1.1                          A bill for an act 
  1.2             relating to consumer protection; providing for a duty 
  1.3             to repair, refund, or replace certain new computers; 
  1.4             proposing coding for new law in Minnesota Statutes, 
  1.5             chapter 325F. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [325F.991] [NEW COMPUTER WARRANTIES; 
  1.8   MANUFACTURER'S DUTY TO REPAIR, REFUND, OR REPLACE.] 
  1.9      Subdivision 1.  [DEFINITIONS.] For the purposes of this 
  1.10  section, the following terms have the meanings given them: 
  1.11     (1) "computer" means an electronic device that performs 
  1.12  logical, arithmetic, or memory functions by the manipulation of 
  1.13  signals, including but not limited to electronic or magnetic 
  1.14  impulses, and includes handheld and laptop devices as well as 
  1.15  desktop or free-standing devices, but does not include software, 
  1.16  including the operating system, that the device uses to 
  1.17  function; 
  1.18     (2) "peripheral" means a printer, monitor, pointing device, 
  1.19  such as a trackball or mouse, keyboard or other input device, 
  1.20  microphone, scanner, camera, or other item that is sold together 
  1.21  with a computer and intended to be connected to the computer in 
  1.22  the normal course of use; 
  1.23     (3) "consumer" means the purchaser or lessee, other than 
  1.24  for purposes of resale or sublease, of a new computer used for 
  1.25  personal, family, or home business purposes at least 40 percent 
  2.1   of the time, or a person to whom the new computer is transferred 
  2.2   for the same purposes during the duration of an express warranty 
  2.3   applicable to the computer; 
  2.4      (4) "manufacturer" means a person engaged in the business 
  2.5   of manufacturing, assembling, or distributing computers, who 
  2.6   will, under normal business conditions during the year, 
  2.7   manufacture, assemble, or distribute to dealers at least ten new 
  2.8   computers; 
  2.9      (5) "manufacturer's express warranty" and "warranty" mean 
  2.10  the written warranty of the manufacturer of a new computer of 
  2.11  its condition and fitness for use, including any terms or 
  2.12  conditions precedent to the enforcement of obligations under 
  2.13  that warranty; 
  2.14     (6) "lease" means a contract in the form of a lease or 
  2.15  bailment for the use of personal property by a natural person 
  2.16  for a period of time exceeding four months, used for personal, 
  2.17  family, or home business purposes at least 40 percent of the 
  2.18  time, whether or not the lessee has the option to purchase or 
  2.19  otherwise become the owner of the property at the expiration of 
  2.20  the lease; 
  2.21     (7) "informal dispute settlement mechanism" means an 
  2.22  arbitration process or procedure by which the manufacturer 
  2.23  attempts to resolve disputes with consumers regarding computer 
  2.24  nonconformities and repairs that arise during the computer's 
  2.25  warranty period; 
  2.26     (8) "computer lessor" means a person who holds title to a 
  2.27  computer leased to a lessee under a written lease agreement or 
  2.28  who holds the lessor's rights under the agreement; and 
  2.29     (9) "early termination costs" means expenses and 
  2.30  obligations incurred by a computer lessor as a result of an 
  2.31  early termination of a written lease agreement and surrender of 
  2.32  a computer to a manufacturer under subdivision 4, including 
  2.33  penalties for prepayment of finance arrangements. 
  2.34     Subd. 2.  [MANUFACTURER'S DUTY TO REPAIR.] If a new 
  2.35  computer or peripheral does not conform to all applicable 
  2.36  express warranties, and the consumer reports the nonconformity 
  3.1   to the manufacturer, its agent, or its authorized dealer during 
  3.2   the term of the applicable express warranties or during the 
  3.3   period of two years following the date of original delivery of 
  3.4   the new computer or peripheral to a consumer, whichever is the 
  3.5   earlier date, the manufacturer, its agent, or its authorized 
  3.6   dealer shall make the repairs necessary to conform the computer 
  3.7   or peripheral to the applicable express warranties, 
  3.8   notwithstanding the fact that the repairs are made after the 
  3.9   expiration of the warranty term or the two-year period. 
