Niedermeier v. FCA US LLC

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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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.

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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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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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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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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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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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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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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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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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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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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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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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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.

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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.

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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

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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;

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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,

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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)

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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

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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”

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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.)

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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”

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(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.

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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.

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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.)

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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.

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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

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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

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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.

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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.

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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.

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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

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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

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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

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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

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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

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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

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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)

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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,

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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)

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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