Subdivision 1. Definitions. For the purposes of this
section, the following terms have the meanings given them:
(a) "consumer"
means the purchaser or lessee, other than for purposes of resale or
sublease, of a new motor vehicle used for personal, family, or household
purposes at least 40 percent of the time, a person to whom the new motor
vehicle is transferred for the same purposes during the duration of an
express warranty applicable to the motor vehicle;
(b) "manufacturer"
means a person engaged in the business of manufacturing, assembling or
distributing motor vehicles, who will, under normal business conditions
during the year, manufacture, assemble or distribute to dealers at least
ten new motor vehicles;
(c) "manufacturer's
express warranty" and "warranty" mean
the written warranty of the manufacturer of a new motor vehicle of its
condition and fitness for use, including any terms or conditions precedent
to the enforcement of obligations under that warranty;
(d) "lease"
means a contract in the form of a lease or bailment for the use of
personal property by a natural person for a period of time exceeding four
months, used for personal, family, or household purposes at least 40
percent of the time, whether or not the lessee has the option to purchase
or otherwise become the owner of the property at the expiration of the
lease;
(e) "motor vehicle"
means (1) a passenger automobile as defined in section 168.011,
subdivision 7, including pickup trucks and vans, and (2) the
self-propelled motor vehicle chassis or van portion of recreational
equipment as defined in section 168.011, subdivision 25, which is sold or
leased to a consumer in this state;
(f) "informal dispute
settlement mechanism" means an arbitration process or procedure by
which the manufacturer attempts to resolve disputes with consumers
regarding motor vehicle nonconformities and repairs that arise during the
vehicle's warranty period;
(g) "motor vehicle
lessor" means a person who holds title to a motor vehicle leased to
a lessee under a written lease agreement or who holds the lessor's rights
under such agreement; and
(h) "early termination
costs" means expenses and obligations incurred by a motor vehicle
lessor as a result of an early termination of a written lease agreement
and surrender of a motor vehicle to a manufacturer under subdivision 4,
including penalties for prepayment of finance arrangements.
Subd. 2.
Manufacturer's duty to repair. If a new motor vehicle does not
conform to all applicable express warranties, and the consumer reports the
nonconformity to the manufacturer, its agent, or its authorized dealer
during the term of the applicable express warranties or during the period
of two years following the date of original delivery of the new motor
vehicle to a consumer, whichever is the earlier date, the manufacturer,
its agent, or its authorized dealer shall make the repairs necessary to
conform the vehicle to the applicable express warranties, notwithstanding
the fact that the repairs are made after the expiration of the warranty
term or the two-year period.
Subd. 3.
Manufacturer's duty to refund or replace. (a) If the manufacturer,
its agents, or its authorized dealers are unable to conform the new motor
vehicle to any applicable express warranty by repairing or correcting any
defect or condition which substantially impairs the use or market value of
the motor vehicle to the consumer after a reasonable number of attempts,
the manufacturer shall either replace the new motor vehicle with a
comparable motor vehicle or accept return of the vehicle from the consumer
and refund to the consumer the full purchase price, including the cost of
any options or other modifications arranged, installed, or made by the
manufacturer, its agent, or its authorized dealer within 30 days after the
date of original delivery, and all other charges including, but not
limited to, sales or excise tax, license fees and registration fees,
reimbursement for towing and rental vehicle expenses incurred by the
consumer as a result of the vehicle being out of service for warranty
repair, less a reasonable allowance for the consumer's use of the vehicle
not exceeding ten cents per mile driven or ten percent of the purchase
price, whichever is less. If the manufacturer offers a replacement vehicle
under this section, the consumer has the option of rejecting the
replacement vehicle and requiring the manufacturer to provide a refund.
Refunds must be made to the consumer, and lienholder, if any, as their
interests appear on the records of the registrar of motor vehicles.
Refunds shall include the amount stated by the dealer as the trade-in
value of a consumer's used motor vehicle, plus any additional amount paid
by the consumer for the new motor vehicle. A manufacturer must give to the
consumer an itemized statement listing each of the amounts refunded under
this section. If the amount of sales or excise tax refunded is not
separately stated, or if the manufacturer does not apply for a refund of
the tax within one year of the return of the motor vehicle, the department
of public safety may refund the tax, as determined under paragraph (h),
directly to the consumer and lienholder, if any, as their interests appear
on the records of the registrar of motor vehicles. A reasonable allowance
for use is that amount directly attributable to use by the consumer and
any previous consumer during any period in which the use and market value
of the motor vehicle are not substantially impaired. It is an affirmative
defense to any claim under this section (1) that an alleged nonconformity
does not substantially impair the use or market value, or (2) that a
nonconformity is the result of abuse, neglect, or unauthorized
modifications or alterations of a motor vehicle by anyone other than the
manufacturer, its agent or its authorized dealer.