  3.10     Subd. 3.  [MANUFACTURER'S DUTY TO REFUND OR REPLACE.] (a) 
  3.11  If the manufacturer, its agents, or its authorized dealers are 
  3.12  unable to conform the new computer or peripheral to any 
  3.13  applicable express warranty by repairing or correcting any 
  3.14  defect or condition which substantially impairs the use or 
  3.15  market value of the computer or peripheral to the consumer after 
  3.16  a reasonable number of attempts, the manufacturer shall either 
  3.17  replace the new computer or peripheral with a comparable 
  3.18  computer or peripheral or accept return of the computer or 
  3.19  peripheral from the consumer and refund to the consumer the full 
  3.20  purchase price, including the cost of any options or other 
  3.21  modifications arranged, installed, or made by the manufacturer, 
  3.22  its agent, or its authorized dealer within 30 days after the 
  3.23  date of original delivery, and all other charges including, but 
  3.24  not limited to, sales or excise tax, less a reasonable allowance 
  3.25  for the consumer's use of the computer or peripheral not 
  3.26  exceeding ten percent of the purchase price.  If the 
  3.27  manufacturer offers a replacement computer or peripheral under 
  3.28  this section, the consumer has the option of rejecting the 
  3.29  replacement and requiring the manufacturer to provide a refund.  
  3.30  A manufacturer must give to the consumer an itemized statement 
  3.31  listing each of the amounts refunded under this section.  A 
  3.32  reasonable allowance for use is that amount directly 
  3.33  attributable to use by the consumer and any previous consumer 
  3.34  during any period in which the use and market value of the 
  3.35  computer are not substantially impaired.  It is an affirmative 
  3.36  defense to any claim under this section that: 
  4.1      (1) an alleged nonconformity does not substantially impair 
  4.2   the use or market value; or 
  4.3      (2) a nonconformity is the result of abuse, neglect, or 
  4.4   unauthorized modifications or alterations of a computer or 
  4.5   peripheral by anyone other than the manufacturer, its agent, or 
  4.6   its authorized dealer.  For the purposes of this clause, 
  4.7   "unauthorized modifications" includes, but is not limited to, 
  4.8   the installation of additional memory, disk drives, modems, and 
  4.9   other devices if that installation is not performed by the 
  4.10  manufacturer, its agent, or its authorized dealer. 
  4.11     (b) It is presumed that a reasonable number of attempts 
  4.12  have been undertaken to conform a new computer to the applicable 
  4.13  express warranties, if (1) the same nonconformity has been 
  4.14  subject to repair four or more times by the manufacturer, its 
  4.15  agents, or its authorized dealers within the applicable express 
  4.16  warranty term or during the period of two years following the 
  4.17  date of original delivery of the new computer to a consumer, 
  4.18  whichever is the earlier date, but the nonconformity continues 
  4.19  to exist, or (2) the computer is out of service by reason of 
  4.20  repair for a cumulative total of 30 or more business days during 
  4.21  the express warranty term or during the two-year period, 
  4.22  whichever is the earlier date. 
  4.23     (c) The term of an applicable express warranty, the 
  4.24  two-year period, and the 30-day period must be extended by any 
  4.25  period of time during which repair services are not available to 
  4.26  the consumer because of a war, invasion, strike, or fire, flood, 
  4.27  or other natural disaster. 
  4.28     (d) The presumption contained in paragraph (b) applies 
  4.29  against a manufacturer only if the manufacturer, its agent, or 
  4.30  its authorized dealer has received prior written notification 
  4.31  from or on behalf of the consumer at least once and an 
  4.32  opportunity to cure the defect alleged.  If the notification is 
  4.33  received by the manufacturer's agent or authorized dealer, the 
  4.34  agent or dealer must forward it to the manufacturer by certified 
  4.35  mail, return receipt requested. 
  4.36     (e) The expiration of the time periods set forth in 
  5.1   paragraph (b) does not bar a consumer from receiving a refund or 
  5.2   replacement computer under paragraph (a) if the reasonable 
  5.3   number of attempts to correct the nonconformity causing the 
  5.4   substantial impairment occur within three years following the 
  5.5   date of original delivery of the new computer to a consumer, 
  5.6   provided the consumer first reported the nonconformity to the 
  5.7   manufacturer, its agent, or its authorized dealer during the 
  5.8   term of the applicable express warranty. 
