of the buyer, the
Commercial Code measure of damages which includes ‘the cost
of repairs necessary to make the goods conform.’ (Civ. Code,
§ 1794, subd. (b)(2).)” (Krotin v. Porsche Cars North America,
Inc. (1995) 38 Cal.App.4th 294, 302 (Krotin), italics added.
Moreover, the plain language of section 1794 makes clear that
“[t]he measure of the buyer’s damages in an action under this
section shall include the rights of replacement or
reimbursement as set forth in subdivision (d) of Section 1793.2,
and [the California Uniform Commercial Code remedies].”
(§ 1794, subd. (b), italics added.) The phrase “as set forth”
indicates that the buyer is entitled to the statutory restitution
remedy as distinctly and precisely described in section 1793.2,
subdivision (d) in addition to any applicable remedies set forth
in the California Uniform Commercial Code.
FCA’s statutory interpretation not only disregards the
plain language of section 1794, it also ignores the overall
statutory context. Section 1794 is intended to encompass all of
the remedies available for failures to “comply with any
18
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
obligation under this chapter [i.e., the Act,]” as well as non-Act
failures to comply with any obligation “under an implied or
express warranty or service contract . . . .” (§ 1794, subd. (a);
§ 1790; see also Kwan, supra, 23 Cal.App.4th at p. 180
[“Section 1794 sets out the damages available to a buyer for a
seller or manufacturer’s failure to comply with an obligation
under the Act or under a consumer product warranty”].
Moreover, the Act provides that its remedies “are cumulative
and shall not be construed as restricting any remedy that is
otherwise available . . . .” (§ 1790.4, italics added.) We have
similarly observed that the “pro-consumer remedies [of the Act]
are in addition to those available to a consumer pursuant to the
Commercial Code ( . . . § 1790.3) and the Unfair Practices Act
( . . . § 1790.4).” (Murillo, supra, 17 Cal.4th at p. 990, italics
added.
The language of the statutory restitution remedy itself
further supports our conclusion that it is distinct from the
California Uniform Commercial Code remedies identified in
section 1794. Section 1793.2, subdivision (d)(2)(B) requires the
manufacturer to “make restitution in an amount equal to the
actual price paid or payable by the buyer . . . plus any incidental
damages to which the buyer is entitled under Section 1794.”
(Italics added.) The inclusion of the word “plus” indicates that
a buyer may receive damages available in the California
Uniform Commercial Code in addition to the statutory
restitution
amount
recoverable
under
section 1793.2,
subdivision (d)(2). As the Court of Appeal explained in Krieger
v. Nick Alexander Imports, Inc. (1991) 234 Cal.App.3d 205, 213,
the Act “supplements, rather than supersedes, the provisions of
the California Uniform Commercial Code.” (See also § 1790.3;
19
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
§ 1794, subd. (b) [incorporating specific damages provisions of
the Cal. U. Com. Code].
The California Uniform Commercial Code remedies
referenced in section 1794 stand separate and apart from the
remedies in section 1793.2, subdivision (d), and do not purport
to limit the statutory restitution remedy in any way. This
makes sense because the Act provides more extensive consumer
protections than the California Uniform Commercial Code.
(Krotin, supra, 38 Cal.App.4th at p. 301; see also Murillo, supra,
17 Cal.4th at p. 989 [the Act “ ‘regulates warranty terms,
imposes service and repair obligations on manufacturers,
distributors, and retailers who make express warranties,
requires disclosure of specified information in express
warranties, and broadens a buyer’s remedies to include costs,
attorney’s fees, and civil penalties.’ ”].) FCA cites no authority
in which the Act’s statutory restitution remedy has ever been
reduced by the provisions of the California Uniform Commercial
Code referenced in section 1794, and its proposed reading would
elevate the California Uniform Commercial Code over the
remedies provided in the Act and be contrary to the Act itself.
“The provisions of [the Act] shall not affect the rights and
obligations of parties determined by reference to the
Commercial Code except that, where the provisions of the
Commercial Code conflict with the rights guaranteed to buyers
of consumer goods under the provisions of [the Act], the
provisions of [the Act] shall prevail.” (§ 1790.3.
FCA’s reliance on Kwan, Bishop, and Kirzhner is
misplaced. These cases address whether certain damages not
explicitly enumerated in the Act were recoverable under it.
(Kwan, supra, 23 Cal.App.4th at p. 192 [emotional distress
damages not recoverable for violations of the Act]; Bishop,
20
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
supra, 44 Cal.App.4th at pp. 757–758 [emotional distress and
loss of use damages for time period plaintiff had no replacement
vehicle after defective vehicle was destroyed not recoverable
under Act]; Kirzhner, supra, 9 Cal.5th at p. 981 [registration
renewal and nonoperation fees incurred after purchase of
vehicle not recoverable under the Act as collateral charges, but
may be recoverable as incidental damages].) For various
reasons, these cases found it appropriate to turn to the
California Uniform Commercial Code provisions referenced in
section 1794 in order to determine whether such damages were
recoverable. But none of these cases holds the restitution
remedy may be reduced by reference to those California Uniform
Commercial Code provisions. (See Kwan, supra, 23 Cal.App.4th
at p. 187 [“Under section 1794, subdivision (b), the buyer’s
remedies under the Act include, in addition to the refund-or-
replace remedy of section 1793.2, subdivision (d), [California
Uniform Commercial Code] damages as” stated in
subsections (1) and (2) (italics added)]; Bishop, supra,
44 Cal.App.4th at p. 754 [in case of restitution, buyer is also
entitled to, inter alia, incidental damages and civil penalty];
Kirzhner, supra, 9 Cal.5th at pp. 971–972 [measure of damages
includes restitution and replacement remedies as well as
remedies allowed by the Cal. U. Com. Code].
FCA argues a few out-of-state cases support a conclusion
that the relevant provisions of the California Uniform
Commercial Code should reduce the statutory restitution
remedy.6 None of these cases, however, address the issue before
6
See Gast v. Rogers-Dingus Chevrolet (Miss. 1991
585 So.2d 725; Roneker v. Kentworth Truck Co. (W.D.N.Y. 1997
21
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
us: whether alternate California Uniform Commercial Code
remedies should reduce damages calculated pursuant to the
express statutory restitution formula contained in California’s
lemon law. The cases cited by FCA merely found that damages
for certain breaches of warranty were to be determined under
the relevant state equivalents of the model Uniform Commercial
Code. In California, as discussed above, the Uniform
Commercial Code provides additional damages affected
consumers can elect to pursue under section 1794 if they wish
but it does not displace the statutory restitution remedy. (See
Krotin, supra, 38 Cal.App.4th at p. 302.
In sum, we hold that “restitution” has the meaning
provided in section 1793.2, subdivision (d)(2)(B) and reducing a
damages award by the amount of a trade-in credit or sale is not
permitted by that statute or by section 1794’s incorporation of
California Uniform Commercial Code remedies. FCA’s reading
of sections 1794 and 1793.2, subdivision (d)(2) would force us to
“ignore the actual words of the statute in an attempt to vindicate
our perception of the Legislature’s purpose in enacting the
law[,]” which is something we cannot do. (Murillo, supra,
17 Cal.4th at p. 993.
B. Offsets for a Trade-in Credit or Sale Proceeds
Are Not Consistent with the Legislative History
of Sections 1794 and 1793.2, Subdivision (d) or
the Purpose of the Act
As discussed above, we conclude that the language of
section 1793.2, subdivision (d)(2) does not permit any reduction
977 F.Supp. 237; Hibbs v. Jeep Corp. (Mo.Ct.App. 1984
666 S.W.2d 792; Sanborn v. Aranosian (1979) 119 N.H. 969.
22
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
in the restitution award by the amount of a trade-in credit or
sale. Nonetheless, FCA’s contention that restitution as detailed
in section 1793.2 should have the same meaning as common law
restitution is not unreasonable on its face. By recovering the
full statutory restitution remedy after receiving value for the
vehicle in the form of a trade-in credit, it can be argued that
Niedermeier was placed in a better financial position than if she
had not purchased the vehicle. To resolve any potential
ambiguity, we consider the legislative history of sections 1793.2
and 1794 and the Act’s purpose. (Kirzhner, supra, 9 Cal.5th at
p. 972.) We conclude that even if the statute is amenable to
more than one reasonable interpretation, additional indicia of
legislative intent support our holding that at least where, as
here, a consumer has been forced to trade in or sell their vehicle
due to the manufacturer’s failure to promptly pay restitution
when its obligation arose, trade-in or sale proceeds do not reduce
the statutory restitution remedy.
