WisBar News: Wisconsin Supreme Court Clarifies Lemon Law, Sides with Consumer:

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  • WisBar News
    May
    24
    2012

    Wisconsin Supreme Court Clarifies Lemon Law, Sides with Consumer

    Joe Forward
    Legal Writer

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    May 24, 2012 – A car dealer that can’t prove a consumer intentionally thwarted the dealer's attempts to timely refund a customer's money can't escape Wisconsin's lemon law, and payment of double damages, the Wisconsin Supreme Court has ruled.

    Wisconsin Supreme Court Clarifies Lemon Law, Sides with Consumer

    Wisconsin Supreme Court ends seven-year lemon law litigation, holding that car dealerships must prove a consumer “intentionally” thwarted the manufacturer’s attempt to make a timely refund by “clear and convincing evidence” in order to escape statutory double damages

    By org jforward wisbar Joe Forward, Legal Writer, State Bar of Wisconsin

    Wisconsin Supreme Court Clarifies 
Lemon Law, Sides with Consumer May 24, 2012 – A car dealer that can’t prove a consumer intentionally thwarted the dealer’s attempts to timely refund a customer’s money can’t escape Wisconsin’s lemon law, and payment of double damages, the Wisconsin Supreme Court has ruled.

    That is, car dealers are still subject to statutory penalties if a consumer’s negligence prevented the manufacturer or dealer from meeting the refund deadline, according to the Wisconsin Supreme Court’s decision in Marquez v. Mercedes Benz USA, 2012 WI 57 (May 24, 2012).

    “It is not sufficient to argue that a consumer was unreasonable or careless in responding to a manufacturer’s requests for additional information,” wrote Chief Justice Shirley Abrahamson in a majority opinion that garnered full acceptance from five of the six other justices.

    However, the court suggested that it may rule differently in rare cases where “the manufacturer tried to comply with great diligence and unlikely events outside its control or outside of the control of a consumer made the manufacturer’s compliance impossible.”

    “Our holding gives manufacturers an incentive to gather the information needed to provide refunds within the 30-day statutory period, but it does not unfairly place manufacturers at the mercy of consumers,” wrote Chief Justice Abrahamson.

    Middle Burden of Proof Applies

    Mercedes-Benz USA failed to give Marco Marquez a refund within 30 days after claiming the car he purchased in 2005, a Mercedes-Benz E320, was improperly manufactured, a lemon.

    A timely refund is required under Wisconsin’s lemon law, Wis. Stat. section 218.0171, which also requires a consumer to prove the car was a lemon, showing four or more failed repairs.

    Mercedes-Benz argued that Marquez’s conduct prevented it from meeting the 30-day statutory refund deadline and therefore it shouldn’t liable for statutory damages. Specifically, Mercedes-Benz argued that it did not have necessary information to make the refund, and Marquez did not respond to requests on the statutory deadline day knowing it was the last day. A circuit court granted summary judgment to Marquez, but an appeals court reversed.

    The appeals court held that consumer's who intentionally thwart the dealer's efforts to make a refund are not protected by Wisconsin's lemon law. It remanded the case for a determination of whether Marquez intentionally thwarted Mercedes Benz's efforts to make the refund.

    On remand, a jury found that Marquez acted in bad faith. But the circuit court judge entered a directed verdict in favor of Marquez, concluding that there was no credible evidence to support the jury’s conclusion.

    The court entered judgment for Marquez, awarding him $117,285 in statutory damages, twice the value of the car. Marquez’s lemon law claim also allowed him to recover $5,833 in prejudgment interest, $45,233 in statutory interest, and $12,321 for statutory and litigation costs, and attorney’s fees totaling $301,707.

    Mercedes-Benz appealed, and the appeals court certified the case to the Wisconsin Supreme Court, which affirmed the circuit court judgment in favor of Marquez.

    In addition to holding that only intentional conduct removes a customer’s protection under the lemon law’s timely refund provision, the court ruled that a “middle burden of proof” applies to the car manufacturer’s affirmative defense of intentional conduct. That is, the car manufacturer must prove the customer’s intentional conduct by “clear and convincing evidence.”

    Mercedes-Benz had argued that it had a low or ordinary burden, proof by a “preponderance of the evidence,” or by the “greater weight of the credible evidence.” That was the burden of proof applied by the circuit court, on Marquez's objection. But the supreme court disagreed.

    “Requiring manufacturers to prove the affirmative defense by the middle burden of proof expresses a preference for the consumer’s interests and acknowledges the imbalanced playing field on which Lemon Law disputes unfold,” the Chief Justice Abrahamson wrote.

    “Manufacturers might argue that our two holdings will allow savvy consumers to use the Lemon Law as a get-rich-quick scheme. We see no such risk,” the chief justice wrote, explaining that consumers still must prove the car is a lemon and take other actions.

    It was proper for the circuit court to grant Marquez’s motion for directed verdict, the court ruled, because no credible evidence supported the jury’s verdict.

    “After reviewing the record in the light most favorable to Mercedes-Benz, we conclude, that there is no credible evidence from which reasonable inferences can be drawn to support Mercedes-Benz’s affirmative defense,” the chief justice wrote.

    The court also ruled that Mercedes-Benz was not entitled to a new trial based on its assertion that it was wrongly denied an adjournment on the morning of trial, and was not permitted to call Marquez’s attorney, Vincent Megna, as a witness.

    Concurrence/Dissent

    Justice Patience Roggensack wrote a lone concurrence/dissent. She agreed that a middle burden applies in these cases, and she agreed that the circuit court did not erroneously exercise its discretion in denying Mercedes-Benz’s request for adjournment on the morning of trial.

    She dissented, however, concluding that there was credible evidence to support the jury’s finding that Marquez acted in bad faith, which was the question presented to the jury.

    “[W]hile I would have sustained the jury’s verdict had the middle burden of proof been applied, because it was not, I would reverse the circuit court’s decision and remand the matter for a new trial where the middle burden of proof would be applied,” she wrote.

    Attorneys

    Vincent Megna and Susan Grzeskowiak of Aiken & Scopture S.C., Milwaukee, represented Marco Marquez. Patrick Wells and Thomas Armstrong of von Briesen & Roper S.C., Milwaukee, represented Mercedes-Benz USA.