Practicing Lemon Law in the Big Three’s backyard is no easy feat, but Dani K. Liblang has proven that building this niche practice into a successful business is possible — and profitable. Her own knowledge and love of cars — plus a knack for picking good cases — has put her head and shoulders above the crowd in this area of law. To that end, she has broken ground several times in a judicial and legislative landscape that doesn’t favor auto consumers. One such case was decided recently in the Court of Appeals. In Laverne, et al. v. Volkswagen and Winnebago, she convinced the court she was owed nearly $42,000 in attorney’s fees, largely based on another one of her cases. It was in that case — Jordan v. Transnational Jordan — that one might say Liblang broke open the field of Lemon Law when the court agreed it was not fair to tie attorneys to what is often a relatively tiny recovery. Liblang has branded herself in Michigan and nationally as the Lemon Law go-to lawyer — and it’s not hard to realize how.
Q. How did you get started in this practice?
A . I was inspired to practice Lemon Law by my own lemon, which happened when I was still in college. I was working full time, putting myself through college and I thought, “Wouldn’t it be smarter to buy a new vehicle, albeit an expensive one, so it would be under warranty and I wouldn’t have to worry about surprise budgeting?” I bought a Pontiac Astro and I had 29 road service calls in the first two months I owned it. Now my dad was a lawyer, I was working for a law firm, and I was dating a lawyer. I couldn’t find anybody who knew anything about it or could do anything about it. All I could do was take a huge bath on this stupid car — that I had put every cent into other than what I was spending on tuition — and get another car. I thought, “Boy, when I get my law license if somebody comes to me with a lemon, I’ll take care of it.”
Q. How did you get the reputation as the person to see if you have a Lemon Law problem?
A. I think I really got noticed in the field when one of my friends had an X-car that had transmission failure at about 17,000 miles. Obviously that shouldn’t happen. I called up another friend who owned a gas station and asked, “Have you heard anything about X-car transmissions?” He started cracking up and told me to talk to my friend Wayne at Wayne’s Transmissions. He told me, “These things are really infamous. I can’t believe you didn’t know about them.” I then contacted The Center for Auto Safety to see what they knew. They said, “Would you be willing to handle an X-car class action?” Here I am — a year out of school — and I naively say, “Yes.” So off I go to file my first class action against General Motors: Halsted v. General Motors. In that case, we had 180 named plaintiffs — we closed it off with that rather than take it national or even statewide — and we resolved it. The publicity from that seemed to get me more attention as a Lemon Law lawyer. And a lot of that took off from speaking engagements and writing articles and these cases. Also, the Michigan Trial Lawyers Association has a ListServe which is helpful. There are different groups around the country, such as the National Association for Consumer Advocates, and I’ve been active in those groups. Lemon Law is not exactly a huge practice group — there aren’t a lot of attorneys who do it.
Q. Why do you think that is?
A. Because up until Jordan, there was a huge perception you couldn’t make any money doing it. As far as litigation goes, you’re typically dealing with “not very large” claims. To consumers they are large claims, of course, and these days cars cost somewhere between $17,000 and $30,000. But by the time you get through the process of litigation over that…. Also, consumer warranty law really isn’t the same as products liability. There are certain parallels and there are some inexperienced lawyers who will treat it that way. If they want to do that kind of discovery and hire all these experts there’s not much you can do except respond in kind. It’s not unusual — in Miles v. Ford, the cost of attorneys fees were $124,000 on a $17,000 car. The problem was most judges had a hard time getting their heads around the idea that attorneys’ fees could be more than the amount in controversy. In Jordan, which was decided in 1995, the case went to trial and we got a jury verdict of about $7,600. At the fee hearing, the judge said, essentially, “Well, you did a great job. You didn’t churn the files as far as I’m concerned. Everything you did was reasonable and necessary, and the hourly rate is fine. However, since you only got a $7,600 verdict, I’m only going to give you $3,000 in fees and I’m going to disallow your experts.” That was a district court case, which we took up to the circuit court. They just rubber stamped it, so we applied for leave and the Court of Appeals granted leave and published an opinion. What the Court of Appeals said was the whole reason for these fee-shifting statutes is to allow consumers to be able to bring claims that otherwise wouldn’t be practical. The other corollary to that is if courts don’t grant market-rate fees, attorneys won’t be able to take these cases, thus these consumers won’t be able to attract competent counsel to take these cases. Once Jordan came out it became a lot easier to convince judges to award decent fees.
Q. Why did it take Jordan to turn things around? Why weren’t courts allowing attorneys to recover reasonable fees for the services they provided?
A. In Jordan, we had to draw a lot on civil rights litigation. Courts had already figured it out in civil rights litigation that attorney fees could be a good chunk of the recovery, and it really doesn’t do a civil rights victim much good if all of his recovery is eaten up with attorneys’ fees. Also, other states had already had a lot more Magnusson-Moss litigation so we were able to draw on those cases. Up until then, courts just weren’t really excited about granting attorneys’ fees in these cases. The other problem is, because there was hardly any litigation in Michigan on Magnusson-Moss and Lemon Law, courts just weren’t familiar with it. They are getting more familiar with it but, even now — especially when I get to the summary disposition stage or trial — with many of the judges I spend a lot of time educating them on what the law is in this area. I’m chair of the Consumer Law Section of the State Bar, and one thing we’re working on is putting together a bench book for judges that has all of the basic elements of these consumer statutes, what you have to prove, and some of the basic issues that come up so they have bench briefs right at their fingertips. Even our civil jury instructions don’t cover enough to deal with all these statutes.
