Aryeh v. Canon Business Solutions: Common Law Accrual Rules and Exceptions Apply to UCL Actions

Aryeh v. Canon Business Solutions, Inc. (1/24/13) is not an employment law case, but the issues involved arise frequently in employment litigation.  

Aryeh filed a putative class action against Canon, alleging that it violated the unfair competition law (UCL) by charging him for too many copies on his leased Canon copiers.  Canon demurred to his complaint, arguing that he knew or should have known of the alleged wrong more than four years before he filed suit, and the statute of limitations barred his action.  The trial court sustained the demurrer without leave to amend. Aryeh appealed, and the Court of Appeal reversed. 

First, the Court held that common law accrual rules apply in UCL actions.   Slip op. at 6-12. This includes both the "last element rule" that "a cause of action accrues when it is complete with all of its elements," and that the last element rule's numerous equitable exceptions: 

1. The discovery rule (no accrual until plaintiff discovers or should discover the cause of action); 
2. Equitable tolling (tolling the statute when the plaintiff reasonably and in good faith chooses among several remedies, and the statute's notice function is served); 
3. Fraudulent concealment (tolling the statute when the defendant causes a claim to grow stale through deceptive conduct); 
4. Continuing violation (aggregating a series of wrongs or injuries and treating the limitations period as accruing for all of them upon the commission or sufferance of the last of them); and 
5. Continuous accrual (each event in a series of wrongs or injuries triggers its own limitations period, such that claims for some wrongs or injuries may be time barred, and others may be timely). 

Second, the Court held that the defendant bears the burden of proving the limitations defense, and the plaintiff bears the burden of proving an exception to it.  Slip op. at 12. 

Third, the Court held that the continuing violation doctrine did not apply in the present case because the complaint identified "a series of discrete, independently actionable alleged wrongs," rather than "a wrongful course of conduct [that] became apparent only through the accumulation of a series of harms." Slip op. at 12-14.  However, the continuous accrual doctrine did apply because Aryeh alleged a continuing duty on Canon's part, susceptible to recurring breaches. "Accordingly, each alleged breach must be treated as triggering a new statute of limitations." Slip op. at 14-20. 

The Court concluded as follows:

At the demurrer stage, Aryeh is the master of his complaint, and we must accept his allegations at face value. 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.

Slip op. at 20.  

The opinion is available here. 

Aryeh v. Canon Business Solutions Opinion Forthcoming

In Aryeh v. Canon Business Solutions (discussed here), the California Supreme Court will decide the following issues:  

1. May the continuing violation doctrine, under which a defendant may be held liable for actions that take place outside the limitations period if those actions are sufficiently linked to unlawful conduct within the limitations period, be asserted in an action under the Unfair Competition Law (Bus. & Prof. Code section 17200 et seq.)? 
2. May the continuous accrual doctrine, under which each violation of a periodic obligation or duty is deemed to give rise to a separate cause of action that accrues at the time of the individual wrong, be asserted in such an action? 
3. May the delayed discovery rule, under which a cause of action does not accrue until a reasonable person in the plaintiff's position has actual or constructive knowledge of facts giving rise to a claim, be asserted in such an action? 

The Supreme Court yesterday announced that it will issue its decision on Thursday, January 24, 2013 at 10 a.m. Stayed tuned for further information, including information on the State Bar of California's Watch List Webinar on the decision.

Aryeh v. Canon Business Solutions: Cal. Supreme Court Calendars Oral Argument

In Aryeh v. Canon Business Solutions (discussed here), the California Supreme Court will decide the following issues:  

1. May the continuing violation doctrine, under which a defendant may be held liable for actions that take place outside the limitations period if those actions are sufficiently linked to unlawful conduct within the limitations period, be asserted in an action under the Unfair Competition Law (Bus. & Prof. Code section 17200 et seq.)? 
2. May the continuous accrual doctrine, under which each violation of a periodic obligation or duty is deemed to give rise to a separate cause of action that accrues at the time of the individual wrong, be asserted in such an action? 
3. May the delayed discovery rule, under which a cause of action does not accrue until a reasonable person in the plaintiff's position has actual or constructive knowledge of facts giving rise to a claim, be asserted in such an action? 

The Supreme Court has scheduled oral argument for December 4, 2012, at 9:00 a.m.  Los Angeles oral arguments are at the Ronald Reagan State Office Building, 300 South Spring Street, 3rd Floor, Los Angeles.  In the afternoon session, the Court will hear argument on Harris v. City of Santa Monica (discussed here) another of our Watch List cases.  

Aryeh v. Canon Business Solutions: Supreme Court to Resolve Statute of Limitations Questions in Unfair Competition Class Action

In Aryeh v. Canon Business Solutions (2010) 185 Cal.App.4th 1159, the Court of Appeal affirmed a judgment of dismissal in a consumer class action under the Unfair Competition Law, holding that the action was barred by the statute of limitations. The Court of Appeal's opinion is here. The Supreme Court granted the plaintiff's petition for review in October, 2010. The issues stated are as follows:

1. May the continuing violation doctrine, under which a defendant may be held liable for actions that take place outside the limitations period if those actions are sufficiently linked to unlawful conduct within the limitations period, be asserted in an action under the Unfair Competition Law (Bus. & Prof. Code section 17200 et seq.)? 
2. May the continuous accrual doctrine, under which each violation of a periodic obligation or duty is deemed to give rise to a separate cause of action that accrues at the time of the individual wrong, be asserted in such an action? 
3. May the delayed discovery rule, under which a cause of action does not accrue until a reasonable person in the plaintiff's position has actual or constructive knowledge of facts giving rise to a claim, be asserted in such an action? 

The Supreme Court's web page for Aryeh (Case No. S184929) is here. It has been fully briefed since last November, but oral argument has not been scheduled.  

I have added Aryeh to our Watch List of pending cases because it could have implications for employment actions.