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An auto industry practice of aggressively challenging adverse determinations under the state “lemon law” was shot down Thursday in a strongly worded opinion by an Albany, N.Y., judge. Supreme Court Justice Joseph R. Cannizzaro held for the first time that consumers are entitled to a refund or a new car if the dealer cannot repair a defect after four tries, even if the car is fixed by the time the motorist gets a lemon law arbitration hearing. The decision stemmed from a new policy adopted in 2002 by Attorney General Eliot Spitzer. Spitzer departed from 16 years of precedent in his office and instructed arbitrators to find in favor of the consumer if the vehicle could not be repaired in four tries. Previously, New York attorneys general had interpreted the law to say the consumer was not entitled to relief if the defect was repaired at the time of the arbitration hearing, regardless of how many attempts the car manufacturer needed. Spitzer’s December 2002 order resulted in a number of victories for consumers, which resulted in a plethora of actions against consumers by the auto industry. Auto dealers, instead of taking on the attorney general directly, sued motorists who had prevailed. They filed actions in Albany challenging the arbitration award under Article 75 of the Civil Practice Law and Rules, saying the arbitrations had been decided under an improper legal standard. With the attorney general not a party to the case and the customer often unrepresented or unwilling or unable to travel to Albany, automobile dealers scored a series of victories. A few months ago, DaimlerChrysler Corp., General Motors Corp. and Saturn Corp. used the victories to mount an assault on the interpretation itself. They sued Spitzer and the New York State Dispute Resolution Association. The litigation gave the attorney general the chance to defend his interpretation in court, with the status of a party to the case, which he did successfully in Matter of DaimlerChrysler Corp. v. Spitzer, 4381-04. Justice Cannizzaro rejected the auto dealers’ claim that the Article 75 rulings were binding. He said the car companies apparently relied on dicta, default orders and a case in which the issue was not briefed. On the other hand, he said they “completely ignored” the only decision that directly addressed whether four unsuccessful repair attempts entitles a consumer to lemon law relief. That decision, Bouchard v. Savoca, 129 Misc. 2d 506, was written in 1985 by then-Supreme Court Justice Lawrence E. Kahn. Justice Kahn, now a federal judge in the Northern District, essentially said the statute ought to be read as Spitzer read it in 2002. Cannizzaro said the interpretation urged by the auto dealers conflicts with rulings by courts in Connecticut, Vermont, New Jersey, Delaware, Wisconsin and Ohio. Those states have lemon laws that are virtually, and in some cases literally, identical to New York’s. As a practical matter, Cannizzaro said, the auto dealers’ view is inconsistent with the aim of the lemon law because it would skew the process in favor of the automobile industry at the expense of the consumers the law was drafted to protect. “[T]he Court finds that petitioners’ interpretation completely ignores the purpose of the statute which is to impose an obligation on the manufacturer to repair a defective vehicle within a reasonable time, thereby giving a consumer a remedy if the manufacturer does not satisfy this obligation,” Cannizzaro wrote. If the dealers prevailed, “it would induce consumers to stop trying to repair their vehicle after the fourth unsuccessful repair attempt and either drive defective vehicles or let them sit idle,” he wrote. That result, he wrote, would put “the burden on the consumers to keep giving the manufacturer opportunities to repair their vehicles without any benefit to the consumer or any consequences to the manufacturer.” The state was represented by assistant attorneys general Matthew J. Barbaro and Jane M. Azia of the Consumer Frauds Bureau. Keith B. Rose of Albany appeared for the car companies. Michael L. Costello of Tobin and Dempf in Albany represented the New York State Dispute Resolution Association. REACTION Consumer Frauds Bureau Chief Thomas G. Conway said in an interview that the ruling “will enable consumers to more easily and properly present their lemon law claims.” “It is satisfying, given what they tried to do … and the way they went about it,” he said. “Judge Cannizzaro recognized that instead of just challenging the policy by suing us, they brought cases against unrepresented consumers in Albany when the consumers were on Long Island, Westchester and around the state.” Rose, the dealers’ lawyer, said both the court and the attorney general misrepresented the facts of the case. He denied the dealers targeted consumers to delay a showdown with the attorney general, and disputed the suggestion that Spitzer’s voice had not been heard in any of the Article 75 cases. “They can spin it any way they want to, but every other judge in this state has gone the other way,” Rose said. “If you want to believe the attorney general that this is the first court to consider their position, you have to discount every other judge’s intelligence and their clerk’s ability to research.” Rose said he anticipated an appeal but had not yet discussed the issue with his clients.

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