1.1 	A bill for an act
1.2 	relating to commerce; extending the motor vehicle
1.3 	lemon law to include motor boats; amending Minnesota
1.4 	Statutes 2004, section 325F.665.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	Section 1. Minnesota Statutes 2004, section 325F.665, is
1.7 	amended to read:
1.8 	325F.665 NEW MOTOR VEHICLE MOTORCRAFT WARRANTIES;
1.9 	MANUFACTURER'S DUTY TO REPAIR, REFUND, OR REPLACE.
1.10 		Subdivision 1.Definitions. For the purposes of this
1.11 	section, the following terms have the meanings given them:
1.12 	(a) "consumer" means the purchaser or lessee, other than
1.13 	for purposes of resale or sublease, of a new motor vehicle 
1.14 	motorcraft used for personal, family, or household purposes at
1.15 	least 40 percent of the time, a person to whom the new motor
1.16 	vehicle motorcraft is transferred for the same purposes during
1.17 	the duration of an express warranty applicable to the motor
1.18 	vehicle motorcraft;
1.19 	(b) "manufacturer" means a person engaged in the business
1.20 	of manufacturing, assembling or distributing motor
1.21 	vehicles motorcraft, who will, under normal business conditions
1.22 	during the year, manufacture, assemble or distribute to dealers
1.23 	at least ten new motor vehicles motorcraft;
1.24 	(c) "manufacturer's express warranty" and "warranty" mean
1.25 	the written warranty of the manufacturer of a new motor vehicle 
2.1 	motorcraft of its condition and fitness for use, including any
2.2 	terms or conditions precedent to the enforcement of obligations
2.3 	under that warranty;
2.4 	(d) "lease" means a contract in the form of a lease or
2.5 	bailment for the use of personal property by a natural person
2.6 	for a period of time exceeding four months, used for personal,
2.7 	family, or household purposes at least 40 percent of the time,
2.8 	whether or not the lessee has the option to purchase or
2.9 	otherwise become the owner of the property at the expiration of
2.10 	the lease;
2.11 	(e) "motor vehicle" means (1) a passenger automobile as
2.12 	defined in section 168.011, subdivision 7, including pickup
2.13 	trucks and vans, and (2) the self-propelled motor vehicle
2.14 	chassis or van portion of recreational equipment as defined in
2.15 	section 168.011, subdivision 25, which is sold or leased to a
2.16 	consumer in this state;
2.17 	(f) "informal dispute settlement mechanism" means an
2.18 	arbitration process or procedure by which the manufacturer
2.19 	attempts to resolve disputes with consumers regarding motor
2.20 	vehicle motorcraft nonconformities and repairs that arise during
2.21 	the vehicle's warranty period;
2.22 	(g) " motor vehicle motorcraft lessor" means a person who
2.23 	holds title to a motor vehicle motorcraft leased to a lessee
2.24 	under a written lease agreement or who holds the lessor's rights
2.25 	under such agreement; and 
2.26 	(h) "early termination costs" means expenses and
2.27 	obligations incurred by a motor vehicle motorcraft lessor as a
2.28 	result of an early termination of a written lease agreement and
2.29 	surrender of a motor vehicle motorcraft to a manufacturer under
2.30 	subdivision 4, including penalties for prepayment of finance
2.31 	arrangements;
2.32 	(i) "motor boat" means a boat equipped with a motor or a
2.33 	motor purchased separately from a boat but designed to be used
2.34 	to propel a boat, which is sold or leased to a consumer in this
2.35 	state; and 
2.36 	(j) "motorcraft" means a motor vehicle or a motor boat.
3.1 	Subd. 2.  [MANUFACTURER'S DUTY TO REPAIR.] If a new motor
3.2 	vehicle motorcraft does not conform to all applicable express
3.3 	warranties, and the consumer reports the nonconformity to the
3.4 	manufacturer, its agent, or its authorized dealer during the
3.5 	term of the applicable express warranties or during the period
3.6 	of two years following the date of original delivery of the new
3.7 	motor vehicle motorcraft to a consumer, whichever is the earlier
3.8 	date, the manufacturer, its agent, or its authorized dealer
3.9 	shall make the repairs necessary to conform the vehicle to the
3.10 	applicable express warranties, notwithstanding the fact that the
3.11 	repairs are made after the expiration of the warranty term or
3.12 	the two-year period.