The Legislature adopted the Act in 1970 to address
problems with enforcing consumer warranties for new products,
including the problem of manufacturers reaping the advertising
benefits of warranties without bearing the costs of promised
repairs. (Stats. 1970, ch. 1333, § 1, p. 2478 et seq.) The original
restitution remedy provided, “[s]hould the manufacturer be
unable to make such return of merchantable goods, he shall
either replace the goods or reimburse the buyer in an amount
equal to the purchase price paid by the buyer, less that amount
directly attributable to use by the buyer prior to discovery of the
defect.” (Former § 1793.2, subd. (c), added by Stats. 1970,
ch. 1333, § 1, p. 2481.
In 1982, the Legislature amended the Act in several ways.
It amended section 1793.2 to apply the “repair and replace”
23
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
provisions of the Act to “new motor vehicles” bought for personal
use.7 (Jensen v. BMW of North America, Inc. (1995
35 Cal.App.4th 112, 123; Stats. 1982, ch. 388, § 1, pp. 1720–
1723.) The Legislature also added section 1794 to the Act to help
consumers and courts understand the panoply of remedies
available to buyers under different laws for breach of a
consumer warranty by enumerating each of the remedies in one
statute. (Gavaldon v. DaimlerChrysler Corp. (2004) 32 Cal.4th
1246, 1261; see also Dept. Consumer Affairs, Explanation and
Analysis of Assem. Bill No. 3560 (1981–1982 Reg. Sess.) Mar.
1982, p. 2 [“[t]he bill’s purpose and function is to consolidate and
restate in a single section of the . . . Act the remedies now
available to buyers under the Song-Beverly Act and other
California and federal laws”]; see also ibid. [“This bill is
essentially a consumer law ‘housekeeping’ bill whose function is
to make our consumer warranty law more coherent, rational,
understandable and effective”].) As originally enacted, section
1794 provided in pertinent part that “[t]he measure of the
buyer’s damages in an action under this section shall be as
follows: [¶] (1) Where the buyer has rightfully rejected or
justifiably revoked acceptance of the goods or has exercised any
right to cancel the sale, Sections 2711, 2712, and 2713 of the
Commercial Code shall apply. [¶] (2) Where the buyer has
7
As amended, section 1793.2, subdivision (d) provided,
“Should the manufacturer or its representative in this state be
unable to service or repair the goods to conform to the applicable
express warranties after a reasonable number of attempts, the
manufacturer shall either replace the goods or reimburse the
buyer in an amount equal to the purchase price paid by the
buyer, less that amount directly attributable to use by the buyer
prior to the discovery of the nonconformity.” (Stats. 1982,
ch. 388, § 1, p. 1721.
24
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
accepted the goods, Sections 2714 and 2715 of the Commercial
Code shall apply, and the measure of damages shall include the
cost of repairs necessary to make the goods conform.” (Former
§ 1794, subd. (b), added by Stats. 1982, ch. 385, § 2, p. 1716.
Although restitution and replacement were available remedies
since the enactment of the Song-Beverly Act, they were not
mentioned in the 1982 version of section 1794.
After these amendments to the lemon law, however, there
were numerous complaints from new car buyers concerning its
implementation, including that manufacturers were not paying
full restitution or replacement awards and were seeking
excessive offsets for rental cars. (See Dept. Consumer Affairs,
Enrolled Bill Rep. on Assem. Bill No. 2057 (1987–1988 Reg.
Sess.) Sept. 25, 1987, pp. 2–3; see also Assembly 3d reading
analysis of Assem. Bill No. 2057 (1987–1988 Reg. Sess.) as
amended June 11, 1987, at p. 4; Sen. Com. on Judiciary,
Analysis of Assem. Bill No. 2057 (1987–1988 Reg. Sess.) as
amended August 17, 1987, p. 3.
As a result, the Legislature again amended the Act in
order to protect consumers. Among other things, the
Legislature amended section 1794 to clarify that a buyer’s
damages include the rights of replacement and reimbursement
and the California Uniform Commercial Code’s additional
remedies, and amended section 1793.2, subdivision (d) to
comprehensively explain how to calculate restitution. (See
Legis. Counsel’s Dig., Assem. Bill No. 2057 (1987–1988 Reg.
Sess.) p. 2 [“This bill would revise the provisions relating to
warranties on new motor vehicles to require the manufacturer
or its representative to replace the vehicle or make restitution,
as specified, if unable to conform the vehicle to the applicable
express warranties after a reasonable number of attempts”
25
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
(italics added)]; see also Stats. 1987, ch. 1280, §§ 1, 2, 4; id., § 9,
p. 4567 [amendment to section 1794 “does not constitute a
change in, but is declaratory of, existing law”].
FCA argues the 1982 version of section 1794 demonstrates
that the Legislature intended for damages under the Act to be
reduced by ordinary damages principles laid out in the
California Uniform Commercial Code. But there is no indication
in the legislative history that the reference to California
Uniform Commercial Code remedies in section 1794 was
intended to supplant or limit the statutory restitution remedy.
To the contrary, the history is clear that the statute was
intended to consolidate, not add to or subtract from, the existing
remedies for the enforcement of a consumer warranty. (Dept.
Consumer Affairs, Explanation and Analysis of Assem. Bill
No. 3560 (1981–1982 Reg. Sess.) Mar. 1982, pp. 1, 4.) Had the
Legislature intended for the statutory restitution remedy to be
limited by the California Uniform Commercial Code provisions
referenced in section 1794, “it would not have chosen such an
obscure mechanism to achieve its purpose.” (Murillo, supra,
17 Cal.4th at p. 992.
FCA also relies on legislative history addressing the 1970
version of section 1794 to argue that the Legislature intended to
apply ordinary contract rules whenever a consumer cannot
return a defective vehicle. All three documents FCA relies
upon — a letter from a legislative aide to Senator Song
addressing the meaning of some language in the Act and two
letters from the Legislative Counsel to Senators Cologne and
Song, respectively, expressing various opinions in response to
particular questions relating to the Act — are postenactment
documents and are entitled to little weight because they do not
reflect the legislative body enacting the statute. (Quintano v.
26
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
Mercury Casualty Co. (1995) 11 Cal.4th 1049, 1062 [statements
of an individual legislator, including bill author, are generally
not considered in construing a statute; court’s task is to
ascertain the intent of the Legislature as a whole]; Coker v.
JPMorgan Chase Bank, N.A. (2016) 62 Cal.4th 667, 690, citing
Bruesewitz v. Wyeth LLC (2011) 562 U.S. 223, 242 [“ ‘[p]ost-
enactment legislative history (a contradiction in terms) is not a
legitimate tool of statutory interpretation’ because ‘by definition
[it] “could have had no effect on the [Legislature’s] vote” ’ ”].
With respect to the letters from the Legislative Counsel, FCA
focuses on two responses addressing distinguishable factual
scenarios. The first considers whether a manufacturer can
refuse to replace, reimburse, or repair defective goods if (unlike
here) the goods are not returned to be serviced at a service
facility. The second asks whether a privately-owned public
utility has any liability under the Act if it sells consumer goods
and contracts with an independent contractor for installation.
The responses do not address, and therefore shed no light on,
the specific issue that is before us in the present case.
