California Court: UCL Subject To Common-Law Accrual; Continuous Accrual Saves Claims

California Court: UCL Subject To Common-Law Accrual; Continuous Accrual Saves Claims

SAN FRANCISCO - (Mealey's) Common-law accrual rules apply in California unfair competition law (UCL) cases, but continuous accrual principles prevent demurrer stage statute of limitations dismissal of a man's action alleging recurring excess charges, the California Supreme Court held Jan. 24 (Jamshid Aryeh v. Canon Business Solutions Inc., No. S184929, Calif. Sup.).

(Opinion available. Document #58-130130-062Z.)

 

Because the UCL, Business and Professions Code Section 17200, et seq., never defines what it means for an action to accrue, "this silence triggers a presumption in favor of permitting settled common law accrual rules to apply," the court said.

The case involves UCL claims brought by Jamshid Aryeh in a class action lawsuit in the Los Angeles County Superior Court against Canon Business Solutions Inc. Aryeh claimed that Canon misrepresented the number of copies created on leased copiers. Aryeh claimed that in November 2001, he leased a black and white copier from Canon for his business, ABC Copy & Print. Aryeh alleged that the agreement provided a monthly copy allowance in exchange for a monthly fee. Aryeh alleged that under terms of the agreement, Canon charged Aryeh for any copies made in excess of the monthly allotment.

Accrual

Aryeh alleged the readings taken by Canon's service personnel did not match the number of copies being made. Aryeh alleged that Canon made no effort to recalibrate the machines. Aryeh alleged that he subsequently began keeping his own records and determined that during a four-year period, Canon charged him for between 50 and 900 "test" copies Canon personnel made. He alleged that Canon failed to reimburse him for the overcharges.

Judge Robert L. Hess dismissed Aryeh's UCL action and sustained Canon's demurrer to Aryeh's second amended complaint without leave to amend. Aryeh appealed, and a divided Second District Court of Appeal held that "the statute of limitations on a UCL action begins to run upon accrual unless equitably tolled."

In its ruling, the state's top court held that the legislative history of the UCL indicates an intent to apply the usual rules of accrual. There is no reason to apply decisions governing antitrust claims to the UCL, the court said.

"No justification for such a leap is evident; though the Cartwright Act and the UCL each address aspects of unfair business competition, they have markedly different origins and scopes," the court said.

Continuing Violations

Turning to Canon's statute of limitations defense, the court said Canon's evidence shows that under the last element accrual rule, the claim accrued in February 2002. The four-year statute of limitations would ordinarily bar Aryeh's claims, filed in 2008, the court said.

However, Aryeh alleges that Canon billed him monthly, including periodic charges for test copies he alleges were unfair or fraudulent.

"By its nature, the duty Canon owed - the duty not to impose unfair charges in monthly bills - was a continuing one, susceptible to recurring breaches. Accordingly, each alleged breach must be treated as triggering a new statute of limitations," the court said.

Aryeh alleges that the recurring excess charges were both fraudulent and unfair, the court noted. Under Aryeh's allegations, each new charge constituted a new, unfair act with its own limitations period, the court said.

Recurring Acts

"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," the court said.

Therefore, Aryeh can seek to recover for excess Canon charged him within the four-year statute of limitations, the court said.

R. Duane Westrup, Mark L. Van Buskirk and Jennifer L. Conner of Westrup Klick in Long Beach, Calif., and Linda Guthmann Krieger and Terrence B. Krieger of Krieger & Krieger in Long Beach represent Aryeh. Robert G. Mason and Richard G. Silberberg of Dorsey & Whitney in New York and Kent Jeffrey Schmidt and John P. Cleveland of its Irvine, Calif., office represent Canon.

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