3.13 	Subd. 3.  [MANUFACTURER'S DUTY TO REFUND OR REPLACE.] (a)
3.14 	If the manufacturer, its agents, or its authorized dealers are
3.15 	unable to conform the new motor vehicle motorcraft to any
3.16 	applicable express warranty by repairing or correcting any
3.17 	defect or condition which substantially impairs the use or
3.18 	market value of the motor vehicle motorcraft to the consumer
3.19 	after a reasonable number of attempts, the manufacturer shall
3.20 	either replace the new motor vehicle motorcraft with a
3.21 	comparable motor vehicle motorcraft or accept return of the
3.22 	vehicle from the consumer and refund to the consumer the full
3.23 	purchase price, including the cost of any options or other
3.24 	modifications arranged, installed, or made by the manufacturer,
3.25 	its agent, or its authorized dealer within 30 days after the
3.26 	date of original delivery, and all other charges including, but
3.27 	not limited to, sales or excise tax, license fees and
3.28 	registration fees, reimbursement for towing and rental
3.29 	vehicle motorcraft expenses incurred by the consumer as a result
3.30 	of the vehicle being out of service for warranty repair, less a
3.31 	reasonable allowance for the consumer's use of the vehicle 
3.32 	motorcraft not exceeding ten cents per mile driven traveled or
3.33 	ten percent of the purchase price, whichever is less.  If the
3.34 	manufacturer offers a replacement vehicle motorcraft under this
3.35 	section, the consumer has the option of rejecting the
3.36 	replacement vehicle motorcraft and requiring the manufacturer to
4.1 	provide a refund.  Refunds must be made to the consumer, and
4.2 	lienholder, if any, as their interests appear on the records of
4.3 	the registrar of motor vehicles or of the Department of Natural
4.4 	Resources, as appropriate.  Refunds shall include the amount
4.5 	stated by the dealer as the trade-in value of a consumer's
4.6 	used motor vehicle motorcraft, plus any additional amount paid
4.7 	by the consumer for the new motor vehicle motorcraft.  A
4.8 	manufacturer must give to the consumer an itemized statement
4.9 	listing each of the amounts refunded under this section.  If the
4.10 	amount of sales or excise tax refunded is not separately stated,
4.11 	or if the manufacturer does not apply for a refund of the tax
4.12 	within one year of the return of the motor vehicle motorcraft,
4.13 	the Department of Public Safety may refund the tax, as
4.14 	determined under paragraph (h), directly to the consumer and
4.15 	lienholder, if any, as their interests appear on the records of
4.16 	the registrar of motor vehicles or of the Department of Natural
4.17 	Resources, as appropriate.  A reasonable allowance for use is
4.18 	that amount directly attributable to use by the consumer and any
4.19 	previous consumer during any period in which the use and market
4.20 	value of the motor vehicle motorcraft are not substantially
4.21 	impaired.  It is an affirmative defense to any claim under this
4.22 	section (1) that an alleged nonconformity does not substantially
4.23 	impair the use or market value, or (2) that a nonconformity is
4.24 	the result of abuse, neglect, or unauthorized modifications or
4.25 	alterations of a motor vehicle motorcraft by anyone other than
4.26 	the manufacturer, its agent or its authorized dealer.
4.27 	(b) It is presumed that a reasonable number of attempts
4.28 	have been undertaken to conform a new motor vehicle motorcraft 
4.29 	to the applicable express warranties, if (1) the same
4.30 	nonconformity has been subject to repair four or more times by
4.31 	the manufacturer, its agents, or its authorized dealers within
4.32 	the applicable express warranty term or during the period of two
4.33 	years following the date of original delivery of the new motor
4.34 	vehicle motorcraft to a consumer, whichever is the earlier date,
4.35 	but the nonconformity continues to exist, or (2) the vehicle 
4.36 	motorcraft is out of service by reason of repair for a
5.1 	cumulative total of 30 or more business days during the term or
5.2 	during the period, whichever is the earlier date.