The legislative history reveals little legislative analysis
addressing the language of the current statutory restitution
remedy, including the meaning of “the actual price paid or
payable.” (See also Mitchell, supra, 80 Cal.App.4th at p. 39
[“ ‘interpretive commentary’ on the statute’s replacement or
refund remedy is practically nonexistent”].) Nevertheless, we
can draw insight from the history of the amendments to
sections 1793.2 and 1794. This history demonstrates that the
Legislature intended to lay out a precise method for calculating
restitution awards payable to buyers, including the amounts
allowed to be reduced from awards.
27
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
The evolution of the Act also indicates a legislative intent
to ensure buyers receive full compensation under the Act, to
make it easier for buyers to access all the benefits to which they
are entitled under applicable warranties, and to constrain
manufacturers from evading their statutory obligations. To this
end, since its enactment, the Act “has been amended numerous
times to broaden its consumer protection policy, expand the
classes of vehicles to which the lemon law applies, lessen the
types of defenses that can [be] asserted, and change the
statutory text in response to appellate decisions.” (Frank,
Lemon Law (Nov. 2016) 39 L.A.Law. 27, 32.) This counsels
against reducing statutory restitution awards by trade-in
credits or sales proceeds, when such reductions are not
enumerated or authorized in section 1793.2, subdivision (d).
Any such reduction would be inconsistent with the legislative
history and the Act’s consumer protective purpose.
C. The Act’s Labeling and Notification Provisions
Do Not Support an Offset to the Statutory
Restitution Remedy for a Trade-in Credit or
Sale Proceeds
FCA maintains that Niedermeier’s interpretation of the
statutory restitution remedy would undercut the labeling and
notification provisions in sections 1793.22 and 1793.23
(hereafter sometimes referred to as the labeling and notification
provisions). It echoes the Court of Appeal’s concerns that
Niedermeier’s interpretation “would incentivize buyers to
reintroduce defective vehicles into the market without the
warnings a manufacturer otherwise would have to provide” and
“would render the labeling and notification provisions largely
meaningless, a result contrary to the rules of statutory
construction.” (Niedermeier, supra, 56 Cal.App.5th at p. 1072.
28
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
In FCA’s view, no rational owner would return their defective
vehicle to the manufacturer if they could instead resell their
vehicles to third parties. The Court of Appeal similarly could
not “conceive why a buyer would ever return a vehicle to the
manufacturer rather than obtain the extra proceeds from a
resale or trade. Return of the vehicle to the manufacturer would
be the rare exception rather than the rule.” (Ibid.) We disagree.
As FCA concedes, sections 1793.22 and 1793.23 require
manufacturers, not consumers, to label defective vehicles as
lemons once they are reacquired. (§ 1793.22, subd. (f)(1
[manufacturers must provide a one-year warranty for all
defective vehicles transferred to it under the Act]; § 1793.23,
subds. (c)–(e).) Buyers have neither the obligation nor the
ability to label their defective vehicles lemons. Had FCA
promptly refunded Niedermeier when its obligation to do so
arose, the defective vehicle could have been reacquired and
labeled a lemon by the manufacturer. Buyers like Niedermeier
are only confronted with the possibility of selling or trading in
their defective vehicles after manufacturers have failed to
comply with their obligation to promptly replace or repurchase
the vehicle. When this occurs, buyers may have no choice but to
engage in self-help to relieve themselves of the burden of owning
or possessing a lemon. Contrary to the Court of Appeal’s focus,
it is manufacturers, not buyers who are forced to trade in or sell
their vehicles, who undercut the Act’s labeling and notification
provisions by failing to timely comply with the Act’s
requirements. (Figueroa, supra, 84 Cal.App.5th at pp. 713, 714;
see also Williams, supra, 5 Cal.App.5th at pp. 784–785.
Allowing buyers to recover full restitution, as defined in the
statute, incentivizes manufacturers to comply with their
obligations under the Act.
29
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
Neither FCA nor the Court of Appeal provide any basis for
their opinion that no rational owner would return their defective
vehicle or that returning a defective vehicle would become the
rare exception rather than the rule, and we question these
assumptions. Niedermeier made three separate requests to
return the vehicle after multiple attempts to repair it over four
years failed. It was not until FCA repeatedly declined to buy
back the vehicle that Niedermeier gave up, purchased a new
vehicle, and traded in the defective one. Even if a buyer is
entitled to recover the full statutory restitution remedy in an
action under section 1794, it is reasonable to believe that, like
Niedermeier, buyers will continue to attempt to return defective
vehicles before filing suit in order to avoid the time and trouble
of selling or trading them in to a third party and resorting to
litigation. The concurrence disagrees, maintaining that “[i]f
trade-in or resale always yielded the potential for double
recovery, one would expect a good number of consumers to go
that route.” (Conc. opn. of Kruger, J., post, at p. 15.) But
manufacturers can rather easily avoid a result in which buyers
resell defective cars simply by promptly complying with their
obligations under the Act. (See Figueroa, supra, 84 Cal.App.5th
at p. 713 [any windfall to the plaintiff was the direct result of
FCA’s willful violation of the Act, and “[h]ad FCA fulfilled its
duty under the [Act] to promptly replace or repurchase the
truck, there would be no such windfall”]; see also Williams,
supra, 88 Cal.App.5th at p. 714.
FCA and the Court of Appeal also overlook the fact that a
buyer’s decision to trade in or sell a vehicle is made in real time.
It would be quite risky for a buyer to choose to trade in or sell a
defective vehicle to a third party before a manufacturer is able
to comply with its statutory obligation to promptly repurchase
30
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
or replace the vehicle. The Act requires a buyer to deliver the
defective vehicle to the manufacturer’s service and repair
facility for the purpose of allowing the manufacturer a
reasonable number of repair attempts. (§ 1793.2, subds. (c), (d);
§ 1793.22, subd. (b); Kirzhner, supra, 9 Cal.5th at pp. 969, 971,
986; Krotin, supra, 38 Cal.App.4th at pp. 302–303 [“the Act does
not require consumers to take any affirmative steps to secure
relief for the failure of a manufacturer to service or repair a
vehicle to conform to applicable warranties — other than, of
course, permitting the manufacturer a reasonable opportunity
to repair the vehicle”]; Martinez, supra, 193 Cal.App.4th at
pp. 191, 193.) Once the manufacturer is unable to repair the
vehicle after a reasonable number of attempts, the
manufacturer’s obligation to promptly provide restitution to the
buyer arises. (§ 1793.2, subd. (d)(2); see also § 1794, subd. (b);
see also Kirzhner, supra, 9 Cal.5th at p. 986.) Thus, it is only
where the manufacturer fails to “promptly” provide restitution
that a buyer would be able to trade in or sell a defective vehicle
while also obtaining restitution from the manufacturer. If a
buyer were to trade in or sell the vehicle before affording the
manufacturer a reasonable number of opportunities to repair
the vehicle, the buyer would not be able to obtain restitution or
replacement remedies under the Act.8 (Kirzhner, supra, at
8
We are not faced with circumstances in which a
manufacturer has violated the Act but has a good faith and
reasonable belief that a statutory obligation to pay restitution
does not exist. Neither are we faced with a situation in which a
buyer sells or trades in a vehicle before a manufacturer has the
opportunity to comply with its obligation to promptly pay
restitution. We do not decide today how such facts might affect
the damages calculation; in this case, a jury found FCA not only
31
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
pp. 969, 971, 986; Krotin, supra, at pp. 302–303.) In this way,
the Act itself curbs the concern that buyers will not return
defective vehicles to the manufacturer for service and labeling.
FCA also argues the labeling and notification provisions,
“contemplate[] that, in exchange [for the full restitution
remedy], the buyer will return the car to the manufacturer. This
is made clear by Section 1793.23, which states in four different
places that a defective vehicle is ‘accepted for restitution’ by the
manufacturer.” FCA instructs us to assume, however, that
consumers who cannot return a vehicle are still entitled to
statutory restitution under section 1793.2. Indeed, FCA does
not challenge Martinez’s holding that a plaintiff does not need
to “possess or own the vehicle at issue in order to obtain
replacement or restitution pursuant to the Act.” (Martinez,
supra, 193 Cal.App.4th at p. 192.) Yet FCA reasons that in light
of section 1793.23, in situations where a consumer cannot return
the vehicle, any value the consumer received from a trade-in or
sale of the vehicle must nonetheless reduce the consumer’s
restitution award.
