Senate Standing Committee on Judiciary

Maybe if we could ask Senator Weber Pierson, let her know that if we form a quorum, then we can vote on the rules, then we can proceed to the substantive matter.

We need one more.

Now. We have 100% of the Republicans here.

Four to two, even though you said we were defeated. John. Senator Laird, don't start undermining me before we even start. All right, all right. All right. Thank you. Okay. All right.

The Senate Committee on Judiciary will come to order. Good afternoon. We're holding this Committee hearing in room 2100 of the O Street Building.

I ask that all Members of the Committee be present in room 2100 so we can establish a quorum. We need only one more Member, and once we have one more Member, and then we can proceed to the rules and then to the one substantive matter that we have before us today.

So I'm not going to ask for quorum quite yet. I will in a moment. I want to welcome Senator Valladares and Senator Weber Pierson to the Committee. We're happy to have you here. Thank you very much.

And I also want to welcome back Senator Wiener, who is an alumnus of the Committee, who's now coming back. Since our first Committee hearing, this is the first Committee hearing, we need to establish our Committee rules. Everyone should have a copy of the Committee rules.

But just so we know, we're going to adopt the same process pretty much as we had last year. So for each Bill this year, we'll have two primary witnesses in support and two primary witnesses in opposition. Each primary witness will have two minutes to speak.

After the primary support, I'll invite other supporters to state their name, affiliation, and position. In other words, you'll come to the microphone and you'll state your name, your affiliation, and your position. I'm going to do the exact same thing for the opposition. After we hear from support and opposition, we'll turn to comments from Committee Members.

If you wish to further expound on your position on the Bill, you can submit a letter to the Committee using one of the methods described in the Judiciary Committee's website. I mentioned this last year, and it's still true this year that virtually all of us can read. So virtually all of us can read, yes.

So if you want to present further information to the Committee, please do submit it. So we now have sufficient Members to form a quorum. Madam Secretary, will you call the roll for purpose of establishing a quorum?

Umberg? Here. Umberg, here. Niello? Here. Niello, here. Allen? Ashby? Here. Ashby, here. Caballero? Durazo? Durazo, here. Laird? Laird, here. Reyes? Stern? Valladares? Here. Valladares, here. Wahab? Wahab, here. Weber Pearson? Wiener? You have a quorum.

All righty. Thank you. So the first order of business is the adoption of the rules. Is there a motion? Senator Lehrer moves. All right. Any discussion? Seeing no discussion. Madam Secretary, would you call the roll on adoption of the rules for 2025-2026.

All right, so for the first correction for 2025, we don't need to call the roll if there's yes, yes, if there's no objection, the rules will be deemed adopted. All right. Now, turning to the first order of business, I'm going to turn the gavel over to Senator Niello. Senator Niello. Vice Chair. Thank you. All right.

Senator Umberg, I believe you are here to present SB26.

I am. Thank you.

You may proceed.

Thank you. Chair Niello. I'm here today to present SB-26, which is a cleanup bill, to the critical reforms that were contained in the Song-Beverly Consumer Warranty Act. It's known, commonly known as the Lemon Law, that I co-authored with Assemblymember Kalra last year.

As I think most of you know, Lemon Law requires that auto manufacturers buy back or replace defective vehicles, also commonly known as lemons, which are sold in California.

AB-1755, the Karl Umberg Bill was introduced last session to modernize California's Lemon Law statutes in a manner that benefits consumers, expedites dispute resolution, and prevents unjustified litigation tactics that delay access to justice. Lemon Law filings have increased exponentially in California.

This issue was actually first brought to me not by the litigants and not by those who represent the litigants or represent others that are stakeholders in this space, but by judges who were reporting that Lemon Law filings were exploding. 2015, Lemon Law filings were just over 4,000. 2022, they were around 15,000.

So one of the issues that was addressed early on is the issue of folks who don't want to be bound by 1755. And so what SB-26 does is it provides an opt out provision. If you don't want to be bound by AB 1755, you can opt out. Manufacturers can opt out.

There were concerns expressed, and the Governor actually, when he signed the bill, provided a signing message, and that signing message is basically contained in SB-26. This was the agreement between the Governor's office and the stakeholders in this space.

With me today to testify concerning SB-26, Mrs. Nancy Drabble at Consumer Attorneys of California, and Mr. Matthew Klopfenstein with Volkswagen. So, Mrs. Drabble.

Thank you, Mr. Chair. Nancy Drabble, CEO of Consumer Attorneys of California, and I'm very pleased to testify in support of SB-26 today. This bill is a follow up to AB-1755 of last year.

And in it, as the Chair mentioned, there is an opportunity for manufacturers to be under the previous law, if they so choose, or under the new law, which does have some additional consumer protections. From our perspective, either way, we will have the strongest Lemon Law in the nation.

Under the new law, there are the requirements for the manufacturers to actually respond to consumers. There are early discovery procedures which are to address the procedural issues that the Chair identified and a number of new consumer protections that did not exist in the past. At the same time, the existing law is also a strong Lemon Law.

So either way, we will have the strongest law in the nation.