  5.9      (f) At the time of purchase or lease, the manufacturer must 
  5.10  provide directly to the consumer a written statement on a 
  5.11  separate piece of paper, in 10-point all capital type, in 
  5.12  substantially the following form:  "IMPORTANT:  IF THIS COMPUTER 
  5.13  OR ANY PERIPHERAL DEVICE SOLD WITH IT (SUCH AS A PRINTER, 
  5.14  MONITOR, MOUSE, OR KEYBOARD) IS DEFECTIVE, YOU MAY BE ENTITLED 
  5.15  UNDER THE STATE'S COMPUTER LEMON LAW TO REPLACEMENT OF IT OR A 
  5.16  REFUND OF ITS PURCHASE PRICE OR YOUR LEASE PAYMENTS.  HOWEVER, 
  5.17  TO BE ENTITLED TO REFUND OR REPLACEMENT, YOU MUST FIRST NOTIFY 
  5.18  THE MANUFACTURER, ITS AGENT, OR ITS AUTHORIZED DEALER OF THE 
  5.19  PROBLEM IN WRITING AND GIVE THEM AN OPPORTUNITY TO REPAIR THE 
  5.20  COMPUTER OR PERIPHERAL DEVICE.  YOU ALSO HAVE A RIGHT TO SUBMIT 
  5.21  YOUR CASE TO THE CONSUMER ARBITRATION PROGRAM WHICH THE 
  5.22  MANUFACTURER MUST OFFER IN MINNESOTA." 
  5.23     (g) The amount of the sales or excise tax to be paid by the 
  5.24  manufacturer to the consumer under paragraph (a) shall be the 
  5.25  tax paid by the consumer when the computer was purchased less an 
  5.26  amount equal to the tax paid multiplied by a fraction, the 
  5.27  denominator of which is the purchase price of the computer and 
  5.28  the numerator of which is the allowance deducted from the refund 
  5.29  for the consumer's use of the computer. 
  5.30     (h) If normal use of a nonconforming computer or peripheral 
  5.31  causes a nonconformity in any other computer or peripheral to 
  5.32  which it is connected, then the manufacturer has the same 
  5.33  responsibilities with respect to these damaged devices that the 
  5.34  manufacturer would have if the devices had originally contained 
  5.35  the nonconformity. 
  5.36     Subd. 4.  [MANUFACTURER'S DUTY TO CONSUMERS WITH LEASED 
  6.1   COMPUTERS.] A consumer who leases a new computer has the same 
  6.2   rights against the manufacturer under this section as a consumer 
  6.3   who purchases a new computer, except that, if it is determined 
  6.4   that the manufacturer must accept return of the consumer's 
  6.5   leased computer pursuant to subdivision 3, then the consumer 
  6.6   lessee is not entitled to a replacement computer, but is 
  6.7   entitled only to a refund as provided in this subdivision.  In 
  6.8   such a case, the consumer's leased computer shall be returned to 
  6.9   the manufacturer and the consumer's written lease with the 
  6.10  computer lessor must be terminated.  The manufacturer shall then 
  6.11  provide the consumer with a full refund of the amount actually 
  6.12  paid by the consumer on the written lease, including all 
  6.13  additional charges set forth in subdivision 3, if actually paid 
  6.14  by the consumer, less a reasonable allowance for use by the 
  6.15  consumer as set forth in subdivision 3.  The manufacturer shall 
  6.16  provide the computer lessor with a full refund of the computer's 
  6.17  original purchase price plus any early termination costs, not to 
  6.18  exceed 15 percent of the computer's original purchase price, 
  6.19  less the amount actually paid by the consumer on the written 
  6.20  lease. 
  6.21     Subd. 5.  [RESALE OR RELEASE OF RETURNED COMPUTER.] If a 
  6.22  computer or peripheral has been returned under the provisions of 
  6.23  subdivision 3 or a similar statute of another state, whether as 
  6.24  the result of a legal action or as the result of an informal 
  6.25  dispute settlement proceeding, it may not be resold or released 
  6.26  in this state unless: 
  6.27     (1) the manufacturer provides the same express warranty it 
  6.28  provided to the original purchaser, except that the term of the 
  6.29  warranty need only last for 12 months after the date of resale; 
  6.30  and 
  6.31     (2) the manufacturer provides the consumer with a written 
  6.32  statement on a separate piece of paper, in 10-point all capital 
  6.33  type, in substantially the following form:  "IMPORTANT:  THIS 
  6.34  COMPUTER OR PERIPHERAL DEVICE WAS RETURNED TO THE MANUFACTURER 
  6.35  BECAUSE IT DID NOT CONFORM TO THE MANUFACTURER'S EXPRESS 
  6.36  WARRANTY AND THE NONCONFORMITY WAS NOT CURED WITHIN A REASONABLE 
  7.1   TIME AS PROVIDED BY MINNESOTA LAW." 
  7.2      The provisions of this section apply to the resold or 
  7.3   released computer or peripheral for the full term of the 
  7.4   warranty required under this subdivision. 