(b) It is presumed that a reasonable number
of attempts have been undertaken to conform a new motor vehicle to the
applicable express warranties, if (1) the same nonconformity has been
subject to repair four or more times by the manufacturer, its agents, or
its authorized dealers within the applicable express warranty term or
during the period of two years following the date of original delivery of
the new motor vehicle to a consumer, whichever is the earlier date, but
the nonconformity continues to exist, or (2) the vehicle is out of service
by reason of repair for a cumulative total of 30 or more business days
during the term or during the period, whichever is the earlier date.
(c) If the nonconformity results in a
complete failure of the braking or steering system of the new motor
vehicle and is likely to cause death or serious bodily injury if the
vehicle is driven, it is presumed that a reasonable number of attempts
have been undertaken to conform the vehicle to the applicable express
warranties if the nonconformity has been subject to repair at least once
by the manufacturer, its agents, or its authorized dealers within the
applicable express warranty term or during the period of two years
following the date of original delivery of the new motor vehicle to a
consumer, whichever is the earlier date, and the nonconformity continues
to exist.
(d) The term of an applicable express
warranty, the two-year period and the 30-day period shall be extended by
any period of time during which repair services are not available to the
consumer because of a war, invasion, strike, or fire, flood, or other
natural disaster.
(e) The presumption contained in paragraph
(b) applies against a manufacturer only if the manufacturer, its agent, or
its authorized dealer has received prior written notification from or on
behalf of the consumer at least once and an opportunity to cure the defect
alleged. If the notification is received by the manufacturer's agent or
authorized dealer, the agent or dealer must forward it to the manufacturer
by certified mail, return receipt requested.
(f) The expiration of the time periods set
forth in paragraph (b) does not bar a consumer from receiving a refund or
replacement vehicle under paragraph (a) if the reasonable number of
attempts to correct the nonconformity causing the substantial impairment
occur within three years following the date of original delivery of the
new motor vehicle to a consumer, provided the consumer first reported the
nonconformity to the manufacturer, its agent, or its authorized dealer
during the term of the applicable express warranty.
(g) At the time of purchase or lease, the
manufacturer must provide directly to the consumer a written statement on
a separate piece of paper, in 10-point all capital type, in substantially
the following form: "IMPORTANT: IF THIS VEHICLE IS DEFECTIVE, YOU MAY BE
ENTITLED UNDER THE STATE'S LEMON LAW TO REPLACEMENT OF IT OR A REFUND OF
ITS PURCHASE PRICE OR YOUR LEASE PAYMENTS. HOWEVER, TO BE ENTITLED TO
REFUND OR REPLACEMENT, YOU MUST FIRST NOTIFY THE MANUFACTURER, ITS AGENT,
OR ITS AUTHORIZED DEALER OF THE PROBLEM IN WRITING AND GIVE THEM AN
OPPORTUNITY TO REPAIR THE VEHICLE. YOU ALSO HAVE A RIGHT TO SUBMIT YOUR
CASE TO THE CONSUMER ARBITRATION PROGRAM WHICH THE MANUFACTURER MUST OFFER
IN MINNESOTA."
(h) The amount of the sales or excise tax to
be paid by the manufacturer to the consumer under paragraph (a) shall be
the tax paid by the consumer when the vehicle was purchased less an amount
equal to the tax paid multiplied by a fraction, the denominator of which
is the purchase price of the vehicle and the numerator of which is the
allowance deducted from the refund for the consumer's use of the vehicle.
Subd. 4.