One of the additional provisions in this bill, the only new substantive provision, is something that the Governor insisted upon at the behest of the Department of Consumer Affairs, and that is that if a consumer has asked for their car to be bought back or they are in litigation, they would then have to notify the subsequent buyer that there is this pending complaint.

Under existing law, there is no notification whatsoever unless a car is taken back informally branded levelment. So that was a new consumer protection that the Governor asked for in his signing message, and that is reflected in the bill. So from the substantive standpoint, those are the two items in this bill.

One is the opt out provision and the second is the new positive consumer notification that's in the bill. So we appreciate your support. Thank you very much.

Outstanding. That was two minutes on the button.

Okay.

Mr. Klopfenstein, go ahead.

Good afternoon, Chair and Members. Matt Klopfenstein with Summit Advocacy here today on behalf of Volkswagen Group.

And I am speaking on behalf of the coalition of automakers that were not part of the conversation, not part of the negotiation last year on 1755, but are very much in support of SB-26, moving this forward to give automakers an option of whether or not to utilize the structure that 1755 created.

We appreciate the commitment by Senator and the Governor's office to give this option to automakers to continue to address challenges with California's Song Beverly Act. The Lemon Law and this bill as an urgency bill needs to take effect before 1755 goes into effect on April 1. This bill, as was mentioned, provides an opt in process for 1755.

We think this strikes the right balance because not every automaker has the same customer service, operations, structure and process. And so this allows them to figure out what is going to be the best solution for their customer base given their operations.

The new bill, this Bill 26 would require that automakers affirmatively opt in and then it locks them into that for a period of five years to ensure that there is consistency for consumers, car buyers and dealers and everybody else. And then also, as was mentioned, requires notification to new car buyers.

So while all automakers are determining how to comply with 1755, Volkswagen and others are weighing the near and long term implications and really appreciate the flexibility that SB-26 would provide. To conclude, straightforward bill represents a deal that was struck last year.

And we appreciate the continued attention to Lemon Law, we think that all other option considerations should not be included in 26 because this does need to pass before 1755 takes effect. And we hope that there are additional conversations long term about Lemon Law. So with all that respectfully request an aye vote.

Thank you very much.

Thank you. And now we will hear from other support witnesses. This is name, affiliation and position on the bill.

Thank you, Mr. Chair and Members. Mike Belote on behalf of the General Motors Corporation in support. Thank you.

Good afternoon. Melissa Werner here on behalf of Honda in support. Thank you.

Good afternoon. Jared Maas on behalf of BMW in support.

Good afternoon. Timothy Burr on behalf of Rivian in support.

Good afternoon. Lizzie Cootsona here on behalf of Tesla in support. Thank you.

Mr. Chairman and Members. Cory Salzillo on behalf of Stellantis in support.

Good afternoon. Graciela Castillo-Krings here in support of Toyota.

Good afternoon. Megan Murray on behalf of Lucid in support.

Good afternoon. Magaly Zagal on behalf of Kia in support.

So now we'll move on to the lead witnesses in opposition.

Two witnesses. Each of you have two minutes. Proceed.

Thank you, Mr. Chair and Members of the Committee for this time. I would like to express some concerns about SB26 as a preliminary matter. It's my understanding, having spoken with many legislators, legislative staff, legal scholars, and legal professionals that an opt-in option to a law would be unprecedented in American history.

That being said, the opt in rather than the opt out presents.

Could you, for the sake of the record, identify yourself as you represent?

My name is Roger Kirnos. I am the Managing Partner at a law firm called Knight Law Group. We are one of the largest and oldest lemon law firms in the state. I personally have been involved in over 30 jury trials.

My firm and I are responsible for 25 published opinions in this space and I am a Member of the CAOC PAC Board. Great first name. So other than that preliminary matter, the issues that I want to raise with this Committee regarding SB26 specifically as it relates to Section 871.24 Subdivision I, this is the notice requirement.

This creates yet another obstacle and burden on consumers in what was supposed to be a self effectuating area of law. Consumers now have the obligation to inform whoever receives this vehicle that this there's pending litigation.

The irony of this notice requirement is that this is only being done in litigation after a manufacturer has, who is in the best position to know, has already said the vehicle is not a lemon. So now the consumer must disclose something that may not be the case. The disclosure, in most cases it is a trade and sale.

And so the disclosure is going to go to a dealership. There is no express corresponding obligation on that dealership to tell the buyer. I can understand that conceptually the notice requirement is supposed to protect the unwitting buyer. This provision unfortunately doesn't do that because there is no express obligation for the dealership to tell that ultimate buyer.

Now there is an implicit perhaps obligation. And so now we've pulled in a dealership into a litigation and potential liability where there wasn't one before.

In the pending action, dealerships will now be deposed and they'll have to be subpoenaed for records to see whether this little piece of paper, this written notice requirement, was actually given. I would propose that in addition, the consequence for failing to provide this written notice is that the manufacturer is absolved of civil penalty liability. This is an untethered consequence because now the consumer's conduct, years later.

Wrap up your testimony.

Years later, is now going to absolve the manufacturer of the conduct that gave rise to the Litigation, the manufacturer should be the one to provide the notice to the DMV, or this notice should be solely in private party sales to ensure that that buyer doesn't.

