Friday, January 25, 2013
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Supreme Court Applies ‘Continuous Accrual’ Rule to UCL Claims
Justices Say Repeated Breaches of Same Contract Should Be Treated as Separate for Limitations Purposes
By KENNETH OFGANG, Staff Writer
A continuing or repeated violation of the Unfair Competition Law may extend the time in which to sue, just as with other statutes, the state Supreme Court unanimously ruled yesterday.
The court revived a West Los Angeles copy shop owner’s UCL action alleging Canon Business Services routinely overcharged copy machine renters for “test” copies made by Canon service personnel. Aryeh claimed he was improperly charged for more than 5,000 such copies made during 17 services visits over less than three years.
Jamshid Aryeh sued in January 2008, nearly six years after he allegedly first noticed the overcharges, but less than four years after the last such charge.
Four-Year Limit
A Los Angeles Superior Court judge had dismissed the claim, and the Court of Appeal’s Div. Eight had affirmed, saying his first realization of the overcharges triggered the four-year limitations period.
But Justice Kathryn Werdegar, writing for the high court, noted that the statute of limitations applicable to UCL claims, Business and Professions Code Sec. 17208, says nothing about when a claim accrues for limitations purposes.
“This silence triggers a presumption in favor of permitting settled common law accrual rules to apply,” she wrote.
The position taken by the lower courts in the case—“treating the UCL as exceptional for accrual purposes”—has been adopted by some courts in California and rejected by others, Werdegar explained. But the better rule, she said, is the one adopted by the more recent cases, that a continuing violation or continuing pattern of violations may extend the deadline, depending on the nature of the claim.
‘Chameleon’ of a Statute
The statute, Werdegar wrote, “is a chameleon” that “affords relief from unlawful, unfair, or fraudulent acts” and—“under the unlawful prong”—treats violations of other statutes as independently actionable UCL violations.
“Depending upon which prong is invoked, a UCL claim may most closely resemble, in terms of the right asserted, an action for misrepresentation…misappropriation…price fixing…interference with prospective economic advantage…or any of countless other common law and statutory claims,” she wrote. “Given the widely varying nature of the right invoked, it makes sense to acknowledge that a UCL claim in some circumstances might support the potential application of one or another exception [to the statute of limitations] and in others might not.”
She also pointed out in a footnote that UCL remedies are equitable in nature, saying equitable principles should also be applied to the question of whether the suit was timely in the first place.
In Aryeh’s case, she went on to say, there was no “continuing violation,” because the plaintiff alleged “a series of discrete, independently actionable alleged wrongs.” Nor could he alleged an inability to appreciate the magnitude of the unlawful conduct when it first occurred, because he “was aware of, recognized as wrongful, and was recording as early as 2002, Canon’s allegedly fraudulent and unfair acts.”
Multiple Breaches
The justice, however, agreed with Justice Laurence Rubin, the dissenter in the Court of Appeal, that the complaint contained sufficient allegations to survive demurrer, based on a different, but related, rule—the “continuous accrual” doctrine. Under that doctrine, each breach of the rental agreement between Aryeh and Canon gave rise to a new cause of action under the UCL.
“At the demurrer stage, Aryeh is the master of his complaint, and we must accept his allegations at face value,” the justice wrote. “He has alleged a recurring unfair act—the inclusion in monthly bills of charges for copies Canon itself made. The theory of continuous accrual applies to such allegations, and insofar as the operative complaint alleges at least some such acts within the four years preceding suit, the suit is not entirely time-barred.”
The case was argued in the Supreme Court by R. Duane Westrup of Long Beach’s Westrup Klick for the plaintiff and Kent J. Schmidt of Dorsey & Whitney of Costa Mesa for the defendant. Amici included Attorney General Kamala D. Harris, Consumer Attorneys of California, and several individuals in support of the plaintiff and the Association of Southern California Defense Counsel on behalf of the defendant.
The case is Aryeh v. Canon Business Solutions, Inc., 13 S.O.S. 345.
Copyright 2013, Metropolitan News Company