Wisconsin Supreme Court Rules on Lemon Law

On July 17, the Wisconsin Supreme Court unanimously ruled that a consumer who brings a claim under Wisconsin’s Lemon Law, who then decides to purchase the defective vehicle, is not entitled to recover the amount the purchase price. The case is Tammi v. Porsche Cars North America, Inc., 2009 WI 83.

The plaintiff, Bruce Tammi, leased a Porsche 911 Turbo Coupe. Tammi had problems with the car’s rear spoiler and the radio. He then took the vehicle for repairs at least eight times, but these attempts to correct the problems were unsuccessful.

Tammi filed a notice under Wisconsin’s Lemon Law to Porsche, and the case proceeded to the federal district court. While the case was pending, Tammi exercised his option to purchase the vehicle. According to Tammi, he had fixed the spoiler problem and felt that the vehicle was worth more than the lease buyout amount.

The federal district court ruled that Tammi was entitled to reimbursement for his lease payments ($57,458) and the purchase price he paid for the vehicle ($75,621.88). In addition, pursuant to Wisconsin’s Lemon Law, the court doubled the pecuniary loss for a total of $266,159.76, plus costs. The court also allowed Tammi to keep the vehicle. Moreover, the federal district court refused to reduce the damages award based on Tammi’s reasonable use of the vehicle prior to his Lemon Law complaint.

The case was appealed to the U.S. Court of Appeals for the Seventh Circuit, which sent the case to the Wisconsin Supreme Court to decide the issues in the case:

  • When a consumer, after making a Lemon Law demand, exercises an option to purchase the vehicle, is the consumer then entitled to recover the amount of the purchase price?

  • Whether a damage award under the Lemon Law should be reduced for reasonable use of the vehicle?

Under the first question, the Wisconsin Supreme Court reversed the federal district court’s decision. The court ruled that any consumer who brings a Lemon Law claim is not entitled to recover the entire amount of the purchase price if he or he exercises the option to purchase vehicle. According to the court, because a person who leases a vehicle is not required to purchase the vehicle, the consumer is only allowed to receive the amount of the entire lease payments, plus any sales tax and collateral costs.

The Wisconsin Supreme Court also reversed the federal district court under the second question. According to the court, damages should be reduced by the reasonable use of the vehicle.