That that unwitting buyer is saved. Lastly, there is language that I would ask this body to revise. It is an 871.29 Subdivision A. There are four references to the word new. The Lemon Law already has a phrase New Motor Vehicle. It is a term of art.

It has a definition which itself includes some used vehicles, namely dealers and demonstrators. When a dealership owns a car, the general manager uses the car, they sell it, that car's used. But it's still considered a New Motor Vehicle. Now, we've interjected, I think accidentally, a whole new type of car which is new.

This is especially important because the Supreme Court recently said that used cars which are still covered under warranty are no longer covered. So now we have a situation where a consumer has given the dealership notice. The dealership has no obligation to provide that notice. A consumer buys this potential lemon and has no Lemon Law Rights. Thank you for the additional time.

Thank you.

Mr. Vice Chair and Members. I'm Rosemary Shahan, President of Consumers for Auto Liability and Safety.

And last year we led a coalition of consumer groups from around the state and the country who were opposed to AB 1755 because, not so much because of the procedural changes, but because of the reduction in access to the Lemon Law in substantive changes.

For instance, it used to be you were covered for the entire length of the express warranty under Song-Beverly. Under AB 1755, your warranty rights to use the Lemon Law are cut off after just six years, even if your warranty is longer. Their statute of limitations used to be four years. The Bill reduced it to one year.

The Bill allowed deductions for negative equity that are really going to harm a lot of low and moderate-income consumers who can't afford to pay an average of $6,000 upfront in order to get clear title to the car. And we have concerns about.

Let me ask a question.

Sure

Is the third person going. Do you intend to testify?

I would like to be heard, if possible Vice Chair.

Well, I will allow that, but we have a time limit.

I understand.

And you have taken up one minute and that means that you would have another minute. So if you could figure out how to. And the first witness went quite a bit over the two minutes.

Understood.

So if you could wrap it up very quickly and the others speak for a minute, or you take the two minutes for your testimony.

Okay. And I invited the other witness to come as an expert because she's familiar with what's going on in the real world. Lemon Law Litigation.

Well, then perhaps she an expert in terms of asking questions that we on this side of the dais might have. So you have another minute.

Okay, thank you. So I will wrap up by saying we agonize over whether we should support or oppose this Bill because we would like manufacturers to opt out of AB 1755 because of the way that it weakens protections for consumers. And with that, I will past it on.

Okay, thank youyou.

And good afternoon Mr. Vice Chair and Members, and thank you for giving me the opportunity to be heard.

30 seconds.

Okay. My name is Armig Khodanian. I'm one of the Co-Managing partners at Prestige Legal Solutions, a Los Angeles-based Lemon Law Firm. And I just wanted to express some concerns of some things I'm seeing with my boots on the ground ever since 1755 has been passed.

I'm already getting requests from many manufacturers, specifically General Motors, asking for open ended extensions on answer deadlines, which runs afoul to this entire system of streamlining.

I have hundreds of overdue checks in my office alone, specifically from pre-litigation matters that I have no recourse to enforce in court because they're pre-lit and don't have a case number. So my only recourse is to file them.

And then when I do have cases where the checks are overdue filed cases, the judges don't want to hear it. They say, go resolve it. So I have angry clients calling in asking about their checks.

And then I'm just concerned about this opt-in, opt-out process in terms of the judges having to explain to them, you know, this manufacturer has opted in, this one has opted out. So therefore the laws apply to this person and not that.

So I just have concerns that SB 26 does not clean up the Bill the way that it was intended and the way we were promised.

Thank you very much. Do we have other witnesses in opposition to this Bill that want to identify themselves and their organization and their position? Appears we do not. So we will bring it back to the Members. Questions? Senator Laird? No. Senator Wahab.

Thank you. You stated that there are a couple of amendments that you would prefer to see in this Bill. Can you clearly state them? One, two, three, you know, things like that?

Yes, I can. As it relates to the first portion about the written notification, I would think that it. One, the consequence cannot be a waiver of civil penalties. Those two things are completely untethered. Two, the specific change would be that the manufacturer should be the one to provide the notice.

And it can do so through the DMV just the way that it brands title already. Once a vehicle is already determined to be a lemon, it can do this the exact same way.

Two, I would say that if there is going to be a written notification burden on a consumer, it should be limited to private party transactions because that's the person that we're trying to protect. We're not trying to protect the dealerships. They're already experts, they can do the inspection.

And in the case of manufacturer affiliated dealerships, they already have record notice of these matters because they have warranty records. So we're giving notice to somebody who already has it. And three, well, those would be the two, the three items.

In any event, there must be, if there's going to be this requirement that consumers tell dealerships, dealerships must also be on the hook to ensure that the dealership is telling the buyer because that buyer, as I mentioned under the recent Supreme Court case of Rodriguez v. FCA, which happens to be a case for my firm now, used vehicles, despite 30 years of case law that said that used vehicles that are still under warranty, according as of the end of last year, they are no longer protected.

So now we've got an unwitting buyer buying a lemon from a dealership and they have no recourse. And it's been said that sure, they can file under the UCC or breach of warranty or other common law claims, but that's exactly why the lemon law was created, because those claims did not suffice.

Consumers can't afford attorneys without the fee-shifting environment. And if manufacturers don't have teeth behind civil penalties, they won't comply. Even with civil penalties. Unfortunately, they don't comply often.