5.3 	(c) If the nonconformity results in a complete failure of
5.4 	the braking or steering system of the new motor vehicle 
5.5 	motorcraft and is likely to cause death or serious bodily injury
5.6 	if the vehicle motorcraft is driven, it is presumed that a
5.7 	reasonable number of attempts have been undertaken to conform
5.8 	the vehicle motorcraft to the applicable express warranties if
5.9 	the nonconformity has been subject to repair at least once by
5.10 	the manufacturer, its agents, or its authorized dealers within
5.11 	the applicable express warranty term or during the period of two
5.12 	years following the date of original delivery of the new motor
5.13 	vehicle motorcraft to a consumer, whichever is the earlier date,
5.14 	and the nonconformity continues to exist.
5.15 	(d) The term of an applicable express warranty, the
5.16 	two-year period and the 30-day period shall be extended by any
5.17 	period of time during which repair services are not available to
5.18 	the consumer because of a war, invasion, strike, or fire, flood,
5.19 	or other natural disaster.
5.20 	(e) The presumption contained in paragraph (b) applies
5.21 	against a manufacturer only if the manufacturer, its agent, or
5.22 	its authorized dealer has received prior written notification
5.23 	from or on behalf of the consumer at least once and an
5.24 	opportunity to cure the defect alleged.  If the notification is
5.25 	received by the manufacturer's agent or authorized dealer, the
5.26 	agent or dealer must forward it to the manufacturer by certified
5.27 	mail, return receipt requested.
5.28 	(f) The expiration of the time periods set forth in
5.29 	paragraph (b) does not bar a consumer from receiving a refund or
5.30 	replacement vehicle under paragraph (a) if the reasonable number
5.31 	of attempts to correct the nonconformity causing the substantial
5.32 	impairment occur within three years following the date of
5.33 	original delivery of the new motor vehicle motorcraft to a
5.34 	consumer, provided the consumer first reported the nonconformity
5.35 	to the manufacturer, its agent, or its authorized dealer during
5.36 	the term of the applicable express warranty.
6.1 	(g) At the time of purchase or lease, the manufacturer must
6.2 	provide directly to the consumer a written statement on a
6.3 	separate piece of paper, in 10-point all capital type, in
6.4 	substantially the following form:  "IMPORTANT:  IF THIS MOTOR 
6.5 	VEHICLE OR MOTOR BOAT IS DEFECTIVE, YOU MAY BE ENTITLED UNDER
6.6 	THE STATE'S LEMON LAW TO REPLACEMENT OF IT OR A REFUND OF ITS
6.7 	PURCHASE PRICE OR YOUR LEASE PAYMENTS.  HOWEVER, TO BE ENTITLED
6.8 	TO REFUND OR REPLACEMENT, YOU MUST FIRST NOTIFY THE
6.9 	MANUFACTURER, ITS AGENT, OR ITS AUTHORIZED DEALER OF THE PROBLEM
6.10 	IN WRITING AND GIVE THEM AN OPPORTUNITY TO REPAIR THE MOTOR 
6.11 	VEHICLE OR MOTOR BOAT.  YOU ALSO HAVE A RIGHT TO SUBMIT YOUR
6.12 	CASE TO THE CONSUMER ARBITRATION PROGRAM WHICH THE MANUFACTURER
6.13 	MUST OFFER IN MINNESOTA."
6.14 	(h) The amount of the sales or excise tax to be paid by the
6.15 	manufacturer to the consumer under paragraph (a) shall be the
6.16 	tax paid by the consumer when the vehicle motorcraft was
6.17 	purchased less an amount equal to the tax paid multiplied by a
6.18 	fraction, the denominator of which is the purchase price of
6.19 	the vehicle motorcraft and the numerator of which is the
6.20 	allowance deducted from the refund for the consumer's use of the
6.21 	vehicle motorcraft.
