CHICAGO (CN) - A truck manufacturer must pay over $500,000 in compensation, penalties and attorneys' fees after withholding a Lemon Law refund in a dispute over $53, the 7th Circuit ruled.
James Michael Leasing Company bought a new Kenworth semi-truck from Paccar Inc. in 2007, and drove it for approximately 3,000 miles before concluding that the truck was a lemon.
It sought a refund from Paccar under Wisconsin's Lemon Law, and the manufacturer agreed to refund the purchase price of $135,847 plus interest, but would not refund the $53 title fee.
This small sum of money drove a wedge between the parties, and escalated into a dispute over whether Paccar was entitled to an allowance for use. Paccar sought to withhold an additional $3,750 from the refund payment.
In court, James Michael Leasing won a $369,196 judgment against Paccar, plus a $157,697 attorneys' fees award.
The 7th Circuit affirmed this outsized judgment last week.
"In light of the Wisconsin Supreme Court's determination that the manufacturer must bear the burden of providing the refund, we cannot conclude that a manufacturer's assurance that it will do so is sufficient to fulfill its obligation under the Lemon Law," U.S. District Judge Robert Dow, Jr. wrote, sitting by designation.
Paccar's statutory duty to issue a refund within 30 days was not changed by the leasing company's stated refusal to return the vehicle given the parties' dispute whether it was owed a refund of the truck's title fee, according to the judgment - even if James Michael Leasing also engaged in "tit-for-tat gamesmanship," which the court did not condone.
The three-judge panel noted that Wisconsin's Lemon law is particularly pro-consumer, which made Paccar's decision to withhold payment a particularly bad call, culminating in a judgment almost quadruple the value of the truck.
Paccar's only options were only to pay either the amount requested by JM Leasing, or the amount it believed it owed within 30 days."Playing chicken with the consumer regarding the amount of the refund and the return of the vehicle is not a viable alternative to those narrow options. As the Wisconsin Supreme Court has stated, the manufacturer 'must weigh very carefully when 'to hold 'em and when to fold 'em,'' Dow wrote, "and PACCAR made a bad bet here."
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.