Okay, and Senator, why are we having an urgency bill? What is the concern?

Well, harking back to the governor's signing message, the Governor had issues with 1755 that he wanted corrected before it went into effect on April 1. And this Bill responds to that signing message and the agreement struck between some of the manufacturers, consumer attorneys, as well as the governor's office. So that's why there's an urgency provision.

Okay. And so I'm just going to say, I think even on the last one, you know, we had a lot of questions and concerns about, I think that there were people that voted no, abstained, were concerned about some of the language there that also seemed to be very much rushed.

And I've heard a lot from my district and the feedback on that particular bill and I have some concerns and I will say I think the civil penalties one is a big factor. And I will just say, I had to actually personally deal with a car that eventually became a lemon. Right?

But you know, it broke down on me. It was under that 60,000 mile. Most people when they purchase a vehicle, they understand, you know, if it's under the 60,000 miles warranty or something else. And I think that that's how they go into it. Right? It's largely advertised and much more.

I highlight this because for 30 years plus, you know, the Ford F150, a GM vehicle, was the number-one-selling vehicle in America. And most recently Toyota RAV4 just beat it. Right? As the number-one-selling vehicle in America.

And when we're talking about warranties and so forth and you know, is it a good purchase and is it not? I'm very concerned about those first-time buyers, those immigrant communities, those people that don't have the privilege to understand half of the stuff that was mentioned here. Right? It makes it too hard to begin with. Right?

And so the manufacturer, my personal opinion, should be the one that reports, not the individual buyer who may be completely oblivious of what is going on, doesn't listen to the news, doesn't know, you know, about their vehicle. And I think that even the private party transaction makes sense to some degree.

But the fact that it has to be a written notice from the person who owns the car to inform anybody that hey, there may be a potential litigation that they're not keeping track with. Not everybody's a lawyer. Right? I think this is an overstep in a number of ways.

And then the new verse used concept because let's be honest, like again, if the car is under warranty, they're assuming that they have some privilege for like another 20,000 miles, another 10,000 miles, something like that. And the warranties all differ from each vehicle. Right? Whether it's a Kia, whether it's a Ford and much more.

So I just find that we are not necessarily protecting the individual unless we have some of these amendments that were discussed that I think are reasonable and also have more of a blanket instead of a carve-out for every single manufacturer that I don't know if it's going to be an opt-in, opt-out.

And as a regular person, I'm not going to know either. Right? Even more so. So I just want to understand your concerns about some of the comments that he made in some of these amendments that I think are very reasonable.

Sure. Let me address the issue of warranty first. A warranty is a contract between the purchaser and either the dealer or the manufacturer. So if you have a warranty, a 10 year warranty, for example, that warranty is as a matter of contract good for 10 years, you have something that breaks down that's covered by the warranty.

This law doesn't change that at all. Secondly, in terms of the. So for example, let's say you have a vehicle that breaks down in year eight, eight years after you've purchased it and you bring it in three times and it's not fixed, that would be classified as a lemon. Potentially.

What this law says is, look it, you've got six years to bring your action. Under the lemon law, you've got six years to bring your action. So it is true, if it breaks down in year eight, that's an issue. But if your warranty is a 10 year warranty, there's no impact whatsoever.

It's also important to understand there's no notice requirement right now. So if, for example, we keep the law exactly as it was, you know, prior to 1755, there's no notice requirement. And so the Governor's office, and I think importantly said, look it, there's got to be some subsequent notice.

Yes, it is the purchaser, the consumer actually, who bought the car in the first place that needs to tell a subsequent private party, hey, I think this is a lemon.

If you bring the car back to the dealer and the dealer then is on notice, has actual knowledge that it's been at least attempted to be fixed three times and it wasn't remedied, the dealer has actual knowledge and all the remedies that exist both in common law and statute still exist against the, well, probably against the manufacturer as well as the dealer.

Now also in terms of when the, I'm sorry, civil penalties, it doesn't absolve the manufacture of the other remedies under lemon law. So for example, if no notice is given, you still get a replacement, you still get restitution, you just don't get the civil penalties if you feel fail to give notice.

So it's, I don't want to have any confusion that somehow the manufacturer gets off scot-free if there's no notice.

Okay, and with what they were saying and some of the amendments, do you not believe that you can absorb some of this? Like, I understand, you know, obviously the Governor had his letter and obviously I'm not 100% privy to that. I did not read it myself.

My concern is that when we're doing legislation, you know, who do we have in mind? And for me, I will just say GM on most of their vehicles, who largely supports this, they have a three-year warranty. Right? And many other competitors have 10 years now. Right? And we're trying to prioritize exactly what we can.

So I highlight this because, again, I do believe that the manufacturers are largely responsible. I personally, as an individual with my personal situation, I informed the manufacturer, I informed the dealership. Trying to get it fixed multiple times did not work. And as a, let's say, young college kid at the time, you have no concept.

You don't have money for a lawyer. You don't know that, you know, you have these rights. You don't know which law is going to happen that helps you and protects you. That's one piece. Number two is the private party transaction. You possibly don't even know it's a lemon, number one. Right?