6.22 	Subd. 4.  [MANUFACTURER'S DUTY TO CONSUMERS WITH LEASED
6.23 	VEHICLES.] A consumer who leases a new motor vehicle motorcraft 
6.24 	has the same rights against the manufacturer under this section
6.25 	as a consumer who purchases a new motor vehicle motorcraft,
6.26 	except that, if it is determined that the manufacturer must
6.27 	accept return of the consumer's leased vehicle motorcraft 
6.28 	pursuant to subdivision 3, then the consumer lessee is not
6.29 	entitled to a replacement vehicle motorcraft, but is entitled
6.30 	only to a refund as provided in this subdivision.  In such a
6.31 	case, the consumer's leased vehicle motorcraft shall be returned
6.32 	to the manufacturer and the consumer's written lease with
6.33 	the motor vehicle motorcraft lessor must be terminated.  The
6.34 	manufacturer shall then provide the consumer with a full refund
6.35 	of the amount actually paid by the consumer on the written
6.36 	lease, including all additional charges set forth in subdivision
7.1 	3, if actually paid by the consumer, less a reasonable allowance
7.2 	for use by the consumer as set forth in subdivision 3.  The
7.3 	manufacturer shall provide the motor vehicle motorcraft lessor
7.4 	with a full refund of the vehicle's motorcraft's original
7.5 	purchase price plus any early termination costs, not to exceed
7.6 	15 percent of the vehicle's motorcraft's original purchase
7.7 	price, less the amount actually paid by the consumer on the
7.8 	written lease.
7.9 		Subd. 5.Resale or re-lease of returned motor
7.10 	vehicle motorcraft. (a) If a motor vehicle motorcraft has been
7.11 	returned under the provisions of subdivision 3 or a similar
7.12 	statute of another state, whether as the result of a legal
7.13 	action or as the result of an informal dispute settlement
7.14 	proceeding, it may not be resold or re-leased in this state
7.15 	unless:
7.16 	(1) the manufacturer provides the same express warranty it
7.17 	provided to the original purchaser, except that the term of the
7.18 	warranty need only last for 12,000 miles or 12 months after the
7.19 	date of resale, whichever is earlier; and
7.20 	(2) the manufacturer provides the consumer with a written
7.21 	statement on a separate piece of paper, in 10-point all capital
7.22 	type, in substantially the following form:  "IMPORTANT:  THIS
7.23 	MOTOR VEHICLE OR MOTOR BOAT WAS RETURNED TO THE MANUFACTURER
7.24 	BECAUSE IT DID NOT CONFORM TO THE MANUFACTURER'S EXPRESS
7.25 	WARRANTY AND THE NONCONFORMITY WAS NOT CURED WITHIN A REASONABLE
7.26 	TIME AS PROVIDED BY MINNESOTA LAW."
7.27 	The provisions of this section apply to the resold or
7.28 	re-leased motor vehicle motorcraft for full term of the warranty
7.29 	required under this subdivision.
7.30 	(b) Notwithstanding the provisions of paragraph (a), if a
7.31 	new motor vehicle motorcraft has been returned under the
7.32 	provisions of subdivision 3 or a similar statute of another
7.33 	state because of a nonconformity resulting in a complete failure
7.34 	of the braking or steering system of the motor vehicle 
7.35 	motorcraft likely to cause death or serious bodily injury if the
7.36 	vehicle motorcraft was driven, the motor vehicle motorcraft may
8.1 	not be resold in this state.
8.2 		Subd. 6.Alternative dispute settlement mechanism. (a)
8.3 	Any manufacturer doing business in this state, entering into
8.4 	franchise agreements for the sale of its motor vehicles 
8.5 	motorcraft in this state, or offering express warranties on its
8.6 	motor vehicles motorcraft sold or distributed for sale in this
8.7 	state shall operate, or participate in, an informal dispute
8.8 	settlement mechanism located in the state of Minnesota which
8.9 	complies with the provisions of the Code of Federal Regulations,
8.10 	title 16, part 703, and the requirements of this section.  The
8.11 	provisions of subdivision 3 concerning refunds or replacement do
8.12 	not apply to a consumer who has not first used this mechanism
8.13 	before commencing a civil action, unless the manufacturer allows
8.14 	a consumer to commence an action without first using this
8.15 	mechanism.
