I would make sure the dealer isn't trying to weasel out of fixing your car. The gas in California is marked with "contains up to 10% ethanol". 12% is really close to 10%. And my understanding is that the method the dealer uses to "measure" the percentage is very crude. I could easily see a significant error in their methods. It's not like they shipped a sample to some lab somewhere.
Having said that, I have heard of "bad gas" before. So you should be careful what you are buying. Personally, I only use Shell 91 in my car. It's the highest widely available octane in California. If you're getting Sam's Club gas or something, I'd be a little more skeptical.
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