  7.5      Subd. 6.  [ALTERNATIVE DISPUTE SETTLEMENT MECHANISM.] (a) 
  7.6   Any manufacturer doing business in this state, entering into 
  7.7   franchise agreements for the sale of its computers or 
  7.8   peripherals in this state, or offering express warranties on its 
  7.9   computers sold or distributed for sale in this state shall 
  7.10  operate, or participate in, an informal dispute settlement 
  7.11  mechanism located in the state of Minnesota that complies with 
  7.12  the provisions of Code of Federal Regulations, title 16, part 
  7.13  703, and the requirements of this section.  The provisions of 
  7.14  subdivision 3 concerning refunds or replacement do not apply to 
  7.15  a consumer who has not first used this mechanism before 
  7.16  commencing a civil action, unless the manufacturer allows a 
  7.17  consumer to commence an action without first using this 
  7.18  mechanism. 
  7.19     (b) An informal dispute settlement mechanism provided for 
  7.20  by this section shall, at the time a request for arbitration is 
  7.21  made, provide to the consumer and to each person who will 
  7.22  arbitrate the consumer's dispute, information about this section 
  7.23  as approved and directed by the attorney general, in 
  7.24  consultation with interested parties.  The informal dispute 
  7.25  settlement mechanism shall permit the parties to present or 
  7.26  submit any arguments based on this section and shall not 
  7.27  prohibit or discourage the consideration of any such arguments. 
  7.28     (c) If, in an informal dispute settlement mechanism, it is 
  7.29  decided that a consumer is entitled to a replacement computer or 
  7.30  refund under subdivision 3, then any refund or replacement 
  7.31  offered by the manufacturer or selected by a consumer shall 
  7.32  include and itemize all amounts authorized by subdivision 3. 
  7.33     (d) No documents shall be received by any informal dispute 
  7.34  settlement mechanism unless those documents have been provided 
  7.35  to each of the parties in the dispute at or prior to the 
  7.36  mechanism's meeting, with an opportunity for the parties to 
  8.1   comment on the documents either in writing or orally.  If a 
  8.2   consumer is present during the informal dispute settlement 
  8.3   mechanism's meeting, the consumer may request postponement of 
  8.4   the mechanism's meeting to allow sufficient time to review any 
  8.5   documents presented at the time of the meeting which had not 
  8.6   been presented to the consumer prior to the meeting. 
  8.7      (e) The informal dispute settlement mechanism shall allow 
  8.8   each party to appear and make an oral presentation in the state 
  8.9   of Minnesota unless the consumer agrees to submit the dispute 
  8.10  for decision on the basis of documents alone or by telephone, or 
  8.11  unless the party fails to appear for an oral presentation after 
  8.12  reasonable prior written notice.  If the consumer agrees to 
  8.13  submit the dispute for decision on the basis of documents alone, 
  8.14  then manufacturer or dealer representatives may not participate 
  8.15  in the discussion or decision of the dispute. 
  8.16     (f) Consumers shall be given an adequate opportunity to 
  8.17  contest a manufacturer's assertion that a nonconformity falls 
  8.18  within intended specifications for the computer by having the 
  8.19  basis of the manufacturer's claim appraised by a technical 
  8.20  expert selected and paid for by the consumer prior to the 
  8.21  informal dispute settlement hearing. 
  8.22     (g) Where there has been a recent attempt by the 
  8.23  manufacturer to repair a consumer's computer, but no response 
  8.24  has yet been received by the informal dispute mechanism from the 
  8.25  consumer as to whether the repairs were successfully completed, 
  8.26  the parties must be given the opportunity to present any 
  8.27  additional information regarding the manufacturer's recent 
  8.28  repair attempt before any final decision is rendered by the 
  8.29  informal dispute settlement mechanism.  This provision shall not 
  8.30  prejudice a consumer's rights under this section. 
  8.31     (h) If the manufacturer knows that a technical service 
  8.32  bulletin directly applies to the specific mechanical problem 
  8.33  being disputed by the consumer, then the manufacturer shall 
  8.34  provide the technical service bulletin to the consumer at 
  8.35  reasonable cost.  The mechanism shall review any such technical 
  8.36  service bulletins submitted by either party. 
  9.1      (i) A consumer may be charged a fee to participate in an 
  9.2   informal dispute settlement mechanism required by this section, 
  9.3   but the fee may not exceed the conciliation court filing fee in 
  9.4   the county where the arbitration is conducted. 
