SENATE BILL REPORT

ESSB 5502

BYSenate Committee on Commerce & Labor (originally sponsored by Senators Rinehart, Warnke, Halsan, Lee, Wojahn, Talmadge, Tanner, Bottiger, Bailey, Smitherman, Vognild, Williams, Garrett, Stratton and Moore)

Creating enforcement provisions for new motor vehicle warranties.

Senate Committee on Commerce & Labor

Senate Hearing Date(s):February 4, 1987; March 2, 1987

Majority Report:  That Substitute Senate Bill No. 5502 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Warnke, Chairman; Smitherman, Vice Chairman; Anderson, Tanner, Williams, Wojahn.

Senate Staff:Jean Meyn (786-7472)

                  April 20, 1987

AS PASSED SENATE, MARCH 11, 1987

BACKGROUND:

In 1983, the Legislature established standards regarding express warranties of new motor vehicles.  An express warranty is a written statement arising out of the sale of the motor vehicle.  If a manufacturer provides an express warranty, then it must adhere to the current law.

After a reasonable number of attempts to conform the vehicle to the express warranty, the manufacturer must repurchase the vehicle from the buyer at the original purchase price, minus the amount based on the buyer's use.  A reasonable number of attempts is defined as four or more repair attempts of the same item that does not conform to the warranty.

If the buyer does not choose repurchasing, he or she may choose the assistance of an informal dispute resolution process established by the manufacturer.  Manufacturers are not required to establish such a process, but if they do, then their processes must substantially comply with federal standards.

SUMMARY:

Any self-propelled motor vehicle for which a warranty is provided, except motorcycles and trucks with 19,000 pounds or more gross vehicle weight rating, are covered.  The self-propelled vehicle and chassis of motor homes are covered, but not the housing structure.

Express warranty is redefined to include written or oral affirmations of fact by the manufacturer that become the basis of the bargain for a new motor vehicle.  Implied warranties are included.  Manufacturers are required to provide a warranty of 24 months or 24,000 miles, whichever occurs first.

If a nonconformity remains uncorrected after a reasonable number of attempts to repair, the manufacturer must replace the new motor vehicle with a comparable replacement or repurchase from the buyer.  The repurchase price is the original price paid, minus a reasonable offset for buyer use, plus collateral charges and incidental costs.  A nonconformity is a defect or condition that substantially impairs the use, value or safety of a new motor vehicle.  Reasonable number of attempts to repair is four times for the same nonconformity and two times for a serious safety defect.

One or more new motor vehicle arbitration boards are established to implement a dispute resolution process with staff support from the Office of the Attorney General.  Testimony and witnesses may be presented and parties have a right to an attorney.  The board determines the appropriate remedy of repurchase or replacement and does not award attorneys' fees.

Consumers may bring manufacturers before the arbitration board and may seek court remedies, but may not take action against dealers.  Consumers have remedies under the Consumer Protection Act for violations of this law and may seek remedies under other laws also.

A fee of $5 will be collected from buyers of new motor vehicles beginning on June 1, 1987 to establish the funding for the arbitration board which goes into effect January 1, 1988.

Fiscal Note:      available

Senate Committee - Testified: Phillip Nowicki, Syracuse University; John Lea, consumer, Palmer, WA; Milt Harnden, AAA Automobile Club of Washington; Jim Austin, Motor Vehicles Manufacturers Association; Lee Ridgeway, General Motors; Janet Cunningham, Washington State Auto Dealers Association

HOUSE AMENDMENT:

A fleet of ten or more vehicles bought or leased by a business are excluded from coverage of the the law as well as vehicles not registered in Washington.

The Attorney General (AG) must contract with private entities to establish new motor vehicle arbitration boards to settle disputes between consumers and manufacturers.  Standards for the private boards which at least include the right to present testimony, to cross-examine witnesses and to be represented by an attorney.  Applications for arbitration are screened by the AG, who will provide information to consumers on their rights and remedies and may make determinations on the dispute's eligibility for arbitration. 

A consumer may choose to first submit a dispute to an arbitration board established by a manufacturer that substantially complies with federal law.  This option is available only until December 31, 1988.

If the AG is unable to contract with private entities that comply with applicable state standards, by January 1, 1988, the AG shall establish one or more new motor vehicle arbitration boards that are staffed by the AG and whose members receive per diem and travel expenses.

The appeal provisions are changed so that both the consumer and manufacturer may request a new trial of the arbitration board decision.  If the manufacturer appeals, the court may require the manufacturer to post security for the consumer's financial loss due to the passage of time for review.

A vehicle that had a serious defect that was still uncorrected after two repair attempts may be resold if it is later corrected and the manufacturer warrants the repair.  Notification of this must be placed on the title of the vehicle prior to resale.

By January 1, 1990, the appropriate Senate and House of Representatives committee shall review the effectiveness of the remedies for consumers and the role of the Attorney General.  By January 1, 1992, the Legislative Budget Committee shall conduct a sunset review and report to the Legislature.