In recent years, the number of lemon law cases filed in California under the Song-Beverly Consumer Warranty Act has surged—from about 15,000 in 2022 to over 22,000 in 2023 and more than 25,000 in 2024—placing a strain on the court system and delaying case resolutions. To address these issues, Assembly Bill 1755 (“AB 1755”), enacted on September 29, 2024, aims to streamline the lemon law process. Effective in two phases—beginning on January 1 and April 1, 2025—AB 1755 introduces new procedural guidelines, including the early exchange of discovery documents, expedited depositions and mandatory mediation all within six months after the answer is filed for those manufacturers who elect to be governed by the new procedures more commonly known as the “opt-in” requirement.1
Key Provisions of AB 1755
AB 1755 introduces key changes to California's Lemon Law, with provisions effective January 1, 2025, except for the pre-suit notice requirement, which becomes effective April 1, 2025.
1. Statute of Limitations (Section 871.21)
AB 1755 establishes a new statute of limitations for lemon law cases. A lawsuit must be filed within one year after the expiration of the applicable express warranty. However, the lawsuit cannot be filed more than six years after the vehicle’s original delivery date, unless tolling provisions apply.
For example, if a vehicle is purchased on January 1, 2020, with a 5-year warranty that expires on January 1, 2025, the consumer must file a lawsuit by January 1, 2026 (one year after the warranty expires). Even if the defect is discovered later, the lawsuit cannot be filed after January 1, 2026, as the 6-year limitation would apply. However, the statute of limitations may be tolled for the time the vehicle is out of service for repairs or for up to 60 days after a pre-suit notice is provided.
2. Pre-Suit Notice Requirement (Section 871.24)
AB 1755 emphasizes pre-litigation resolution, allowing consumers and manufacturers to resolve disputes without court intervention. Effective April 1, 2025, the consumer must provide written notice to the manufacturer at least 30 days before filing a lawsuit seeking civil penalties. The notice must include: (1) the consumer’s name, the Vehicle Identification Number (“VIN”), a summary of the repair history and vehicle issues; and (2) a request for repurchase or replacement.
After receiving the notice, the manufacturer has 30 days to comply with the request, or they will face civil penalties. If the manufacturer chooses to proceed with replacement or restitution, it must be completed within 60 days after receiving the original notice.
3. Settlement Procedures (Section 871.25)
AB 1755 standardizes settlement procedures, particularly the terms and conditions of releases in lemon law cases. It includes a Standardized SBA Release form, clarifying the terms for replacement or restitution, with strict compliance timelines (e.g., restitution or replacement must be completed within 60 days of receiving notice). This form simplifies settlement and ensures both parties understand their obligations and deadlines. As discussed further below, there are penalties for noncompliance with this provision.
4. Initial Disclosure (Section 871.26)
If the dispute does not settle after the pre-suit notice requirements, and the consumer proceeds with litigation, AB 1755 streamlines the discovery process by requiring early disclosure of key documents. Within 60 days after the filing of the answer or other responsive pleading, all parties must provide an initial disclosure and the documents specified in the statute—without awaiting a discovery request. Such documents include repair orders, warranties and pre-suit communications, among others.
5. Mandatory Mediation (Section 871.26)
AB 1755 includes a mandatory mediation process to encourage early dispute resolution. Within 90 days after the filing of the answer or other responsive pleading, the parties must schedule mediation. Mediation must occur within 150 days. Discovery is stayed (except for initial disclosure and depositions) until mediation is complete. If mediation does not resolve the case, normal discovery resumes.
6. Depositions (Section 871.26)
AB 1755 sets guidelines for depositions, ensuring focused and efficient discovery. Within 120 days after the filing of the answer or other responsive pleading, all parties are entitled to conduct initial depositions of the plaintiff and defendant (or, if the defendant is not a natural person, the person most qualified to testify on their behalf). Each deposition is limited to two hours and the topics specified in the statute, including the vehicle history, repairs and communications with the manufacturer.
7. Sanctions for Noncompliance with Discovery Requirements (Section 871.26)
The court will impose sanctions on represented parties who fail to comply with certain discovery requirements, unless the party shows good cause. For noncompliance with document production or deposition requirements, the court will impose a $1,500 sanction on the plaintiff’s attorney or a $2,500 sanction on the defendant’s attorney.
Repeated noncompliance by the plaintiff will result in dismissal of the case without prejudice, with the plaintiff’s attorney liable for the manufacturer’s costs. Repeated noncompliance by the defendant will lead to evidentiary sanctions, preventing the introduction of certain evidence at trial. These sanctions ensure timely compliance and expedite case resolution.
8. Penalties for Noncompliance with Restitution or Replacement Process (Section 871.26)
If the manufacturer fails to complete restitution or replacement within 30 days of receiving the signed release, daily penalties of $50 will apply until the settlement is finalized, unless the parties agree otherwise. If the consumer fails to comply in good faith and delays the restitution or replacement, the manufacturer will not incur the daily $50 penalty. These penalties incentivize manufacturers to resolve cases quickly.
Impact on Manufacturers
AB 1755 introduces new obligations, including strict timelines for responding to pre-suit notices and completing replacements or restitution. While the structured process and standardized forms make compliance more predictable, the law may create new challenges. For example, plaintiffs’ attorneys may use the new timelines to strategically flood manufacturers with multiple claims filed on the same day. By holding back numerous claims and submitting them all at once, plaintiffs can overwhelm legal departments, increasing the risk of missed deadlines or failure to comply with the timelines. This could lead to civil penalties or pressure manufacturers into settlements. As the new procedures require quicker responses and faster resolutions, manufacturers must be more nimble in handling cases, dedicating additional resources to meet the new requirements and avoid costly mistakes. By understanding these potential tactics, manufacturers can better navigate the complexities of the new system and reduce the risk of penalties, delays and unnecessary settlements.
How Can We Help
As AB 1755 takes effect on January 1, 2025, manufacturers must be prepared to navigate these changes, assuming they opt into these new procedures under SB 26. Proactive compliance and understanding plaintiff strategies will be crucial to managing risks in this new legal landscape. Should you need assistance with navigating these new rules, please do not hesitate to contact us.
________________________________________
1 SB 26 was introduced on December 2, 2024 and its current status is in progress. SB 26 would specify that the procedures described above would apply to the manufacturer of a new motor vehicle only if the manufacturer elects to be governed by those procedures by reporting the election to the Department of Consumer Affairs. The bill would require a manufacturer that wishes to make this election regarding its vehicles sold new in the year 2025 and all prior years within 30 days after the effective date of this bill. Thereafter, the bill would require a manufacturer that wishes to make this election to make an irrevocable election, as specified, regarding vehicles sold new during the five calendar years following the date of the election. The bill would require the Department of Consumer Affairs, by December 15 of each year, to publish to its website a list of the manufacturers that have elected to be governed by the procedures described above for a period that includes the following calendar year. If enacted, SB 26 would take effect immediately as an urgency statute.