Consumers don't always have to complete informal dispute resolution procedures before suing auto-makers under Pennsylvania's lemon law, a federal appeals court has ruled.
The three-judge panel in Phil-adelphia said the Federal Arbitration Act does not apply to lemon law defect claims under state law.
The decision was a victory for Fannie Harrison, who wanted to sue Nissan Motor Corp. U.S.A. on lemon law and Magnuson-Moss breach-of-warranty charges.
Nissan sought to have the case dismissed because Harrison did not complete the informal dispute-resolution procedure provided under the state lemon law. That law requires consumers to 'first resort' to informal procedures that comply with Federal Trade Commission regulations -such as Nissan's Better Business Bureau Auto Line.
Harrison's lawyer requested arbitration through BBB Auto Line, contending there were problems with the engine, air conditioning and steering of Harrison's 1994 Sentra. Harrison wanted a refund. After 40 days passed, she sued Nissan in federal court for compensatory and triple damages.
Nissan contended Harrison could not sue because she did not take any further action after contacting the BBB Auto Line.
The 3rd U.S. Circuit Court of Appeals sided with Harrison. The court said it is unclear whether the Federal Arbitration Act applies to agreements to take part in informal dispute-resolution mechanisms such as the BBB Auto Line.
At the same time, the court expressed sympathy for Nissan's assertion that some consumer attorneys merely 'go through the motions' of an alternative dispute resolution process to get quickly into court rather than using the programs to resolve disagreements.
The case was settled for an undisclosed amount after the decision, according to Craig Thor Kimmel, Harrison's lawyer in Ambler, Pa. Kimmel said the decision means manufacturers should re-examine their dispute-resolution procedures and ensure that consumers receive clear guidance about their rights and remedies.
Kurt von Zumwalt, Nissan's pub- lic affairs manager, said the company was pleased by the outcome, even though the appellate court did not accept its arguments. 'They were sympathetic to us,' he said.