Manufacturer's duty to consumers with leased vehicles. A consumer
who leases a new motor vehicle has the same rights against the
manufacturer under this section as a consumer who purchases a new motor
vehicle, except that, if it is determined that the manufacturer must
accept return of the consumer's leased vehicle pursuant to subdivision 3,
then the consumer lessee is not entitled to a replacement vehicle, but is
entitled only to a refund as provided in this subdivision. In such a case,
the consumer's leased vehicle shall be returned to the manufacturer and
the consumer's written lease with the motor vehicle lessor must be
terminated. The manufacturer shall then provide the consumer with a full
refund of the amount actually paid by the consumer on the written lease,
including all additional charges set forth in subdivision 3, if actually
paid by the consumer, less a reasonable allowance for use by the consumer
as set forth in subdivision 3. The manufacturer shall provide the motor
vehicle lessor with a full refund of the vehicle's original purchase price
plus any early termination costs, not to exceed 15 percent of the
vehicle's original purchase price, less the amount actually paid by the
consumer on the written lease.
Subd. 5.
Resale or re-lease of returned motor vehicle. (a) If a motor
vehicle has been returned under the provisions of subdivision 3 or a
similar statute of another state, whether as the result of a legal action
or as the result of an informal dispute settlement proceeding, it may not
be resold or re-leased in this state unless:
(1) the manufacturer provides the same
express warranty it provided to the original purchaser, except that the
term of the warranty need only last for 12,000 miles or 12 months after
the date of resale, whichever is earlier; and
(2) the manufacturer provides the consumer
with a written statement on a separate piece of paper, in 10-point all
capital type, in substantially the following form: "IMPORTANT: THIS
VEHICLE WAS RETURNED TO THE MANUFACTURER BECAUSE IT DID NOT CONFORM TO THE
MANUFACTURER'S EXPRESS WARRANTY AND THE NONCONFORMITY WAS NOT CURED WITHIN
A REASONABLE TIME AS PROVIDED BY MINNESOTA LAW."
The provisions of this section apply to the resold or re-leased motor
vehicle for full term of the warranty required under this subdivision.
(b) Notwithstanding the provisions of
paragraph (a), if a new motor vehicle has been returned under the
provisions of subdivision 3 or a similar statute of another state because
of a nonconformity resulting in a complete failure of the braking or
steering system of the motor vehicle likely to cause death or serious
bodily injury if the vehicle was driven, the motor vehicle may not be
resold in this state.
Subd. 6.
Alternative dispute settlement mechanism. (a) Any manufacturer
doing business in this state, entering into franchise agreements for the
sale of its motor vehicles in this state, or offering express warranties
on its motor vehicles sold or distributed for sale in this state shall
operate, or participate in, an informal dispute settlement mechanism
located in the state of Minnesota which complies with the provisions of
the Code of Federal Regulations, title 16, part 703, and the requirements
of this section. The provisions of subdivision 3 concerning refunds or
replacement do not apply to a consumer who has not first used this
mechanism before commencing a civil action, unless the manufacturer allows
a consumer to commence an action without first using this mechanism.
(b) An informal dispute settlement mechanism
provided for by this section shall, at the time a request for arbitration
is made, provide to the consumer and to each person who will arbitrate the
consumer's dispute, information about this section as approved and
directed by the attorney general, in consultation with interested parties.
The informal dispute settlement mechanism shall permit the parties to
present or submit any arguments based on this section and shall not
prohibit or discourage the consideration of any such arguments.
(c) If, in an informal dispute settlement
mechanism, it is decided that a consumer is entitled to a replacement
vehicle or refund under subdivision 3, then any refund or replacement
offered by the manufacturer or selected by a consumer shall include and
itemize all amounts authorized by subdivision 3. If the amount of excise
tax refunded is not separately stated, or if the manufacturer does not
apply for a refund of the tax within one year of the return of the motor
vehicle, the department of public safety may refund the excise tax, as
determined under subdivision 3, paragraph (h), directly to the consumer
and lienholder, if any, as their interests appear on the records of the
registrar of motor vehicles.
(d) No documents shall be received by any
informal dispute settlement mechanism unless those documents have been
provided to each of the parties in the dispute at or prior to the
mechanism's meeting, with an opportunity for the parties to comment on the
documents either in writing or orally. If a consumer is present during the
informal dispute settlement mechanism's meeting, the consumer may request
postponement of the mechanism's meeting to allow sufficient time to review
any documents presented at the time of the meeting which had not been
presented to the consumer prior to the meeting.
(e) The informal dispute settlement mechanism
shall allow each party to appear and make an oral presentation in the
state of Minnesota unless the consumer agrees to submit the dispute for
decision on the basis of documents alone or by telephone, or unless the
party fails to appear for an oral presentation after reasonable prior
written notice. If the consumer agrees to submit the dispute for decision
on the basis of documents alone, then manufacturer or dealer
representatives may not participate in the discussion or decision of the
dispute.