And dealerships constantly fight with you or the manufacturer that like, oh no, it's fine, take it to another shop, you know, get a second assessment, whatever the case is. And people don't have time for that. People are working two jobs at this point. Right? If not, more. So, I still have significant concerns with this particular Bill.

I understand, you know, there's been conversations had, things like that. So I want to understand what you're willing to kind of amend if you were to really focus on the individual who is stuck with a lemon.

So let me respond to your comment about the person that doesn't know that they may have access to lemon law. There's no difference before or after this law. If you don't know.

I would assert that in the last few years that more people have become aware of their rights because the advocates have been quite prolific in telling folks, oh by the way, if you've got a vehicle that needs repairs three times, that you have access to lemon law.

So there's no difference from today, last year and the year before in terms of notification to the consumer.

But if a person sells it to their neighbor, you know, and they don't know it's a lemon. Right? Because they don't know that they're supposed to get it checked three times and so forth, what is the liability for that particular individual?

So if the person that has already filed a claim. Right?

What if they didn't file a complaint?

Well, if they didn't file a complaint. So let's say you've got an unknowing person who sells a car to another unknowing person. Right? There's no difference.

The person who was unknowing in the first instance, didn't know that they had a lemon, sells it to another person that is not on notice. There's no difference in the remedies that exist under this law or before.

So, in other words, what this changes is that if you filed a lemon law claim, right? After you filed a lemon law claim, and then you're selling it to your neighbor, you now have an obligation to tell your neighbor, I have filed a lemon law claim.

But if you haven't filed a claim and you don't know you have a lemon, then you're not under an obligation to tell your neighbor.

So wouldn't it just be easier for the manufacturer just to tell the DMV that, hey, we have this potential terrible vehicle that we have made in 2017, and, you know, everybody's on notice and call it a day, rather than the potential thousands upon thousands of people that need to figure out what's going on and still can be sued.

Let's be honest about this. You know, you could sue anybody for any reason, and that's just creating more unnecessary litigation.

Wouldn't it be easier? I suppose, there is a process, the recall process. So let's say there's an entire model that has defective brakes, and the manufacturer is under obligation to tell those who have purchased that vehicle you need to bring your vehicle in for purposes of repair of those brakes.

So if the manufacturer is not on notice as to this unique vehicle. So, for example, let's say you have a vehicle for whatever reason is unique and whatever is wrong with it, the manufacturer wouldn't necessarily know unless you tell the manufacturer, oh, by the way, I brought this vehicle in, and it's still not repaired.

In other words, the manufacturer wouldn't know about unique issues, unique deficiencies in a particular vehicle. So here, where someone has that knowledge, if you have actual knowledge, you're a, for example, you are a person who's filed a lemon law claim.

Yes, this law says you got to tell a subsequent purchaser that there's a lemon law claim filed, unlike the law that exists where there's no obligation to tell someone. So, in other words, this is an additional consumer protection as to the subsequent purchaser.

Okay. And would you agree to that?

I respectfully would disagree. The lemon law has something called an affirmative duty, and it's not a responsive duty where a manufacturer is supposed to respond to consumer request. It's to the contrary. Case law is abound by saying that manufacturers have access to their own warranty records.

And if they wanted to know about the unique problems, they could know just by looking at their warranty records. We know they look at their warranty records to determine warranty costs. They just don't look at their warranty records to determine consumer protection.

Okay.

Respectfully, we're answering different questions.

Okay.

The question that's being asked and answered by Mr. Kirnos is if the manufacturer is on notice, in other words, the manufacturer knows because of repeated claims concerning a particular deficiency, then the manufacturer is on notice. And if it needs to recall, that's a whole different issue. That's a whole different issue.

But under existing law, a private party has no obligation to tell another private party, currently, that this is a lemon. If this bill is signed by the Governor, that private party does have an obligation. So the subsequent purchaser is on notice that there may be a problem with the vehicle.

Okay, and then why the opt-in, opt-out concept? And just because it looks like we're creating two separate categories for whichever manufacturer.

Right. As you may recall from the earlier hearing on 1755, there were some manufacturers that said, look it, we don't like this law and we prefer to keep the old law. And there were some advocates, lemon law lawyers, who said, we don't like this law. We would prefer to keep the old law

And indeed, it was my suggestion, if both parties don't like the law and want to operate under the old law, then, you know, be my guest. And so that's what this does.

It simply says, if you are XYZ manufacturer and you don't like the new law and you are a claimant, you can operate under the old law, simply gives the option.

Okay. But if we were to do that, it allows the manufacturer to choose what's best for them. Right? Not necessarily what's best for the consumer who doesn't even know that there's a version A law and a version B law and what truly applies for them. Right?

And is this going to be consistent across all the vehicles they manufacture, or is this going to be, you know, vehicle per vehicle and issue per issue?

It does give the option. So the question is, does this SB 26 or SB 1755 provide more benefit to the consumers? It is my view that it does.

It is my view that, for example, by taking the law that exists in other civil litigation and saying, in lemon law litigation, you've got to produce records, witnesses, and documents up front without a request to produce the documents without a motion to compel, and do all those things that are extremely expensive, that you can do it with simply a letter

So I think, yes, I think that SB 1755 and I think that SB 26 provide additional benefits to the consumer. It is a compromise. Most definitely is a compromise. So there's give and take on each side.