  9.5      (j) Any party to the dispute has the right to be 
  9.6   represented by an attorney in an informal dispute settlement 
  9.7   mechanism. 
  9.8      (k) The informal dispute settlement mechanism has all the 
  9.9   evidence-gathering powers granted an arbitrator under section 
  9.10  572.14. 
  9.11     (l) A decision issued in an informal dispute settlement 
  9.12  mechanism required by this section may be in writing and signed. 
  9.13     Subd. 7.  [EFFECT AND ADMISSIBILITY OF DECISION BY INFORMAL 
  9.14  DISPUTE SETTLEMENT MECHANISM.] The decision issued in an 
  9.15  informal dispute settlement mechanism required by this section 
  9.16  is nonbinding on the parties involved, unless otherwise agreed 
  9.17  by the parties.  Any party, upon application, may remove the 
  9.18  decision to district court for a trial de novo.  If the 
  9.19  manufacturer is aggrieved by the decision of the informal 
  9.20  dispute settlement mechanism, an application to remove the 
  9.21  decision must be filed in the district court within 30 days 
  9.22  after the date the decision is received by the parties.  If the 
  9.23  application to remove is not made within 30 days, then the 
  9.24  district court shall, upon application of a party, issue an 
  9.25  order confirming the decision.  A written decision issued by an 
  9.26  informal dispute settlement mechanism, and any written findings 
  9.27  upon which the decision is based, are admissible as nonbinding 
  9.28  evidence in any subsequent legal action and are not subject to 
  9.29  further foundation requirements. 
  9.30     Subd. 8.  [TREBLE DAMAGES FOR BAD FAITH APPEAL OF 
  9.31  DECISION.] If the district court finds that a party has removed 
  9.32  a decision of an informal dispute settlement mechanism in bad 
  9.33  faith, by asserting a claim or defense that is frivolous and 
  9.34  costly to the other party, or by asserting an unfounded position 
  9.35  solely to delay recovery by the other party, then the court 
  9.36  shall award to the prevailing party three times the actual 
 10.1   damages sustained, together with costs and disbursements, 
 10.2   including reasonable attorney fees. 
 10.3      Subd. 9.  [CIVIL REMEDY.] Any consumer injured by a 
 10.4   violation of this section may bring a civil action to enforce 
 10.5   this section and recover costs and disbursements, including 
 10.6   reasonable attorney fees incurred in the civil action.  In 
 10.7   addition to the remedies provided herein, the attorney general 
 10.8   may bring an action pursuant to section 8.31 against any 
 10.9   manufacturer for violation of this section. 
 10.10     Subd. 10.  [LIMITATION ON ACTIONS.] A civil action brought 
 10.11  under this section must be commenced within three years of the 
 10.12  date of original delivery of the new computer to a consumer; 
 10.13  except that, if the consumer applies to an informal dispute 
 10.14  settlement mechanism within three years of the date of original 
 10.15  delivery of a new computer to a consumer, and if the consumer is 
 10.16  aggrieved by the decision of the informal dispute settlement 
 10.17  mechanism, then any civil action brought under this section must 
 10.18  be commenced within six months after the date of the final 
 10.19  decision by the mechanism. 
 10.20     Subd. 11.  [REMEDY NONEXCLUSIVE.] Nothing in this section 
 10.21  limits the rights or remedies which are otherwise available to a 
 10.22  consumer under any other law. 
 10.23     Subd. 12.  [DISCLOSURE REQUIREMENT.] In addition to any 
 10.24  investigative powers authorized by law, the attorney general may 
 10.25  inspect the records of the informal dispute settlement mechanism 
 10.26  upon reasonable notice, during regular business hours, and may 
 10.27  make available to the public information about the operation of 
 10.28  the mechanism, but data on an individual may not be disclosed 
 10.29  without the prior consent of the individual. 
 10.30     Subd. 13.  [DEALER LIABILITY.] Nothing in this section 
 10.31  imposes liability on a dealer or creates an additional cause of 
 10.32  action by a consumer against a dealer, except for written 
 10.33  express warranties made by the dealer apart from the 
 10.34  manufacturer's warranties.  The manufacturer shall not charge 
 10.35  back or require reimbursement by the dealer for any costs, 
 10.36  including, but not limited to, any refunds or computer 
 11.1   replacements, incurred by the manufacturer arising out of this 
 11.2   section, unless there is evidence that the related repairs had 
 11.3   not been carried out by the dealer in a timely manner or in a 
 11.4   manner substantially consistent with the manufacturer's 
 11.5   published instructions.