The “accepted for restitution” language in the Act,
however, is only present in the labeling and notification
provisions. (§ 1793.23, subds. (c)–(e).) It is notably absent from
both sections 1794 and 1793.2, subdivision (d)(2). The labeling
and notification provisions identify what a manufacturer must
do to comply with the Act when it reacquires a vehicle. The
provisions impose no limits on the remedies identified, and
concededly applicable, in sections 1794 and 1793.2,
subdivision (d)(2). Accordingly, this language does not require
failed to promptly pay Niedermeier restitution, but FCA also
willfully failed to comply with the Act.
32
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
a buyer’s restitution award to be reduced if the buyer does not
return their defective vehicle to the manufacturer.
Ultimately, the labeling and notification provisions “are
inapplicable in the situation where, as here, the manufacturer
elects not to reacquire the vehicle and the buyer is forced to seek
legal intervention.” (Williams, supra, 88 Cal.App.5th at p. 783.
These provisions do not require a buyer to return a defective
vehicle in order to receive restitution under the Act; they merely
place a duty on the manufacturer or dealer to notify subsequent
transferees that the car was reacquired due to a nonconformity.9
Once restitution is available to a plaintiff as a remedy, which
FCA concedes is the case here, the measure of restitution is as
described in section 1793.2, subdivision (d)(2), with no
reductions other than those expressly stated in that subdivision.
D. Additional Public Policy Considerations
Support Not Reducing a Restitution Award by a
Trade-in Credit or Sale Proceeds
There are a number of additional public policy reasons to
conclude the statutory restitution remedy does not permit a
reduction for a trade-in credit or sale proceeds.
9
The concurring opinion observes that the statutory
restitution remedy seems to be built on the premise that a buyer
returns the defective vehicle, the manufacturer accepts it, and
the manufacturer offers the buyer their choice of a refund or
replacement vehicle. (See conc. opn. of Kruger, J., post, at p. 9.
But as FCA acknowledges, the question of whether Martinez
was correctly decided is not before us, so we assume a buyer is
not required to return the defective vehicle to a manufacturer to
obtain restitution.
33
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
First, the Court of Appeal’s (and FCA’s) interpretation
would incentivize manufacturers to drag out the process of
offering restitution in hopes of paying reduced damages.
Specifically, manufacturers would be encouraged to wait for
consumers to become fed up with delays and give up and sell or
trade in their defective (if not dangerous) vehicles, at which
point the manufacturers could request that the consumers’
damages be reduced accordingly. If the statutory restitution
remedy can be reduced by a trade-in credit or sale proceeds,
manufacturers will be relieved of the obligation to pay the full
restitution amount required by statute. Such a rule would
encourage “the manufacturer’s unforthright approach and
stonewalling of fundamental warranty problems.” (Krotin,
supra, 38 Cal.App.4th at p. 303.)10
Similarly, allowing a reduction to the statutory restitution
remedy in actions pursuant to section 1794 would reward
manufacturers for delaying refunds when the manufacturer
“ha[s] complete control over the length of that delay, and an
affirmative statutory duty to replace or refund promptly.”
(Jiagbogu, supra, 118 Cal.App.4th at p. 1244; Williams, supra,
10
Niedermeier and amicus Consumers for Auto Reliability
and Safety argue that trade-in credits tend to be artificially
inflated and are not reflective of the actual value of the vehicle.
The prospect that a buyer would trade in a defective vehicle for
an artificially inflated value would provide an even greater
incentive for manufacturers to delay in repurchasing defective
vehicles. However, Niedermeier’s counsel advised the court as
to the Yukon’s purchase price; no evidence was introduced at
trial as to the Yukon’s purchase price or whether the trade-in
amount reflected the vehicle’s actual value. Thus, the court does
not credit the assertion that the trade-in amount Niedermeier
received was artificially inflated.
34
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
88 Cal.App.5th at p. 785 [manufacturer’s interpretation “would,
in essence, reward manufacturer for declining or not offering to
reacquire the vehicle”].) If a manufacturer fails to comply with
the Act, a buyer may spend months or years pursuing futile
repair attempts and years in litigation pursuing remedies. Any
delay in paying restitution increases the likelihood that a buyer
will be forced to trade in or resell the defective vehicle or
relinquish the vehicle to a lienholder, relieving manufacturers
of the obligation to label the vehicles lemons.
FCA contends that reducing the restitution remedy by the
amount of a trade-in credit or sale will not encourage delay.
According to FCA, there is no economic difference from the
manufacturer’s perspective between a scenario in which a buyer
returns the car to the manufacturer and the manufacturer is
liable for the purchase price of the vehicle, and a scenario in
which a buyer sells or trades in a car to a third party and the
manufacturer pays the buyer reduced damages. This argument
is not well taken. FCA ignores that manufacturers
independently benefit from delays that cause buyers to trade in
or sell defective vehicles because manufacturers are relieved of
the burden of complying with the Act’s labeling and notification
requirements. Not only that, incidental damages cease accruing
when buyers trade in or sell defective vehicles, further reducing
the amount manufacturers have to pay in damages. FCA’s
interpretation would result in significant incentives for delay.
Encouraging manufacturer delays would undermine the prompt
restitution obligation imposed on manufacturers under the Act
and
contravene
the
Act’s
pro-consumer
purpose.
“Interpretations
that
would
significantly
vitiate
a
manufacturer’s incentive to comply with the Act should be
35
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
avoided.” (Jiagbogu, supra, 118 Cal.App.4th at p. 1244; see also
Kwan, supra, 23 Cal.App.4th at p. 184.
The Court of Appeal was unpersuaded by the argument
that a buyer trading in a defective vehicle bears all or part of the
cost of the manufacturer’s delay, and observed that Niedermeier
“can recover the full purchase price through a combination of
the trade-in and restitution from defendant.” (Niedermeier,
supra, 56 Cal.App.5th at p. 1073.) The Court of Appeal fails to
account for the fact that buyers are always forced to bear a
burden when a manufacturer delays in promptly reimbursing or
exchanging a vehicle. These burdens may include considerable
stress and time diverted from work, school, family, or leisure
activities while attempting to repair or return a defective
vehicle. At a minimum, a manufacturer’s failure to promptly
reimburse a buyer imposes a financial burden on the buyer, who
must continue to shoulder payments for a defective vehicle
and — if the buyer can afford it — pay out of pocket for a new
vehicle. This, by itself, is inconsistent with the pro-consumer
purpose of the Act. If buyers cannot afford to buy a replacement
vehicle, they may have no choice but to continue driving a
defective or dangerous vehicle. Forcing consumers to engage in
self-help in order to avoid the ongoing impact of a
manufacturer’s delay is not what the Legislature intended.
The Court of Appeal’s interpretation of “actual price paid
or payable” as not including trade-in or sale amounts could also
compel buyers to choose replacement over restitution. Faced
with the choice of a manufacturer delaying payment of
restitution on the one hand, and a replacement option that
requires a manufacturer to provide an alternate vehicle that is
likely already available on the other hand, buyers may
ultimately select replacement. This, however, would be in direct
36
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
contravention of the Act’s explicit directive that “the buyer shall
be free to elect restitution in lieu of replacement, and in no event
shall the buyer be required by the manufacturer to accept a
replacement vehicle.” (§ 1793.2, subd. (d)(2).
