Thursday, October 21, 2010
S.C. to Decide Whether ‘Continuing Violations’ Rule Applies to Unfair Competition Law Claims
By a MetNews Staff Writer
The California Supreme Court agreed yesterday to decide whether the “continuing violations” doctrine or a variant of that rule can be applied to extend the time to sue for violation of the Unfair Competition Law.
The justices, at their weekly conference in San Francisco, voted unanimously to review the ruling by a split panel of this district’s Court of Appeal that threw out a West Los Angeles copy shop owner’s Unfair Competition Law action against Canon Business Services.
Jamshid Aryeh claims that Canon routinely overcharged copy machine renters for “test” copies made by its service personnel. But Div. Eight, in its June 22 ruling in Aryeh v. Canon Business Solutions, Inc. (2010) 185 Cal.App.4th 1159, said the claim accrued when the plaintiff first learned of the alleged overcharges nearly six years before filing suit, and was barred by the UCL’s four-year limitations period.
Justice Madeleine Flier, joined by Los Angeles Superior Court Judge Peter D. Lichtman, sitting by assignment, rejected Aryeh’s claim that the clock on filing suit restarted every time Canon made an overcharge. Pointing to the doctrine’s traditional application in employment cases, Flier wrote that Canon’s actions were not the type of “harassing and egregious conduct the…doctrine is designed to deter.”
Justice Laurence D. Rubin dissented that the “similarly named but conceptually distinct ‘continuous accrual’ doctrine” applied, opining that each breach of the rental agreement between Aryeh and Canon gave rise to a new cause of action.
A cause of action generally arises when the defendant’s conduct occurs. The continuing violations doctrine, however, delays accrual of certain causes of action until the plaintiff has actual or constructive knowledge of facts giving rise to the claim.
Aryeh said in his complaint that in November 2001, doing business as ABC Copy & Print, he entered into a lease agreement with Canon for a copier in which he agreed to pay a monthly fee for a monthly copy allowance, and an additional charge for further copies.
Aryeh entered into a second, similar lease for another machine the following February, but began noticing that the meter readings taken by Canon’s filed service personnel did not match the number of copies actually made on the leased copiers. He claimed that when Canon ignored his repeated requests to repair the copiers and take accurate readings, he began keeping his own records of copies, and determined that he was being charged for test copies made by Canon personnel when the machines were repaired or serviced.
Despite his requests, Aryeh alleged, Canon never reimbursed him for the overcharges, and also charged him late fees.
Aryeh filed a putative class action in 2008, but Canon demurred and Los Angeles Superior Court Judge Robert L. Hess ruled that Aryeh failed to state a cause of action. Hess also concluded that Aryeh’s claim was barred by Business and Professions Code Sec. 17208’s four-year statute of limitations.
On appeal, Flier—pointing to the 2002 decision by the Fourth District Court of Appeal in Snapp & Associates Ins. Services, Inc. v. Robertson 96 Cal.App.4th 884—wrote that both cases involved “the allegedly wrongful collection of fees on a recurring basis,” and said that the Snapp court’s decision that a claim accrued at the time of the first alleged overcharge was controlling.
She also opined that the continuing violations doctrine did not apply to UCL claims, and declined to expand the doctrine’s application beyond employment cases involving “on-going accumulative harassment…or a broad and longstanding corporate policy of discrimination,” or cases involving a creditor’s harassment of a debtor.
Rubin, however, contended that the majority’s focus on the continuing violation rule was unnecessary, and he opined that Snapp did not support Hess’ ruling.
Arguing that the rule only came into play when a plaintiff sought recovery for conduct falling both within the limitations period and outside of it, the justice noted that Aryeh’s suit only implicated overcharges within the limitations period. He wrote that Aryeh was alleging a breach of his agreement with Canon, and that when a contract is breached on multiple occasions, each breach gives rise to a new cause of action.
“The injunctive relief authorized by the UCL should not be automatically unavailable following recent misconduct merely because the first unfair practice took place several years earlier,” he commented.
Rubin also rejected Snapp’s application, writing that the case involved only equitable tolling and delayed discovery, neither of which were implicated in Aryeh’s case. Instead, he said, the court should have applied Suh v. Yang (1997) 987 F.Supp. 783, where a judge of the U.S. District Court for the Northern District of California distinguished the continuing violation and continuous accrual rules in the context of a UCL claim, and rejected a similar statute of limitations argument.
In other conference action, the justices:
•Left standing a judgment for more than $22.4 million in favor of the City of Compton against a former contractor who bribed city officials to obtain an exclusive franchise while also running the city’s in-house waste division.
Div. Four of this district’s Court of Appeal ruled on July 19 in HUB City Solid Waste Disposal Services, Inc. v. City of Compton (2010) 186 Cal.App.4th 1114, that Michael Aloyan and his company were both liable for violation of Government Code Sec. 1090, which prohibits a public official or employee from acting on a contract in which that person has an interest.
The waste franchise was tainted both by Aloyan’s securing it while working for the city, and by his paying what amounted to bribes to members of the City Council, including then-Mayor Omar Bradley and his aunt, then-Councilwoman Delores Zurita, Presiding Justice Norman Epstein wrote for the court.
•Agreed to decide a dispute between Los Angeles County and 47 cities who claim they have been shortchanged with respect to distribution of property tax revenues. This district’s Court of Appeal, Div. Three, ruled in favor of the cities on July 7 in City of Alhambra v. County of Los Angeles, 186 Cal.App.4th 537.
•Declined to review the dismissal of a wrongful termination action by former reference librarian Michael Kaye against the Board of Trustees of the San Diego County Law Library. The Fourth District’s Div. One ruled that Kaye’s claim that the library violated Labor Code Sec. 1198.5, pertaining to an employee’s right to access his or her personnel file, was barred by res judicata because he could have raised the claim in an earlier action.
In the earlier case, the appellate panel upheld a judgment rejecting Kaye’s claims for violation of the state Constitution’s “liberty of speech” clause, the statute governing employment of law librarians, the California False Claims Act, and the Ralph M. Brown Act. The most recent case, Kaye v. Board of Trustees of the San Diego County Law Library, D055268, was decided July 30 in an unpublished opinion.
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