What is a Civil Penalty?

A civil penalty, as its name states, is a penalty assessed to the car manufacturer in an amount of damages beyond the consumer’s “actual damages.” The purpose of the penalty is to “punish” the car manufacturer for its conduct. The penalty under the Song Beverly Consumer Warranty Act can be “up to two times the amount of actual damages.” CA Civil Code Section 1794. 

What are actual damages? 

In the case of restitution (vehicle buy-back), actual damages amount to the “actual price [of the vehicle] paid or payable by the buyer, including any charges for transportation and manufacturer installed options . . and including any collateral charges such as sales or use tax, license fees, registration fees, and other official fees, plus any incidental damages . . . including, but not limited to, reasonable repair, towing, and rental car costs actually incurred by the buyer.” Because of this, the penalty can be substantial. CA Civil Code Section 1793.2 (d) (2) (B). 

When can the civil penalty be assessed? 

The penalty can be assessed either 1) when the buyer establishes that the failure to comply was “willful” or 2) when buyer establishes a violation of the Song Beverly Consumer Warranty Act under Section 1793.2 or presumption, and the car manufacturer does not maintain a qualified third-party resolution program that substantially complies with Section 1793.22. 

What is willful conduct?  

“Willful” conduct on the part of the car manufacturer takes place when the manufacturer “fail[s] to investigate the repair history of the car despite the availability to [the car manufacturer] of that information . . . without making any effort to gather the available information on repair history, [the car manufacturer] might well be deemed to have acted willfully. A decision made without the use of reasonably available information germane to that decision is not a reasonable, good faith decision.” Kwan v. Mercedez-Benz (1994) 23 Cal.App. 4^th 174. 

A car manufacturer may have also acted “willfully” when the car manufacturer does not act “promptly” in response to a demand. Although “promptness” is not defined by the statute, responding within 30 days appears to satisfy this requirement. For example, in Lukather v. General Motors, LLC (2010) Cal.App. 4^th 1041, the car manufacturer willfully violated the lemon law statute when the car “was delivered to the dealer on 2/12/07 . . . [and the complaint] was filed 4/12/07. Between those 2 dates, the Court [found] [car manufacturer] was not acting in good faith in providing a clear prompt spelling out of [consumer] rights under the statute and in trying to persuade [the consumer] to accept a replacement rather than the repurchase he initially and periodically requested.” Id. 

What is the other way to obtain a civil penalty?

The other way to obtain a civil penalty is to establish a violation of the Song Beverly Consumer Warranty Act under Section 1793.2 or the presumption period, also known as “Tanner Consumer Protection Act,” and establish that the car manufacturer does not maintain a qualified third-party resolution program that substantially complies with Section 1793.22. However, if the car manufacturer complies within 30 days of receipt of a demand (to buy-back or replace the vehicle), the manufacturer “shall not be liable for a civil penalty.” Section 1794 (e) (4).

Keep in mind that the civil penalty under the Song Beverly Consumer Warranty Act is fact specific and is for a jury to determine. 

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