This blog is an excerpt from an original article titled, “Serious Consideration Must Be Given In Responding To CLRA Demands” by Darryl H. Horowitt and Kelsey A. Seib.
“The Consumer Legal Remedies Act (“CLRA”) gives consumers the right to sue a seller, individually and on behalf of a class of affected consumers, if the seller defrauded the consumer. A lawsuit may not be filed for violation of the CLRA unless the consumer first sends a written demand for correction to the seller and the seller fails to offer an adequate correction within thirty (30) after the demand is received. The FTC Holder Rule also gives the consumer the right to sue the finance company to unwind the transaction in addition to any claims against the seller, but limits the recovery to what the consumer paid for the product.
As auto dealers and finance companies are aware, certain rules must be followed when responding to a pre-litigation demand letter sent under the CLRA. Whether one could offer to rescind and provide restitution would be enough was unclear. One court held that doing so may be sufficient. (See Benson v. Southern California Auto Sales, Inc., (4th Dist. 2015) 239 Cal.App.4th 1198.) A more recent decision, Valdez v. Seidner-Miller, Inc. (2nd Dist. 2019) 33 Cal.App.5th 600, held otherwise, creating a split between districts.
The Court in Valdez ruled on and clarified three areas relating to CLRA pre-litigation settlement offers, namely: (1) if the deadline to respond to a CLRA demand falls on a weekend or holiday, then such an offer is timely if the offer is sent on the next day that does not fall on a weekend or holiday, (2) a business may not condition a correction offer on a release of claims other than a claim for relief, including damages, under the CLRA (which is contrary to the popular holding out of the Fourth District, Benson v. Southern California Auto Sales, Inc., supra), and (3) a business may not condition a CLRA correction offer on the subjective determination of the business regarding the current condition of the product.”