Assembly committee approves SB 26 to allow automakers five-year opt-in to arbitration framework

The Assembly Judiciary Committee voted to approve SB 26, a bill that lets automakers choose whether to participate in the arbitration framework established by AB 1755, during a committee hearing where consumer advocates and several automakers testified in support.

SB 26 would require automakers that wish to remain under the AB 1755 arbitration procedures to notify the arbitration certification program in the Department of Consumer Affairs; that decision would apply for five years, proponents told the committee. Supporters said the measure preserves consumer access to arbitration while giving manufacturers an option they sought after last year’s changes to lemon-law procedures.

Senator Tom Umberg, the bill’s author in the hearing record, described SB 26 as a follow-up to AB 1755 and said the measure implements a compromise reached last year. He told the committee the earlier law aimed to expedite consumers’ access to remedies and to speed manufacturer responses by requiring early exchange of documents and witnesses. “This was a complicated issue, and thus we’ve come up with a complicated compromise,” Umberg said, urging an aye vote.

Sabina Tacker of the Consumer Attorneys of California testified in support on behalf of her organization and said the group cosponsored last year’s AB 1755 changes; she told the committee, “we . . . urge your aye vote.” Several automaker representatives also spoke in favor. Nicole Hernandez, regional director of state government affairs for Toyota, described SB 26 as a straightforward implementation of the prior agreement and said Toyota and other manufacturers were weighing the near- and long-term implications of remaining under AB 1755.

Representatives from General Motors, Rivian, Honda, Hyundai, Lucid, Tesla, Kia, Volkswagen Group and Mercedes also registered or spoke in support on the record, saying SB 26 preserves an option for manufacturers to align arbitration procedures with their customer-service operations.

Consumer advocate Rosemary Shahan of Consumers for Auto Reliability and Safety said her group offered “soft support” because it still has unresolved concerns about the effects of AB 1755. Shahan told the committee she remained worried about shorter statutory timelines and the allowance for manufacturers to deduct negative equity from buyback amounts, which she said could leave lower-income consumers unable to obtain repurchases. She also raised concerns about increasingly complex vehicle software issues that may be difficult to remedy.

Committee members and the bill author emphasized that SB 26 is intended to give manufacturers a temporary choice while preserving consumer access to remedies, and that the Legislature will monitor litigation outcomes and consumer impacts over the coming years. After discussion, the committee voted to approve SB 26 and advance it for further consideration.

Votes at a glance: the committee recorded the motion to approve SB 26 as passing; the transcript contains explicit recorded “aye” votes by Kalra, Aaron and Conley and the committee announced the motion passed.

The committee also discussed transmittal scheduling and next steps for floor or subsequent committee consideration; the author and staff indicated the bill could be taken up at the next available hearing for further action.