FCA argues that manufacturers have “ample incentive” to
promptly comply with the Act because they are already subject
to attorney fee awards and civil penalties for willful violations
of the Act. The facts of this case prove otherwise. Niedermeier
took the vehicle in for repair a total of 16 times over four years,
rendering the vehicle out of commission for 75 days without it
ever being repaired. Niedermeier made three separate demands
for restitution — which she was not required to do under the Act
(see Krotin, supra, 38 Cal.App.4th at pp. 302–303) — but FCA
declined to repurchase the vehicle. Attorney fees and penalties
were a real possibility in this case, and in fact were imposed on
FCA for willfully violating the Act, but FCA still failed to
promptly comply with the Act. As Niedermeier points out, “the
most defective vehicles . . . are the vehicles most likely to be
traded-in for a safe vehicle, yet those are the ones by which a
manufacturer would reap the best benefit for its delay.” To the
extent FCA contends that manufacturers already have
sufficient incentives to comply with the Act or that buyers will
receive windfalls if the statutory restitution remedy is not
reduced by the trade-in credit or sale proceeds, these are
competing policy concerns that are more appropriately directed
to the Legislature. (See Brennon B. v. Superior Court (2022
13 Cal.5th 662, 696 [“The proper balancing of these competing
priorities is ultimately and unquestionably ‘a policy issue that
lies within the province of the legislative, rather than the
judicial, branch’ ”].
37
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
For these reasons, we decline to adopt a rule that reduces
a buyer’s statutory restitution award by a trade-in credit or sale
proceeds at least where, as here, a consumer has been forced to
trade in or sell the defective vehicle due to the manufacturer’s
failure to comply with the Act. Once restitution is available to
a plaintiff as a remedy, the measure of restitution is as described
in section 1793.2, subdivision (d)(2), with no reductions other
than those expressly stated in that subdivision. Our
interpretation is supported by the plain language of the Act, the
legislative history, and the consumer-protective purpose of the
Act. It is also “more consistent with the rule that courts should
liberally construe remedial statutes in favor of their protective
purpose . . . .” (Pineda, supra, 51 Cal.4th at p. 532.
The concurrence maintains a rule that categorically
entitles consumers to obtain the full statutory restitution
remedy without a reduction for trade-in or sale proceeds “would
raise significant questions of fairness.” (Conc. opn. of Kruger,
J., post, at p. 15.)11 To be sure, we do not mean to suggest that
11
The concurrence also argues that such a rule “would mean
that plaintiffs who buy luxury vehicles could wind up turning a
substantial profit if those vehicles later prove defective, while
plaintiffs who buy economy cars probably could not — for
reasons that have nothing to do with the extent of their actual
losses or the extent of the manufacturer’s wrongdoing.” (Conc.
opn. of Kruger, J., post, at p. 15.) Consumers who purchase
more expensive vehicles pay more as a matter of course for their
vehicles and thus are more likely to obtain more when they are
traded in or resold. The court does not assume, based on our
holding, that consumers will start buying vehicles with the
expectation that they will be defective and that manufacturers
will refuse to comply with the Act, so that they can sell or trade
38
NIEDERMEIER v. FCA US LLC
Opinion of the Court by Evans, J.
a consumer has the right to sell or trade in a vehicle at any time.
Our holding is narrower and applies to the measure of
restitution described in section 1793.2, subdivision (d)(2), in
actions brought pursuant to section 1794. A consumer still has
the obligation to permit manufacturers a reasonable
opportunity to repair the vehicle. Manufacturers must also
comply with their obligations under the Act, including the
obligation to promptly repurchase or replace vehicles and the
obligation to label vehicles lemons. Prompt compliance with the
Act will ensure manufacturers meet these obligations and that
defective vehicles end up in their possession for labeling.
III. DISPOSITION
As we conclude that neither a trade-in credit nor sale
proceeds reduce the statutory restitution remedy, at least where
a consumer has been forced to trade in or sell a defective vehicle
due to the manufacturer’s failure to comply with the Act, we do
not reach the issue of whether the amount a buyer recovers
should be assessed before or after calculating penalties. We
reverse the judgment of the Court of Appeal.
EVANS, J.
We Concur:
GUERRERO, C. J.
CORRIGAN, J.
LIU, J.
GROBAN, J.
JENKINS, J.
in the vehicles and bring actions under the Act hoping to realize
a profit.
39
NIEDERMEIER v. FCA US LLC
S266034
Concurring Opinion by Justice Kruger
Car manufacturer FCA US LLC willfully violated its
duties under California’s lemon law when it repeatedly refused
to accept the return of Lisa Niedermeier’s defective Jeep for
replacement or a refund of the $40,000 she paid for it.
Niedermeier eventually gave up on FCA and went to an
unaffiliated dealership, where she traded in the defective Jeep
for a working vehicle. Niedermeier sued FCA for her damages,
including a full $40,000 refund. FCA now argues that because
Niedermeier did not return the Jeep but instead traded it in for
another car, FCA is entitled to subtract from her damages the
likely inflated $19,000 trade-in credit she received for the Jeep.
Never mind that the reason Niedermeier did not return the
defective Jeep to FCA is that FCA had refused to accept it and
promptly pay restitution, in willful violation of California’s
lemon law.
FCA’s argument is all but self-refuting, and the court
rightly rejects it. The majority opinion holds that under
California’s lemon law, a car buyer is entitled to a full refund for
a defective vehicle even if the buyer has in the meantime traded
it in or sold it to a third party — with the qualification that this
rule applies “at least” where, as in this case, the buyer “has been
forced” to trade in or sell the defective vehicle because of “the
manufacturer’s failure to comply with the [Song-Beverly
Consumer Warranty] Act.” (Maj. opn., ante, at p. 3.) I write
1
NIEDERMEIER v. FCA US LLC
Kruger, J., concurring
separately to explain how I understand this holding, including
both the rule and the suggestion that the rule may have limits.
I also write to explain why, in my view, such limits are
important to a full understanding of the lemon law in light of its
overarching consumer-protection purposes.
As I read the law, if a car proves defective, the buyer
ordinarily must return the car to the manufacturer in order to
receive a replacement vehicle or refund. The car manufacturer
may then resell the returned car, but first must disclose to
prospective buyers that the car has been designated a lemon.
This usual order of operations ensures that original buyers are
appropriately compensated when their cars cannot be made to
conform to their warranties within a reasonable time, while also
protecting prospective buyers from inadvertently purchasing
vehicles that have a history of serious defects. But all bets are
necessarily off if the manufacturer willfully thwarts the buyer’s
efforts to return the vehicle for a replacement or refund, which
is what happened here. If the car buyer then engages in
reasonable self-help by selling the car or trading it in for another
vehicle, the manufacturer is not entitled to pocket the proceeds
and thereby profit from its willful misconduct.
I.
California’s lemon law, formally known as the Song-
Beverly Consumer Warranty Act (the Act), Civil Code section
1790 et seq., is a consumer protection law aimed specifically at
new car buyers, who often depend on those cars to get to work,
to take their children to school, and to handle myriad other daily
necessities of life. Among other things, the law places
affirmative obligations on car manufacturers to back up the
2
NIEDERMEIER v. FCA US LLC
Kruger, J., concurring
warranty promises made in connection with the sale of their
products.
The dispute in this case centers on the meaning of various
provisions of the lemon law addressing what happens when a
car manufacturer is unable to make a car conform to its
warranty after a reasonable number of attempts. One set of
provisions concerns a buyer’s remedies. The first of these
provisions, Civil Code section 1793.2, subdivision (d)(2) (section
1793.2(d)(2)), provides that if the manufacturer has had a
reasonable amount of time to repair the vehicle and still cannot
get it done, the manufacturer has an obligation to “promptly”
replace the defective vehicle or “make restitution” by refunding
the buyer. (See Kirzhner v. Mercedes-Benz USA, LLC (2020) 9
Cal.5th 966, 971.) Appellate case law makes clear that this
replace-or-refund obligation exists whether or not the buyer
asks; it is the manufacturer’s “affirmative duty to replace a
vehicle or make restitution to the buyer if the manufacturer is
unable to repair the new vehicle after a reasonable number of
repair attempts.” (Krotin v. Porsche Cars North America, Inc.