Q. Are you finding that consumers are realizing that they can do something about their car problems?
A. Yes. When I testified at the hearings [to get the Lemon Law passed], the manufacturers were there in full force to say, “We don’t need a Lemon Law because we have Magnusson-Moss. We have the Consumer Protection Act and the Uniform Commercial Code.” In fact, all of that is sort of true. We have those statutes and, many times, they are better than the Lemon Law —you don’t have to jump through as many hoops, and the standards of proof aren’t nearly are tough as our Lemon Law is. But the reason we needed a Lemon Law was that most consumers have no clue about Magnusson-Moss and UCC. At least the Lemon Law got the word out there. The Internet has also certainly helped get the word out. People are much savvier. Many of my clients come from the Internet and they have done their research and they appreciate not only what the law is basically but they have a pretty good idea if they have a claim or not.
Q. Has it gotten any easier to practice Lemon Law in Michigan?
A. Unfortunately, two opinions just came down that got it absolutely wrong on the Lemon Law and basically gutted it. One was Hines v. Volkswagen and the other one was Computer Network v. AM General. I think they are moving for reconsideration and they are going to take those up on appeal which I hope they do.
Q. How did they get it wrong?
A. Computer Network was a commercial lease case and the court said basically we can ignore precedent that had been established for consumers, like Henderson v. Chrysler, which had said you can mitigate your damages by continuing to use the vehicle if the other side is being stubborn by not accepting your revocation. Most consumers can’t afford to just park the vehicle while they are in litigation; most consumers need something to drive. The court distinguished Henderson by saying, since he was a business — I guess making the assumption that all businesses can afford to do this —he should have parked the thing and gotten another vehicle. They said this even though his vehicle had something like 114 days out of service and God knows how many service visits. The court said he loses on the express warranty and loses on the revocation because he continued to use the vehicle. They did at least say he had a breach of implied warranty. That wasn’t good. It wasn’t a fatal blow or anything, but it wasn’t good. Hines is a much more troubling opinion. What they said in Hines is, if you go back to the Lemon Law, there are two ways you can prove a prima facie case. The first is four times in the shop for the same defect or condition, the other way is 30 days in the first year of ownership in the shop. With the four times for the same defect or condition, you have to meet certain criteria. One is that it has to be reported during the first year of ownership, even though the repairs might span a longer period than the first year. It doesn’t have to be the exact same thing but it has to be related. For example, if you have a transmission that blows out first gear and then maybe it blows out third gear it’s still going to count. But under that four times, you have to show that after the fourth time that defect still exists and you have to show that that defect substantially impairs the use or value of the vehicle so you have those extra hurdles. When you’re dealing with the 30 days issue, the Legislature, in the language of the statute and the legislative history, said when you have 30 days in the shop you don’t have to prove outside of that a substantial impairment — it’s essentially presumed that is a substantial impairment. But what happened in Hines was the court said the same defect had to continue beyond the 30 days. It doesn’t say that anywhere in statute. It’s just ridiculous, because the 30-day standard is supposed to apply even if it’s 30 different things that take you into the shop. They just got that flat out wrong.
Q. Do you think that Michigan — being the hub of the auto industry — played a part in the delay in passing a Lemon Law? And is that why it’s harder to practice Lemon Law in Michigan?
A.I think that’s not only why it’s harder, I think that influenced why it was so hard to get a Lemon Law. They fought this Lemon Law, they watered down the original Lemon Law with their lobbying, and then they came back and watered it down again. The Legislature finally came back and said, “Oops. We should have included leases.” The manufacturers came back and said they didn’t think that the standards for the offset for use was fair. They thought there should be a limit of four times for the same thing and it has to occur in the first two years of the last defect. So now Michigan, not surprisingly I suppose, has one of the least effective Lemon Laws in the United States. Some states have provisions that address safety defects, but we have nothing like that. We have to jump through far more hurdles than most Lemon Law states do and now our courts have kind of unilaterally amended the law in favor of the manufacturers.
Q. Given all that, what’s the key to your success?
A.I think a lot of it is careful case selection. That’s number one — being very careful about the cases you take and screen them thoroughly. The other thing is, I used to work at a gas station as a kid and I love cars. I’m a car nut. I think it helps to know something about vehicles. A lot of things I can recognize by looking at the repair orders, whereas somebody who isn’t familiar with vehicles might not. Certain defenses that the opposing side will raise, because of my experience and what I know about vehicles, I can say that’s ridiculous. It helps you to know when you’re facing a real defense or a bunch of smoke and mirrors and being able to deal with that. I think it helps give you some credibility with opposing counsel when you pick good cases and you actually know something about cars so they can’t run a fast one by you. — BY DENISE G. CALLAHAN