If the manufacturers say, you know what, I don't want to buy into this, I want to use the old law, the old law that in my view is much more expensive, they can do that. So that's why there's an option.

But why are we giving that option? If we're trying to improve this for the average consumer. Why even give a manufacturer an option to opt-out?

The reason is because it is the art of compromise, where there's a give and a take, where the manufacturers have given some, the consumers have given some, and the governor's office has weighed in heavily. So, yes, I mean, there's, you know, I usually write perfect laws, but occasionally there are laws that are not completely perfect.

Okay.

And if this law has problems later on, and I've done this before, notwithstanding the fact I write perfect bills and perfect laws, that I've done cleanup legislation.

Okay. So I will just say I am still deeply concerned about this just because we are creating two sets of standards, number one, which, you know, I like nice blanket policies, so we understand where we all sit under the law. And I also think that some of the suggestions that were, you know, made are very reasonable.

And if we're going to legislate, we should just consider that so we don't have to have multiple different cleanups for it. And granted, you know, when you're tackling a big issue, an issue that's lasted for so many decades, that it's a little bit harder than just one fix.

So I say that because I still reserve a lot of concern and I appreciate your time.

Senator Weber Pierson.

Thank you, Chair. Thank you so much for this presentation. I do agree with Senator Wahab in that it does present a very confusing situation for consumers. However, I have read the Governor's veto message, and he was very explicit in stating that this is what he wanted urgently for this opt-in, assuming that that was a compromise that was made.

But I want to go back to your original point, which was around the purpose of AB 1755, which was to effectively reduce litigation.

With this new mandate from the Governor to allow for an opt in, knowing that consumers can go back to what was clearly problematic before, are we actually improving that and creating a path to reduce litigation since the many would go back to the old way.

So let's be clear that these cases are not filed routinely by consumers. The consumers go to a lawyer, and the lawyers are experienced, are very effective in this space, and they then handle the claim. And yes, I think it does require experienced counsel to be able to effectively enforce the law. And I think that.

I don't know what the percent is, but my guess is it's over 95% of those who file lemon law cases are filed with a lawyer.

As I mentioned earlier, I think most consumers are aware that if they've had to repair their car three times or more, that there is a remedy, and they've been told, here's where you go. Here's the lawyer you go to effect that remedy.

So to the extent that an individual wants to file as a pro se litigant, yes, it's a little hard, but it's not unlike other kinds of litigation that exist. Enforcing the Uniform Commercial Code by an individual is very, very challenging if you are representing yourself and you're not a lawyer.

So while it may require more work on the part of advocates and lawyers to figure out, you know, under what process you're proceeding, I don't think it harms the consumer themselves.

And what about us reducing the litigation? The initial part.

I do think it reduces litigation costs. The huge cost in litigation is discovery. That's the taking of depositions, the propounding of interrogatories, the moving to compel, the production of documents. That's sort of a space I've lived in on both sides of the ledger, mostly on the defense side.

And one way that you can defeat an opponent is you can defeat an opponent by driving up costs and discovery so that resources are more determinative rather than the merits of a controversy.

And so what AB 1755 contained was a provision that gives a path to get documents, to get the names of witnesses, to basically respond to with certain information very early on without the need to file a motion to compel, without a need to have court intervention. And that reduces costs considerably.

It also reduces the burden on the courts considerably.

Right, but now we're giving a pathway for people to go back to the original way.

Well, it's actually the manufacturer's choice. If they want to incur the additional expenses, they can do so.

And my final question is in the Governor's veto message, he also talked about having conversations and discussions around changes to the Lemon Law in terms of our newer vehicles, like our electric vehicles. Was that a part of the conversation?

I was not part of that conversation concerning electric vehicles. I assume it was part of the conversation.

Okay. And so the decision was made to just leave things at it.

Well, I think that this is like all compromises. The stakeholders have come together. It's a very challenging issue and fairly, as you point out, Senator Weber Pierson, a complicated issue. So, yes, I do think there was give and take by all parties.

Thank you. Senator Durazo and then Ashby.

It's unfortunate that protections for the consumers have gotten so complicated that we can't more easily explain this law or the previous law, and I thought this was a cleanup. Now it seems like there may be a cleanup to the cleanup, maybe another cleanup, you know, after that.

So not to you directly, to the author, but I'm a little disappointed that the cleanup isn't a cleanup as it's supposed to be. I'm very concerned how it impacts--I'm sure, like everybody here--very concerned how it impacts, first and foremost, the consumer, and where do we get as far as protecting the consumer?

On the other hand, it's so complicated, I don't know that a consumer knows other than they got a car that keeps breaking down, so they're going to talk to an attorney to fix it. I don't think they follow all the details here. So we do rely on the attorneys to help us figure it out. A very sort of simple question is, if this bill does not get approved today, what happens? What's the practical result of that?

Well, I think the practical result is that--well, let me respond to a couple points that you've made. In terms of consumer protection, I think that's why the Consumer Attorneys of California, that's why they're in support because they believe it provides additional protection.