(1995) 38 Cal.App.4th 294, 303.
This process is meant to work without court involvement.
But if a manufacturer does not comply with its obligation to
promptly repurchase or replace the defective vehicle, the buyer
may turn to a second provision of the law, Civil Code section
1794 (section 1794), which creates “an action for the recovery of
damages and other legal and equitable relief.” (§ 1794, subd.
(a).) A successful claimant in a suit under section 1794 is
entitled to reasonable attorney’s fees and costs (id., subds. (d),
(e)(1)), as well as damages whose measure “shall include the
rights of replacement or reimbursement as set forth in
subdivision (d) of Section 1793.2, and” provisions of the
3
NIEDERMEIER v. FCA US LLC
Kruger, J., concurring
California Uniform Commercial Code governing the damages
ordinarily available to a buyer of nonconforming commercial
goods. (Id., subd. (b).
The law also provides for penalties to punish and deter
willful violations. Appellate case law treats the manufacturer’s
violation as not willful “if [its] failure to replace or refund was
the result of a good faith and reasonable belief the facts
imposing the statutory obligation were not present. This might
be the case, for example, if the manufacturer reasonably
believed the product did conform to the warranty, or a
reasonable number of repair attempts had not been made, or the
buyer desired further repair rather than replacement or
refund.” (Kwan v. Mercedes-Benz of North America, Inc. (1994
23 Cal.App.4th 174, 185.) If, however, a manufacturer violates
the statute without such a good faith and reasonable belief, the
judgment may include a civil penalty of up to two times the
amount of actual damages. (§ 1794, subd. (c).
That is the set of provisions governing the remedies
available to the buyer of a defective car, and which forms the
centerpiece of the dispute before us. There is also, however, a
second set of provisions relevant to our inquiry, which are the
provisions governing what’s supposed to happen to the car after
it is found to be defective. A car that has once been labeled a
lemon because it could not be made to conform to its warranty
within a reasonable time is not necessarily worthless, and it
may be resold. But to prevent reselling defective or once-
defective vehicles “without notice to the subsequent purchaser”
(Civ. Code, § 1793.23, subd. (a)(2)), the law imposes various
labeling and notification requirements on the manufacturer
that has “reacquired” a vehicle that is “required by law to be
replaced” or “accepted for restitution” under section 1793.2(d)(2
4
NIEDERMEIER v. FCA US LLC
Kruger, J., concurring
or under comparable laws in other jurisdictions (Civ. Code,
§ 1793.23, subd. (c); see also id., subds. (d)–(f)).
Specifically, before the manufacturer resells, leases, or
transfers the car, the manufacturer must instruct the
Department of Motor Vehicles to “inscribe the ownership
certificate with the notation ‘Lemon Law Buyback,’ ” and “affix
a decal to the vehicle” indicating that it has been designated a
“ ‘Lemon Law Buyback.’ ” (Civ. Code, § 1793.23, subd. (c); Veh.
Code, § 11713.12, subd. (a).) The manufacturer must also
provide written notice to the transferee of the nonconformities
reported by the original buyer or lessee and of any repairs
attempted to correct the nonconformity. (Civ. Code, §§ 1793.23,
subd. (d), 1793.24, subd. (a)(3)–(4).) The Act likewise prohibits
the sale, lease, or transfer of a vehicle “transferred by a buyer or
lessee to a manufacturer pursuant to [section 1793.2(d)(2)] or a
similar statute of any other state” absent disclosure of the
vehicle’s nonconformities, correction of those nonconformities,
and a one-year manufacturer warranty that the vehicle is free
of the nonconformities. (Id., § 1793.22, subd. (f)(1); see generally
Niedermeier v. FCA US LLC (2020) 56 Cal.App.5th 1052, 1065–
1066.
II.
The threshold question in this case is whether the plain
language of the statute forecloses FCA’s argument for
calculating Niedermeier’s damages by subtracting the trade-in
value of the Jeep from the original purchase price. The plain-
language argument goes something like this: Section 1794 says
that a car manufacturer that violates its lemon law duties must
pay damages including “replacement or reimbursement as set
forth in subdivision (d) of Section 1793.2.” (§ 1794, subd. (b).
5
NIEDERMEIER v. FCA US LLC
Kruger, J., concurring
And the restitutionary remedies in section 1793.2(d)(2) specify
precisely what this means. A manufacturer required to
reimburse the buyer for a defective car must pay the actual price
of the vehicle but may make reductions for nonmanufacturer
items installed by a dealer or the buyer, and the amount directly
attributable to the vehicle’s use by the buyer before first
delivering it for correction of the warranty nonconformity.
(§ 1793.2(d)(2)(B), (C).) But those provisions do not say
anything about reducing the reimbursement amount by the
trade-in or resale value a buyer receives for the defective vehicle.
By negative implication, then, a manufacturer may not reduce
the reimbursement amount by whatever proceeds the buyer
may have received through selling or trading in the car to a third
party.
The majority walks through this argument (maj. opn.,
ante, at pp. 10–23), but it also, in the end, acknowledges that a
“potential ambiguity” in the statutory language makes it
appropriate to consider legislative history and the purposes and
policies underlying the lemon law in arriving at the conclusions
the court reaches today (id. at p. 24). I emphatically agree the
statute is ambiguous.
Looking at sections 1793.2(d)(2) and 1794 in isolation, the
idea that the plain language of the provisions answers the
question has some superficial appeal. The difficulty with the
plain-language argument, however, is that it would seem to
prove too much. The restitutionary remedy in section
1793.2(d)(2) is not specific to cases like this one, in which a car
manufacturer has willfully violated its duties to make a prompt
offer of replacement or refund. Indeed, section 1793.2(d)(2) does
not address violations of those duties at all; it is what tells car
manufacturers what they must do in the first instance to avoid
6
NIEDERMEIER v. FCA US LLC
Kruger, J., concurring
violating their duties. By suggesting that section 1793.2(d)(2
categorically entitles a car buyer to trade in or sell a defective
vehicle to a third party, retain the proceeds, and still demand a
full refund of the purchase price (or even a brand-new
replacement vehicle from the manufacturer), the plain-language
argument would seem to provide an avenue for double recovery
in every lemon law case, regardless of whether the
manufacturer has done anything wrong. This is not the only
way — or even a particularly likely way — to understand the
text of the relevant remedial provisions.1
One reason is the one the majority expressly identifies:
Allowing across-the-board double recovery for lemon law
plaintiffs arguably overshoots what the Legislature was aiming
at when it provided for damages to include a right of
“restitution,” even if that right is statutory rather than based in
common law. (Maj. opn., ante, at p. 24; see Alder v. Drudis
1
The court in Martinez v. Kia Motors America, Inc. (2011
193 Cal.App.4th 187, 194, did appear to adopt this reading of
the language of the statute. But the actual holding of the case
did not depend on it. In Martinez, the buyer abandoned her
nonfunctioning car at the dealership after the dealer refused to
provide warranty coverage to repair it. The car was ultimately
repossessed. (Id. at p. 192.) There was no trade-in or resale to
contend with, no dispute about the proper amount of restitution,
and no question about the calculation of damages. The Court of
Appeal determined that nothing in the lemon law required
Martinez to possess the vehicle before pursuing damages for the
violations she asserted. (Id. at pp. 193–194.) Whether and to
what extent the Martinez opinion correctly reasoned through
the issue before it is beyond the scope of our inquiry in this case.
It suffices to observe that the actual holding of Martinez is not
inconsistent with a more nuanced understanding of the statute
that acknowledges its ambiguities.
7
NIEDERMEIER v. FCA US LLC
Kruger, J., concurring
(1947) 30 Cal.2d 372, 384 [“[t]he purpose of restitution as a
remedy for [contract] breach is the restoration of the status quo
ante as far as is practicable”].