(f) Consumers shall be given an adequate
opportunity to contest a manufacturer's assertion that a nonconformity
falls within intended specifications for the vehicle by having the basis
of the manufacturer's claim appraised by a technical expert selected and
paid for by the consumer prior to the informal dispute settlement hearing.
(g) Where there has been a recent attempt by
the manufacturer to repair a consumer's vehicle, but no response has yet
been received by the informal dispute mechanism from the consumer as to
whether the repairs were successfully completed, the parties must be given
the opportunity to present any additional information regarding the
manufacturer's recent repair attempt before any final decision is rendered
by the informal dispute settlement mechanism. This provision shall not
prejudice a consumer's rights under this section.
(h) If the manufacturer knows that a
technical service bulletin directly applies to the specific mechanical
problem being disputed by the consumer, then the manufacturer shall
provide the technical service bulletin to the consumer at reasonable cost.
The mechanism shall review any such technical service bulletins submitted
by either party.
(i) A consumer may be charged a fee to
participate in an informal dispute settlement mechanism required by this
section, but the fee may not exceed the conciliation court filing fee in
the county where the arbitration is conducted.
(j) Any party to the dispute has the right to
be represented by an attorney in an informal dispute settlement mechanism.
(k) The informal dispute settlement mechanism
has all the evidence-gathering powers granted an arbitrator under section
572.14.
(l) A decision issued in an informal dispute
settlement mechanism required by this section may be in writing and
signed.
Subd. 7.
Effect and admissibility of decision by informal dispute settlement
mechanism. The decision issued in an informal dispute settlement
mechanism required by this section is nonbinding on the parties involved,
unless otherwise agreed by the parties. Any party, upon application, may
remove the decision to district court for a trial de novo. If the
manufacturer is aggrieved by the decision of the informal dispute
settlement mechanism, an application to remove the decision must be filed
in the district court within 30 days after the date the decision is
received by the parties. If the application to remove is not made within
30 days, then the district court shall, upon application of a party, issue
an order confirming the decision. A written decision issued by an informal
dispute settlement mechanism, and any written findings upon which the
decision is based, are admissible as nonbinding evidence in any subsequent
legal action and are not subject to further foundation requirements.
Subd. 8.
Treble damages for bad faith appeal of decision. If the district
court finds that a party has removed a decision of an informal dispute
settlement mechanism in bad faith, by asserting a claim or defense that is
frivolous and costly to the other party, or by asserting an unfounded
position solely to delay recovery by the other party, then the court shall
award to the prevailing party three times the actual damages sustained,
together with costs and disbursements, including reasonable attorney's
fees.
Subd. 9. Civil
remedy. Any consumer injured by a violation of this section may
bring a civil action to enforce this section and recover costs and
disbursements, including reasonable attorney's fees incurred in the civil
action. In addition to the remedies provided herein, the attorney general
may bring an action pursuant to section 8.31 against any manufacturer for
violation of this section.
Subd. 10.
Limitation on actions. A civil action brought under this section
must be commenced within three years of the date of original delivery of
the new motor vehicle to a consumer; except that, if the consumer applies
to an informal dispute settlement mechanism within three years of the date
of original delivery of a new motor vehicle to a consumer, and if the
consumer is aggrieved by the decision of the informal dispute settlement
mechanism, then any civil action brought under this section must be
commenced within six months after the date of the final decision by the
mechanism.
Subd. 11.
Remedy nonexclusive. Nothing in this section limits the rights or
remedies which are otherwise available to a consumer under any other law.
Subd. 12.
Disclosure requirement. In addition to any investigative powers
authorized by law, the attorney general may inspect the records of the
informal dispute settlement mechanism upon reasonable notice, during
regular business hours, and may make available to the public information
about the operation of the mechanism, but data on an individual may not be
disclosed without the prior consent of the individual.
Subd. 13.
Dealer liability. Nothing in this section imposes liability on a
dealer or creates an additional cause of action by a consumer against a
dealer, except for written express warranties made by the dealer apart
from the manufacturer's warranties. The manufacturer shall not charge back
or require reimbursement by the dealer for any costs, including, but not
limited to, any refunds or vehicle replacements, incurred by the
manufacturer arising out of this section, unless there is evidence that
the related repairs had not been carried out by the dealer in a timely
manner or in a manner substantially consistent with the manufacturer's
published instructions.
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