8.16 	(b) An informal dispute settlement mechanism provided for
8.17 	by this section shall, at the time a request for arbitration is
8.18 	made, provide to the consumer and to each person who will
8.19 	arbitrate the consumer's dispute, information about this section
8.20 	as approved and directed by the attorney general, in
8.21 	consultation with interested parties.  The informal dispute
8.22 	settlement mechanism shall permit the parties to present or
8.23 	submit any arguments based on this section and shall not
8.24 	prohibit or discourage the consideration of any such arguments.
8.25 	(c) If, in an informal dispute settlement mechanism, it is
8.26 	decided that a consumer is entitled to a replacement vehicle 
8.27 	motorcraft or refund under subdivision 3, then any refund or
8.28 	replacement offered by the manufacturer or selected by a
8.29 	consumer shall include and itemize all amounts authorized by
8.30 	subdivision 3.  If the amount of excise tax refunded is not
8.31 	separately stated, or if the manufacturer does not apply for a
8.32 	refund of the tax within one year of the return of the motor
8.33 	vehicle motorcraft, the Department of Public Safety may refund
8.34 	the excise tax, as determined under subdivision 3, paragraph
8.35 	(h), directly to the consumer and lienholder, if any, as their
8.36 	interests appear on the records of the registrar of motor
9.1 	vehicles or of the Department of Natural Resources, as
9.2 	appropriate.
9.3 	(d) No documents shall be received by any informal dispute
9.4 	settlement mechanism unless those documents have been provided
9.5 	to each of the parties in the dispute at or prior to the
9.6 	mechanism's meeting, with an opportunity for the parties to
9.7 	comment on the documents either in writing or orally.  If a
9.8 	consumer is present during the informal dispute settlement
9.9 	mechanism's meeting, the consumer may request postponement of
9.10 	the mechanism's meeting to allow sufficient time to review any
9.11 	documents presented at the time of the meeting which had not
9.12 	been presented to the consumer prior to the meeting.
9.13 	(e) The informal dispute settlement mechanism shall allow
9.14 	each party to appear and make an oral presentation in the state
9.15 	of Minnesota unless the consumer agrees to submit the dispute
9.16 	for decision on the basis of documents alone or by telephone, or
9.17 	unless the party fails to appear for an oral presentation after
9.18 	reasonable prior written notice.  If the consumer agrees to
9.19 	submit the dispute for decision on the basis of documents alone,
9.20 	then manufacturer or dealer representatives may not participate
9.21 	in the discussion or decision of the dispute.
9.22 	(f) Consumers shall be given an adequate opportunity to
9.23 	contest a manufacturer's assertion that a nonconformity falls
9.24 	within intended specifications for the vehicle motorcraft by
9.25 	having the basis of the manufacturer's claim appraised by a
9.26 	technical expert selected and paid for by the consumer prior to
9.27 	the informal dispute settlement hearing.
9.28 	(g) Where there has been a recent attempt by the
9.29 	manufacturer to repair a consumer's vehicle motorcraft, but no
9.30 	response has yet been received by the informal dispute mechanism
9.31 	from the consumer as to whether the repairs were successfully
9.32 	completed, the parties must be given the opportunity to present
9.33 	any additional information regarding the manufacturer's recent
9.34 	repair attempt before any final decision is rendered by the
9.35 	informal dispute settlement mechanism.  This provision shall not
9.36 	prejudice a consumer's rights under this section.
10.1 	(h) If the manufacturer knows that a technical service
10.2 	bulletin directly applies to the specific mechanical problem
10.3 	being disputed by the consumer, then the manufacturer shall
10.4 	provide the technical service bulletin to the consumer at
10.5 	reasonable cost.  The mechanism shall review any such technical
10.6 	service bulletins submitted by either party.
10.7 	(i) A consumer may be charged a fee to participate in an
10.8 	informal dispute settlement mechanism required by this section,
10.9 	but the fee may not exceed the conciliation court filing fee in
10.10 	the county where the arbitration is conducted.
10.11 	(j) Any party to the dispute has the right to be
10.12 	represented by an attorney in an informal dispute settlement
10.13 	mechanism.
10.14 	(k) The informal dispute settlement mechanism has all the
10.15 	evidence-gathering powers granted an arbitrator under section
10.16 	572.14.