But the more fundamental reason, as I see it, relates to
the relationship between section 1793.2(d)(2) and related
provisions governing what is supposed to happen to a car after
it has proved defective. If the statute does not specify that resale
or trade-in values are to be excluded from the “restitution” for
which section 1793.2(d)(2) provides, that may simply be because
the statute does not anticipate the scenario in which a car buyer
seeks a full refund or replacement vehicle despite having sold
the defective car to a third party.
Again, recall that section 1793.2(d)(2) is not written as a
remedy for manufacturer wrongdoing; it is, rather, the provision
that tells the manufacturer what it must do when a defective car
doesn’t live up to the warranty. The assumption running
through the statute appears to be that, in the ordinary course,
if it appears that a car cannot be made to conform to the
warranty within a reasonable number of repair attempts, the
manufacturer will offer replacement or restitution and will
reacquire the car in exchange.
This assumption is most clearly evident in the Act’s
labeling and notification provisions governing “Lemon Law
Buyback” (Civ. Code, § 1793.23), which impose on
manufacturers multiple requirements designed to disclose a
defective vehicle’s past before the vehicle can be sold to another
buyer. These provisions expressly refer to cars “accepted for
restitution” under section 1793.2(d)(2) — suggesting that the
cars will, in fact, be returned to the manufacturer in exchange
for the restitution described in that section. (Civ. Code,
8
NIEDERMEIER v. FCA US LLC
Kruger, J., concurring
§ 1793.23, subds. (c)–(e).) And, perhaps more fundamentally,
the labeling and notification provisions can serve their essential
purpose of protecting downstream consumers in the used-car
market only if the manufacturers have the chance to comply,
which means the cars must somehow find their way back into
the manufacturers’ hands.
None of this is, or should be, especially controversial.
Indeed, Niedermeier’s counsel acknowledged at oral argument
that the idea that a car buyer will return the defective vehicle
in exchange for replacement or full refund is “embedded” in the
statutory framework that describes what is supposed to
transpire when a manufacturer cannot conform a vehicle to its
warranty, even if the lemon law may not say so in explicit terms.
The restitutionary remedy in section 1793.2(d)(2) appears built
on this premise: The buyer returns the defective vehicle, the
manufacturer accepts it and in return offers the buyer her choice
of a refund or a replacement vehicle.2
2
Unsurprisingly, many other states’ lemon laws make the
return of the car an explicit requirement. (E.g., N.J. Stat. Ann.
§ 56:12-32(a)(1) [“the manufacturer . . . shall accept return of the
motor vehicle from the consumer” and “(1) . . . provide the
consumer with a full refund of the purchase price of the original
motor vehicle” (italics added)]; N.Y. Gen. Bus. Law § 198-a(c)(1
[“the manufacturer, at the option of the consumer, shall replace
the motor vehicle with a comparable motor vehicle, or accept
return of the vehicle from the consumer and refund to the
consumer the full purchase price” (italics added)]; R.I. Gen.
Laws § 31-5.2-3(a)(1) [“the manufacturer shall accept return of
the vehicle from the consumer or lessee and, at the consumer’s
or lessee’s option, refund the full contract price or lease price of
the vehicle including all credits and allowances for any trade-in
vehicle” (italics added)]; Wn. Rev. Code Ann. § 19.118.041(1
9
NIEDERMEIER v. FCA US LLC
Kruger, J., concurring
The problem we confront here raises a set of issues as to
which the statute provides no express instruction. What
happens if the buyer doesn’t return the vehicle — because, as
occurred here, the manufacturer refuses to take the car back —
and the buyer then trades it in or sells it to a third party? Is the
buyer entitled to a full refund or replacement? The statute
offers no clear answers.
To navigate this hazy area of the lemon law, we can look,
as the majority says, to the legislative history and, ultimately,
to the law’s purposes as they relate to the issue before us. (Maj.
opn., ante, at p. 24.) As I understand the majority opinion, the
dispositive consideration is an essentially equitable one that
focuses on the circumstances of this case and others like it. If
Niedermeier did not return the defective Jeep, it was not for lack
of trying. It was, rather, because FCA willfully refused to accept
the return of the Jeep and promptly pay restitution, as it was
statutorily required to do. If the result was that Niedermeier
ultimately sold the Jeep in a manner that undercut the labeling
and notification requirements, the fault belongs with FCA,
which effectively forced Niedermeier into that position. FCA
should not then be permitted to profit from its intransigence by
subtracting the likely inflated trade-in credit Niedermeier
received from the total amount it would otherwise owe
Niedermeier in damages. (Maj. opn., ante, at pp. 30–31, 35–38.
[“the manufacturer . . . shall, at the option of the consumer,
replace or repurchase the new motor vehicle” (italics added)]; see
also Martinez v. Kia Motors America, Inc., supra, 193
Cal.App.4th at pp. 196–197 [discussing additional jurisdictions
that require return of a defective vehicle for a lemon law
refund].
10
NIEDERMEIER v. FCA US LLC
Kruger, J., concurring
This is not a particularly novel concept, nor one unique to
the lemon law. It is, rather, essentially a statute-specific
application of the well-established equitable principle that “[n]o
one can take advantage of his own wrong.” (Civ. Code, § 3517.
The problem raised by the calculation of the “restitution” owed
to Niedermeier in this case, in other words, evokes the familiar
doctrine of unjust enrichment. The doctrine is “based on the
idea that ‘one person should not be permitted unjustly to enrich
himself at the expense of another, but should be required to
make restitution of or for property or benefits received, retained,
or appropriated, where it is just and equitable that such
restitution be made.’ ” (County of San Bernardino v. Walsh
(2007) 158 Cal.App.4th 533, 542.) “Typically, the defendant’s
benefit and the plaintiff’s loss are the same, and restitution
requires the defendant to restore the plaintiff to his or her
original position. [Citations.] The principle of unjust
enrichment, however, is broader than mere ‘restoration’ of what
the plaintiff lost.” (Ibid.) “The emphasis is on the wrongdoer’s
enrichment, not the victim’s loss. In particular, a person acting
in conscious disregard of the rights of another should be
required to disgorge all profit because disgorgement both
benefits the injured parties and deters the perpetrator from
committing the same unlawful actions again.” (Ibid.; see Ward
v. Taggart (1959) 51 Cal.2d 736, 741–742; Rest.3d Restitution
and Unjust Enrichment, § 1.
Consideration of unjust enrichment principles offers an
explanation for the conclusion that a manufacturer obligated to
pay lemon law damages may not withhold the amounts it would
otherwise save through its willful violation of section
1793.2(d)(2) — which is to say, its “conscious disregard” of the
buyer’s statutory rights and of its own statutory duties. (County
11
NIEDERMEIER v. FCA US LLC
Kruger, J., concurring
of San Bernardino v. Walsh, supra, 158 Cal.App.4th at p. 542;
see Rest.3d Restitution and Unjust Enrichment, supra, § 51,
subd. (4) [“unjust enrichment of a conscious wrongdoer . . . is the
net profit attributable to the underlying wrong”]; American
Master Lease LLC v. Idanta Partners, Ltd. (2014) 225
Cal.App.4th 1451, 1487 [same].) Through its misconduct —
unjustly refusing to accept Niedermeier’s Jeep for restitution
even after multiple repair efforts had failed to make the Jeep
safe to drive — FCA effectively “forced” Niedermeier to trade in
her Jeep for a working vehicle (maj. opn., ante, at pp. 3, 24, 39,
40), and improperly retained the full restitution to which she
was entitled under section 1793.2(d)(2). Considered in light of
unjust enrichment principles, the damages calculation
prescribed by sections 1794 and 1793.2(d)(2) cannot be
interpreted to reward FCA for this willful wrongdoing.