In terms of the cleanup of the cleanup, yes, this was an additional compromise that was effected between the stakeholders--and the Governor's Office was involved--to basically accommodate those folks that said, look, we want to live under the old law. We want to live under the old law. So they can live under the old law.

And yes, I do think that a consumer who's trying to navigate this space without the assistance of attorney, it's hard, and it's just like many other areas of the law; it's hard. So I don't think we're abrogating the rights of consumers. In fact, the notice provision, for example, enhances the rights of a subsequent buyer.

In terms of where we're going to go from here, if this law is not passed and signed by the Governor, I suppose that the Governor will then ask for something that basically eliminates 1755, which would be, I think, sad, because I do think that this is a benefit to consumers and I think it does reach a reasonable accommodation between all the stakeholders.

Yeah. Thank you, Mr. Chair. I was pretty vocal about this one last time it came through. My opinion has not changed much, although I would never question the perfect record of the author and his legislative history or prowess in the space. That said, I remain unconvinced that this effort serves consumers with what I think is critically important, which is equal access to justice.

I still believe that it does not do enough to remove unsafe vehicles from our communities. In fact, I argue that this might have more unsafe vehicles in our communities and I think I would not be alone in that assessment. I don't think it holds manufacturers accountable. I think it reduces the amount of accountability on manufacturers.

I think that's pretty clear. Senator Wahab laid that out nicely. I won't do it farther. I don't think it provides reliable notice. I do think we have a witness who gave us a pathway to a probably more reliable form of notice. That being said, it still leaves an opening, as the author has described, on how we handle sales between individuals and what we expect of those individuals and how we hold them accountable. One of the Senators asked many questions about why have the opt in or the opt out?

I think it's important to remember that the opt in belongs to the manufacturer, which means that the manufacturer is going to choose what's in the best interest of the manufacturer, and our job is to choose what's in the best interest of the consumer.

So I am not certain that those two things align, although there could be times that they do. I assume there would be times that they also do not. That being said, I continue to have serious concerns with this bill and therefore will not support it today.

So just in response--no, I understand, and I respect your opinion. I don't understand why a bill that provides notice is less effective than the current situation with no notice. So even if the notice that you want is not as broad as you may like, some notice is better than no notice, and that's what exists right now.

And indeed, the manufacturers, if they receive complaints, if they're aware of deficiencies, they have an obligation to recall, by the way. And if they don't recall, they are in a position to notify those who are purchasing. That's exactly correct. But that's not what this bill does. That's not what Lemon Law is about.

It's about cars that have a defect, not cars that need to be recalled overwhelmingly. It's about cars that have, for example, individual defects. So I respectfully disagree.

Senator, I would just say that you know this better than myself, even, that when you introduce a notice requirement into a manufacturer's liability, then you create a reliance on the notification, which doesn't currently exist, which further reduces the access for consumers.

Any other questions or comments? Senator Laird?

I'd move the bill.

Bill's been moved. Senator Caballero.

I have a question and then see if I, if I have this wrong, Senator. And the question is to Mr. Kirnos. You mentioned the definition of new in a subsection. I didn't get the subsection down, but could you either repeat the subsection--I'll look it up later and figure out what it refers to--or how does that change or confuse the definition that's been utilized up to this point?

I'm so happy that you asked that because under my time, I did feel that I glossed over that, so I'm very pleased to answer that question. Currently, there is Civil Code 1793.22 [e][2], and that is the definition of a new--of the phrase "new motor vehicle."

And as defined, it includes, quote, 'a dealer-owned vehicle and a demonstrator or other motor vehicle sold with the manufacturer's new car warranty.' That's the term of art that's used throughout the Lemon Law, yet in SB 26, there would be a new statute at 871.29 [a] which uses the word 'new' in four separate instances rather than new motor vehicle. This is particularly important.

Not only is it confusing because it could be interpreted--and I'm sure manufacturers will interpret this self-servingly--but this is a particularly important issue because as I mentioned, the Supreme Court recently essentially invited the Legislator, legislative body, to address whether or not used cars, which as I just read, are a motor vehicle sold with the manufacturer's new car warranty.

We're not talking about all used cars, we're just talking about used cars still under warranty. People pay up for those. And yes, the warranty exists, yes, a manufacturer would have an obligation to perform warranty repairs, but there is no liability if the dealer or the manufacturer says we're not going to cover it. There's no recourse for a consumer.

So I think that that is a big bite to chew and probably a conversation for another time because it doesn't directly relate to this bill, but what does relate directly to this bill is to change the language ever so slightly so that it is consistent with the rest of the Song-Beverly Act, and that would be to strike the word 'new' and use the phrase 'new motor vehicle' in each of those four instances in subdivision A, A1, A2, B and D of 871.29.

Okay, I appreciate that. It's fairly complicated and--

It is a nuanced issue, but very important, and I came here to talk about that.

That's really important. And actually, you make the point that I was, that I was going to get to, and I appreciate all the testimony here today, but I have great respect for this committee.

And part of the challenge with grappling with complicated judicial issues is that it's hard to follow things when you're just talking instead of reading and getting--my understanding, and Senator, correct me if I'm wrong--is that all the complicated court stuff is not what we're asking the consumers to understand, to read, and to know how to deal with.

