Mediator’s perspective on AB1755 and SB26 which will go into full effect as of July 1, 2025

EARLY ADR

 New CCP section 871.26(d) will require a mandatory mediation process with the option for in-person or remote attendance.  It requires that within 90 days after the filing of the answer or other responsive pleading, the parties must schedule mediation. Mediation must occur within 150 days.

CCP Section 871.25 will mandate standardized language of a Lemon Law release agreement.

If mediation does not resolve the case, the Legislative intent of encouraging early disposition  will have been exhausted and the case can proceed as Lemon Law cases have in the past with formal discovery, more and longer depositions, and the like.

 PRE-SUIT NOTICE REQUIREMENTS

 The pre-suit notice requirement of new CCP section 871.24 totally changes existing law, which had never required a pre-suit buyback demand by the consumer but for 2025 and later cases now will.  For manufacturers who elect to be bound by these new rules (which I believe will be most if not all of them), the consumer must provide a written buyback demand notice to the manufacturer at least 30 days before filing a lawsuit that seeks civil penalties. The notice must include the consumer’s name, the vehicle’s “VIN”, a summary of the repair history, and a request for repurchase or replacement.  Since almost all Lemon Law lawsuits seek civil penalties, this pre-suit notice will become the new norm.  After receiving the notice, the manufacturer has 30 days to comply with the request before plaintiff can file suit, and the consumer cannot sell the car while the buy-back demand and response are pending.  To comply with the new law, the manufacturer’s Buy-Back offer per new CCP 871.24(e)(1(A) must include a provision for reasonable attorney’s fees and costs if the consumer is represented by an attorney.

SPEEDY SETTLEMENTS AND SURRENDERS

 If the manufacturer chooses to proceed with replacement or restitution, it must be completed within 60 days (unless extended by both sides) after receiving the original notice in order to avoid a lawsuit being filed.  CCP section 871.24(f) provides that a “prelitigation dispute as to attorney fees and costs shall be resolved by neutral, binding arbitration [i.e., NOT by noticed motion].  A dispute as to the amount of attorney fees and costs shall not, by itself, be a sufficient basis to show that the manufacturer’s offer is out of compliance with this section.”  Section 871.25 will mandate standardized language of a Lemon Law release agreement.  Manufacturers failing to complete restitution or replacement within 30 days of receiving a signed release face daily penalties of $50 until the settlement is finalized, unless the delay is due to the consumer’s lack of good faith compliance.