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June 2, 2014

Class Action Lawsuit in California Accused Hyundai of Violating Purchasers’ Lemon Law Rights

Hyundai faced a class-action lawsuit alleging that the company had illegally bought back or replaced customers’ defective vehicles without refunding certain costs. The lawsuit involved customers’ rights under the California Song-Beverly Consumer Warranty Act and the federal Magnuson-Moss Warranty Act.

Firm founder Payam Shahian served as co-counsel in a class-action lawsuit against Hyundai Motor America involving allegations that the company violated customers’ rights under the California Song-Beverly Consumer Warranty Act (California’s lemon law) and the federal Magnuson-Moss Warranty Act. Specifically, the lawsuit alleged that Hyundai Motor America illegally bought back or replaced customers’ defective vehicles without refunding the costs customers paid for service contracts, insurance, and registration fees. The lawsuit also alleged that the company improperly imposed deductions from vehicles’ repurchase prices for “any condition beyond normal wear and tear.”

As reported by Law360, Hyundai Motor America claimed that it complied with its obligations under California’s lemon law and the Magnuson-Moss Warranty Act and was not required to reimburse the additional costs the lead plaintiff in the class-action lawsuit claimed. However, California’s lemon law requires manufacturers to reimburse customers for the “actual price paid or payable,” and the company provided no explanation or support for its claim that service contract, insurance, and registration fees were not part of the “actual price” customers had to pay.

In addition to the plain language of California’s lemon law, the controlling precedent, Mitchell v. Blue Bird Body Co., states that the language, “actual price paid or payable,” in the statute includes all amounts customers become legally obligated to pay at the time of purchase, including (but not limited to) financing charges. As a result, the law was (and remains) squarely on the plaintiffs’ side.

With regard to its imposition of deductions for conditions “beyond normal wear and tear,” Hyundai Motor America claimed that the deductions were permissible based on language in the California Code of Regulations that allows arbitrators presiding over lemon law claims to offset any amount “for which the customer is justly responsible.” However, as the lead plaintiff’s legal team wrote, this argument “ignor[es] the legislative history, case law, and the statutory mandate.” Under California’s lemon law, the predelivery mileage offset is the sole permissible deduction.

Hyundai Motor America tried to avoid defending against the lead plaintiff’s Magnuson-Moss Warranty Act claim entirely by claiming that she failed to first contest the company’s reimbursement through its informal dispute procedure. In response, the plaintiff’s legal team argued that the company’s use of BBB Autoline did not qualify as a true “informal dispute settlement procedure” under the law.

Get Free Legal Help with Your California Lemon Law Claim

Did you purchase or lease a defective vehicle from Hyundai or another vehicle manufacturer? If so, you may have a claim under California’s lemon law. To find out if you are entitled to a refund, replacement vehicle, or cash settlement, call us at 888-757-5366 or request a free initial consultation online today.