It's once you go to an attorney and you start exercising your rights under the law. As I recall, what 1755 was attempting to do is to set up a relationship where it's clear that an individual has had problems with the vehicle such that they are going to exercise their right under the Lemon Law and to do it in a way that's concrete so that the dealer knows and the manufacturers know.

And then the issues about disclosure and the discovery, all of that; I mean, there's no way that we would expect consumers to know what to do with that. That's for the attorneys to be able to--it's basically to be able to reduce costs because it requires cooperation from the manufacturers to be able to get that information early and not to have to spend a lot of money doing it. So there's been this confusion from my perspective, that we're asking consumers to understand that and to know it, and I just don't read it that way, and I guess I--if there's no other comments, maybe you can address--

Let me break this down. I think there are three issues that have been raised. One: Mr. Kirnos raises the issue of a definition, and I think that that is something we do need to explore. We want to have consistency in the law. And I'll take that point, number one.

Number two, the issue of what the Supreme Court has done since the introduction of--I think the passage actually of 1755, and today with respect to the continuation of responsibilities and warranties once a car is sold--that's not in this bill, and maybe something in the Supreme Court did invite the Legislature to intervene.

It's not part of this bill, and it may be something that others, maybe even mine will introduce. I don't know, but that's a separate issue, completely separate issue, and it does impact this space because we're concerned about consumers who buy cars.

Your third point is one where, yes, I think this is very difficult for a consumer to navigate, and that's why consumers--I would advise a consumer to hire a lawyer. If somebody wanted to file a civil RICO action, I would say, 'you know what? You probably should get a lawyer.'

If somebody wants to file a civil antitrust action, I would say, 'you probably should get a lawyer.' If someone wants to file a Lemon Law case, you probably should get a lawyer because it is something that requires legal expertise to handle. And so we want consumers to be fully compensated. We want the vehicle to be replaced.

We want restitution and civil penalties if it's appropriate. So I think I agree with your last point concerning the law; yes, requires legal expertise to actually effectuate.

Senator Caballero, if I may just add, also, the Senate Judiciary analysis notes on page ten actually invite the revision that you asked me about to new motor vehicle.

That's what I thought.

I was trying to understand. Thank you.

Yes.

Mr. Vice Chair, if I could say something?

I'm sorry?

If I could say something? That we agree with Mr. Kirnos about that technical amendment that Council noted in--on page ten of the analysis. That would be an improvement.

Thank you. Are there any other questions or comments, because I do have a couple. This is a perfect example of why we should not be approving legislation that is a gut and amend at the last minute of the end of session. We've created now a question that is difficult, almost illogical, frankly. Are you three witnesses recommending a no vote on this bill?

As written, based on the concerns that I've raised.

We've been informed it's going to pass.

That's not my--that's not my question.

We just felt it was important to get our concerns on the record for the future.

Okay. Yes. What she said.

And that's why this is complicated because Senator Umberg's speculation as to what the Governor may do if we pass this bill is speculation. I have no idea what he's going to do. The practical effect of defeating this bill is we have AB 1755, and that becomes the operative law. I voted against that.

Why would I vote against this in order to effectuate what I opposed on the floor a few months ago? And yet I think what we have is a messy and frankly--all due respect--illogical resulting situation. And it's almost--I feel like I'm in Alice in Wonderland, quite frankly. What's up is down and what's down is up.

So I am going to very reluctantly support this and I guess hope that Senator Umberg's speculation as to where the Governor might be is accurate because what we should do is repeal AB 1755 and bring all of the interested parties together, which was discussed before the bill went to the Governor, and figure--because this law has been in effect for 50 years, and to suggest that maybe it needs some amendment and reform is not unreasonable, but what was proposed last year involved just a small sliver of those affected.

So I'd like to see another run at this to begin at square one, but I'm not willing to vote in a way that, without knowing what's going to happen subsequently, effectively makes AB 1755 the only law regulating the Lemon Law. So at that, Senator, you may close.

Well, thank you for that resounding endorsement.

Not resounding and not endorsement.

No, no, and you are correct. I don't speak for the Governor. The Governor wouldn't want me to speak for the Governor. Whatever I've said as to what the Governor may do is purely speculation, number one. Number two is that obviously, it is my belief that this improves things for consumers.

I believe this is a compromise that ultimately improves things for consumers. I understand the concerns of some of the committee members. I understand the concerns of the folks who have concerns--I don't know whether in opposition or they're just expressing their concerns--and, you know, fortunately, the law is a, is a living thing.

And so should this pass and should this be signed by the Governor, if there requires additional remedies along the lines of what you suggest, Senator Niello, maybe so, but I thank you for casting what we used to call a .I. So, I can explain that later. All right. With that, I urge an aye vote.

Thank you. Please call the roll.

This is File Item Number One: SB 26. The motion is due pass to Senate Business, Professions and Economic Development. [Roll Call]. Ten to one.

Ten to one. Bill passes. Bill passes.

Okay.

Ten to one. Bill passes. Thank you. Thank you all. That was fun.

Senator Niello, you want to just close the--I don't think there's anything more to do.

We will adjourn the meeting. Thank you.

Thank you. Thank you. Thanks, Roger. Okay. No, no, I, I appreciate that. No, I--