Litigation or Arbitration: What’s the Better Option Under California Lemon Law?

California lemon law can be a delicate process for consumers. There is never a convenient time to be sold a defective vehicle. As most – if not all – consumers are facing this situation for the first time. Unfortunately, in most cases, automakers have no intention of taking responsibility and reimbursing consumers after selling them a defective cars. 

Additionally, there is no shortage of bad information that serves their own financial interests. One of the biggest bits of bad information involves arbitration.

When a vehicle meets the California lemon law qualifications, manufacturers will commonly tell consumers that arbitration is a better option than litigation. Don’t be fooled.

In this post, we want to discuss the difference between arbitration and litigation in the eyes of California lemon law – and how to avoid falling victim to this trap.

What is Arbitration in California Lemon Law?

Arbitration is one of the most common tactics auto manufacturers use to avoid responsibility for selling a lemon. Unfortunately, getting a refund for a faulty car isn’t like going to the Walmart return center. You can’t just walk into their office with the receipt for the vehicle and get your money back. There is a legal process to follow.

If the manufacturer is not able to repair the defect(s), they will commonly tell consumers that arbitration is a “quick and cheap” option to get a refund. This is in contrast to the litigation process. Unfortunately, it is only “quick and cheap,” because the consumer usually loses quickly and the manufacturer doesn’t have to refund any money.

Arbitration involves taking your situation in front of an arbitrator or panel of arbitrators instead of a judge. You, the manufacturer, and the arbitrator(s) will discuss the defective vehicle and whether the manufacturer is liable to provide a buyback (refund).

Auto manufacturers know how inconvenient it is for you to not have a properly-functioning vehicle. They may try to convince you that taking your lemon claim through the court system can take months or years. Additionally, the court fees and lemon law lawyer expenses will end up costing more than the refund amount. Arbitration, on the other hand, can resolve your claim in a matter of weeks – or less. 

In most cases, this is absolutely not true.

The arbitration process is not quicker, and it rarely works out in the consumer’s favor.

What is Litigation in California Lemon Law?

Litigation would involve taking your California lemon law claim through the public court system. Keep in mind, your tax dollars go towards funding this system. It exists to help you seek fair justice in situations like these. Our court system gives you rights and puts responsibilities on the defendants/wrong-doers.

Choosing litigation means you’d need to hire a lemon law attorney to negotiate with the manufacturer for the buyback. The attorney will work to hold the automaker accountable for every single penny you had to spend for the defective car. This includes (but is not limited to):

  • The cost of the vehicle
    • Down payment, monthly payments made, the remaining balance of the loan
  • All official costs associated with the vehicle (sales tax, registration, etc.)
  • All incidental costs incurred from the lemon (towing fees, rental cars, cab fares, hotel stays, meals, etc.)
  • All court fees and attorney expenses

What some consumers might not know is that most California lemon law claims never go to trial. A good lemon attorney will work to settle the matter with the manufacturer directly. As stated above, the manufacturer would be liable for all court fees if they lost the case. If your defective vehicle is clearly a lemon, the manufacturer will likely choose to avoid the costly litigation process and settle out of court.

What is the Better Option for California Lemon Law?

Litigation is ALWAYS a better option than arbitration.

What many consumers might not realize about arbitration is that the arbitrators are paid by the manufacturer. This means they may or may not be biased in their decision.

Think about it like this: Say you’re playing a game of baseball – only all the umpires are being paid by the other team. Do you think they would call a fair game? Probably not. A similar concept applies in arbitration.

When the manufacturer tells you that arbitration is “quicker and cheaper” than going to court, it’s only cheaper for them. In our experience and investigation, in most cases, arbitration ends with the consumer getting a low-ball cash settlement, instead of the fair refund they deserve. If you’re faced with a lemon, never agree to arbitration – no matter how enticing the manufacturer makes it sound.

Some automakers – like Tesla – slip forced arbitration clauses into their purchase orders. Tesla’s arbitration terms state that if any defects aren’t resolved within 60 days, disputes will be handled with Tesla and a single arbitrator, not with a judge and jury. Fortunately, these clauses have a 30-day opt-out window.

Whenever you purchase or lease a vehicle, be diligent in checking the order for a forced arbitration clause. This is another sneaky way automakers try to avoid liability for selling defective products.

Seek Out a Professional California Lemon Law Attorney

In the unfortunate situation you end up with a lemon, speaking with a California lemon law attorney is the best thing you can do. The manufacturer is NOT on your side. Their primary goal is to avoid lemon law buybacks. Not only are buybacks expensive, having one of their vehicles get ruled defective compromises their global brand image.

The lemon law lawyer you hire is the only party that is truly on your side. When you choose arbitration, no one is on your side.

Even if you don’t have a valid lemon claim, it never hurts to speak with an attorney for more information. Most California lemon law attorneys know you’re in this situation for the first time – and have no problem giving you proper instructions.

If you have any questions or concerns about a defective vehicle, reach out to our team at Cline APC. We’re more than happy to help you in seeking justice for a defective vehicle. Call our office at 888-982-6915, send an email to info@clineapc.com, or fill out a free case evaluation.

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