10.17 	(l) A decision issued in an informal dispute settlement
10.18 	mechanism required by this section may be in writing and signed.
10.19 		Subd. 7.Effect and admissibility of decision by informal
10.20 	dispute settlement mechanism. The decision issued in an
10.21 	informal dispute settlement mechanism required by this section
10.22 	is nonbinding on the parties involved, unless otherwise agreed
10.23 	by the parties.  Any party, upon application, may remove the
10.24 	decision to district court for a trial de novo.  If the
10.25 	manufacturer is aggrieved by the decision of the informal
10.26 	dispute settlement mechanism, an application to remove the
10.27 	decision must be filed in the district court within 30 days
10.28 	after the date the decision is received by the parties.  If the
10.29 	application to remove is not made within 30 days, then the
10.30 	district court shall, upon application of a party, issue an
10.31 	order confirming the decision.  A written decision issued by an
10.32 	informal dispute settlement mechanism, and any written findings
10.33 	upon which the decision is based, are admissible as nonbinding
10.34 	evidence in any subsequent legal action and are not subject to
10.35 	further foundation requirements.
10.36 		Subd. 8.Treble damages for bad faith appeal of
11.1 	decision. If the district court finds that a party has removed
11.2 	a decision of an informal dispute settlement mechanism in bad
11.3 	faith, by asserting a claim or defense that is frivolous and
11.4 	costly to the other party, or by asserting an unfounded position
11.5 	solely to delay recovery by the other party, then the court
11.6 	shall award to the prevailing party three times the actual
11.7 	damages sustained, together with costs and disbursements,
11.8 	including reasonable attorney's fees.
11.9 		Subd. 9.Civil remedy. Any consumer injured by a
11.10 	violation of this section may bring a civil action to enforce
11.11 	this section and recover costs and disbursements, including
11.12 	reasonable attorney's fees incurred in the civil action.  In
11.13 	addition to the remedies provided herein, the attorney general
11.14 	may bring an action pursuant to section 8.31 against any
11.15 	manufacturer for violation of this section.
11.16 		Subd. 10.Limitation on actions. A civil action brought
11.17 	under this section must be commenced within three years of the
11.18 	date of original delivery of the new motor vehicle motorcraft to
11.19 	a consumer; except that, if the consumer applies to an informal
11.20 	dispute settlement mechanism within three years of the date of
11.21 	original delivery of a new motor vehicle motorcraft to a
11.22 	consumer, and if the consumer is aggrieved by the decision of
11.23 	the informal dispute settlement mechanism, then any civil action
11.24 	brought under this section must be commenced within six months
11.25 	after the date of the final decision by the mechanism.
11.26 		Subd. 11.Remedy nonexclusive. Nothing in this section
11.27 	limits the rights or remedies which are otherwise available to a
11.28 	consumer under any other law.
11.29 		Subd. 12.Disclosure requirement. In addition to any
11.30 	investigative powers authorized by law, the attorney general may
11.31 	inspect the records of the informal dispute settlement mechanism
11.32 	upon reasonable notice, during regular business hours, and may
11.33 	make available to the public information about the operation of
11.34 	the mechanism, but data on an individual may not be disclosed
11.35 	without the prior consent of the individual.
11.36 		Subd. 13.Dealer liability. Nothing in this section
12.1 	imposes liability on a dealer or creates an additional cause of
12.2 	action by a consumer against a dealer, except for written
12.3 	express warranties made by the dealer apart from the
12.4 	manufacturer's warranties.  The manufacturer shall not charge
12.5 	back or require reimbursement by the dealer for any costs,
12.6 	including, but not limited to, any refunds or vehicle motorcraft 
12.7 	replacements, incurred by the manufacturer arising out of this
12.8 	section, unless there is evidence that the related repairs had
12.9 	not been carried out by the dealer in a timely manner or in a
12.10 	manner substantially consistent with the manufacturer's
12.11 	published instructions.

12.12 	Sec. 2. EFFECTIVE DATE.
 12.13 	Section 1 is effective for new motor boats purchased on or
12.14 	after August 1, 2005.