The trial court in this case invoked these principles when
it rejected FCA’s request for a reduction in damages, expressly
citing the tenet that “ ‘[n]o one can take advantage of his own
wrong.’ ” And in other cases — also, as it happens, against
FCA — courts have rejected similar requests for a reduction in
damages with the observation that FCA should not “be
compensated for its own willful violation of the law.” (Figueroa
v. FCA US, LLC (2022) 84 Cal.App.5th 708, 713; see also
Williams v. FCA US LLC (2023) 88 Cal.App.5th 765, 785
[agreeing with Figueroa and declining to interpret the Act to
“reward manufacturer” for its willful refusal to reacquire the
vehicle].) Regardless of whether Niedermeier would otherwise
be entitled to trade in her Jeep and pocket the proceeds, any
reasonable understanding of the lemon law refutes the idea that
FCA is entitled to profit from the course of action that led
Niedermeier to that point in this case.
12
NIEDERMEIER v. FCA US LLC
Kruger, J., concurring
Niedermeier invoked the requirements of the Act by
presenting her Jeep to FCA for repair; she also specifically asked
FCA to accept the Jeep for restitution when many repairs over
an extended period did not conform the Jeep to its warranty.
Niedermeier, in other words, tried to return her vehicle to FCA,
as the Act envisions, and would have been entitled to recover
full restitution as described in section 1793.2(d)(2) if FCA had
not willfully violated the Act and refused her return. Under
these circumstances, Niedermeier’s “rights of replacement or
reimbursement as set forth in subdivision (d) of Section 1793.2”
(§ 1794, subd. (b)), for purposes of measuring her damages,
include the full measure of restitution to which she would have
been entitled absent FCA’s willful violation of its duties and
conscious disregard of her rights.
III.
The majority opinion suggests — but does not outright
hold — that the result might be different in a different case. It
says that the statute entitles a plaintiff car buyer to a full
refund, without any deductions for trade-in or resale value, but
adds this qualification: “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.” (Maj. opn., ante,
at p. 3.) The majority also makes clear that its holding is limited
to circumstances like those presented in this case, and is leaving
open whether the same rule would apply in a case involving a
good-faith, reasonable mistake about whether the Act’s replace-
or-refund provision applies to a particular vehicle. (Id. at
pp. 32–33, fn. 8.
In my view, the result the court reaches today makes sense
precisely because of the circumstances we confront. Although
13
NIEDERMEIER v. FCA US LLC
Kruger, J., concurring
the majority opinion leaves the limits of its holding for
exploration in a future case, those limits are, in my view,
important to a full understanding of the law.
There is no real question that a rule the majority applies
today results in something of a windfall for the buyer, in that it
leaves her better off than she was before she purchased the
defective car. (Accord, maj. opn., ante, at p. 24.) In a case where
she has been forced to sell the car because of the manufacturer’s
willful failure to promptly refund or replace the car in
accordance with the law, none of this matters. The reason the
buyer in Niedermeier’s position is entitled to a full refund is not
because all the money is necessary to make her whole; it is,
rather, because it is necessary for the manufacturer to
relinquish any claim on the money, in order to avoid rewarding
misbehavior and to avoid encouraging a repeat of the same
statute-defying stunt in future cases. (Cf., e.g., Center for
Healthcare Education & Research, Inc. v. International
Congress for Joint Reconstruction, Inc. (2020) 57 Cal.App.5th
1108, 1129 [the “ ‘profit-based measure of unjust enrichment
determines recoveries against conscious wrongdoers’ ” and
“ ‘may potentially exceed any loss to the claimant’ ”].)3
3
I do not mean to overstate the degree to which our holding
is likely to affect manufacturers’ existing incentives to do their
best to comply with the law. As the majority points out, the
prospect of hundreds of thousands of dollars in civil penalties
and attorney fees was not enough to deter FCA’s misbehavior in
this case. (See maj. opn., ante, at p. 38.) It is unclear to me, at
least, that the prospect of being denied a $19,000 trade-in credit
would have made a dispositive difference. But the point here is
not how effective any individual component of the monetary
remedy may be in deterring wrongdoing in any particular case.
14
NIEDERMEIER v. FCA US LLC
Kruger, J., concurring
But it is not hard to see why the Court of Appeal in this
case was concerned about adopting a rule that would extend
similar treatment across the board, to any buyer of a defective
vehicle who might choose to trade in or sell the vehicle for profit
rather than give it back to the manufacturer. Certainly some
buyers might choose continued repairs rather than getting rid
of the vehicle and “resorting to litigation.” (Maj. opn., ante, at
p. 31; see also Kwan v. Mercedes-Benz of North America, Inc.,
supra, 23 Cal.App.4th at p. 186 [the plaintiff “repeatedly agreed
to allow continued repair efforts rather than insisting on
replacement or refund”].) But a rule that guaranteed full
reimbursement on top of trade-in or resale profit would almost
certainly alter some consumers’ calculations. If trade-in or
resale always yielded the potential for double recovery, one
would expect a good number of consumers to go that route. And
as the Court of Appeal explained, the result would be to
undermine the operation of the labeling and notification
provisions, which depend on buyers returning their defective
cars to manufacturers rather than selling their unlabeled
lemons into the used-car market. (Niedermeier v. FCA US LLC,
supra, 56 Cal.App.5th at pp. 1071–1072.
An across-the-board rule giving lemon law plaintiffs a
categorical entitlement to full reimbursement (or else a new
replacement car) plus the proceeds of resale or trade-in would
also raise significant questions of fairness. A rule permitting
this sort of double recovery in every case would mean that
plaintiffs who buy luxury vehicles could wind up turning a
substantial profit if those vehicles later prove defective, while
The point is that such wrongdoing should not be rewarded in
any measure.
15
NIEDERMEIER v. FCA US LLC
Kruger, J., concurring
plaintiffs who buy economy cars probably could not — for
reasons that have nothing to do with the extent of their actual
losses or the extent of the manufacturer’s wrongdoing. It is
unclear why the Legislature would have set up a remedial
scheme that would authorize this additional recovery based
solely on the price tag of the car, and thus, by extension, the
financial means of the buyer.
By applying its holding “at least” in a case involving
circumstances like those before us — that is, a willful failure to
accept the return of a defective vehicle and make restitution —
the majority leaves open the possibility that the rule it
announces may be limited to such cases, and does not
necessarily apply across the board. As I see it, such a limit is
not only sound, but important to a complete understanding of
the statutory scheme. On that understanding, I concur in the
majority’s reversal of the judgment of the Court of Appeal.
KRUGER, J.
We Concur:
GROBAN, J.
JENKINS, J.
16
See next page for addresses and telephone numbers for counsel who
argued in Supreme Court.
Name of Opinion Niedermeier v. FCA US LLC
Procedural Posture (see XX below
Original Appeal
Original Proceeding
Review Granted (published) XX 56 Cal.App.5th 1052
Review Granted (unpublished)
Rehearing Granted
Opinion No. S266034
Date Filed: March 4, 2024
Court: Superior
County: Los Angeles
Judge: Daniel S. Murphy
Counsel:
Gibson, Dunn & Crutcher, Thomas H. Dupree, Jr., Matt Gregory,
Shaun Mathur; Clark Hill and David L. Brandon for Defendant and
Appellant.
Knight Law Group, Steve Mikhov, Roger Kirnos, Amy Morse; Hackler
Daghighian Martino & Novak, Sepehr Daghighian, Erik K. Schmitt;
Greines, Martin, Stein & Richland, Cynthia E. Tobisman, Joseph V.
Bui; Public Justice and Leslie A. Brueckner for Plaintiff and
Respondent.
Consumer Law Practice and Daniel T. LeBel for Consumers for Auto
Reliability and Safety as Amicus Curiae on behalf of Plaintiff and
Respondent.
Counsel who argued in Supreme Court (not intended for
publication with opinion):
Thomas H. Dupree, Jr.
Gibson, Dunn & Crutcher LLP
1050 Connecticut Avenue, NW
Washington, DC 20036
(202) 955-8547
Cynthia E. Tobisman
Greines, Martin, Stein & Richland LLP
6420 Wilshire Boulevard, Suite 1100
Los Angeles, CA 90048
(310) 859-7811
Opinion Information
| Date: | Docket Number: |
| Mon, 03/04/2024 | S266034 |
