The Supreme Court of California, in Aryeh v. Canon Business Solutions, Inc., resolved the “lingering uncertainty over the timing of accrual and the applicability of continuing-wrong accrual principles” to claims brought under California’s unfair competition law. It concluded that “the UCL is governed by common law accrual rules to the same extent as any other statute.” However, it also noted that labeling the cause of action as a UCL claim is not dispositive; instead, it is “‘the nature of the right sued upon’ and the circumstances attending its invocation [that] control the point of accrual.”

On January 24, 2013, the Supreme Court of California reversed the Court of Appeal’s opinion in Aryeh v. Canon Business Solutions, Inc., holding that (1) the text and legislative history of California’s unfair competition law, Business & Professions Code sections 17200, et seq. (“UCL”) leave UCL claims subject to the common law rules of continuous accrual just as it would apply to any other cause of action, and (2) these continuous accrual principles prevent Aryeh’s complaint from being dismissed at the demurrer stage on statute of limitations grounds.

Aryeh and Canon entered into two copier leases, which also included Cannon periodically servicing the copiers. Shortly thereafter, Aryeh noticed discrepancies between Canon’s meter readings and the actual number of copies Aryeh made on each copier. When Canon did not respond to Aryeh’s inquiries, it began compiling independent copy records. It found that, during servicing, Canon was running test copies — allegedly at least 5,028 copies over the course of 17 service visits between February 2002 and November 2004. These copies resulted in Aryeh exceeding the monthly allowances and owing excess copy charges and late fees. Aryeh filed its complaint in January of 2008, alleging Canon knew or should have known it was charging Aryeh for excess copies and that this practice was both unfair and fraudulent.

The trial court read the UCL as requiring that “the clock [on a UCL claim] starts running when the first violation occurs.” Consequently, it found that, because the second amended complaint established a first violation in 2002, the UCL claim was barred by the applicable four-year statute of limitations. A divided Court of Appeal affirmed the trial court’s decision, agreeing that neither delayed discovery nor the continuing accrual doctrine could be applied to extend the statute of limitations for UCL claims. The Court of Appeal dissent, in contrast, confirmed that it would have reversed under the theory of continuous accrual, reasoning that even if some parts of Aryeh’s claim were stale, not all parts of it were barred. The Supreme Court of California granted review “to resolve lingering uncertainty over the timing of accrual and the applicability of continuing-wrong accrual principles under the UCL.”

The Supreme Court recognized that, “under the theory of continuous accrual, a series of wrongs or injuries may be viewed as each triggering its own limitations period, such that a suit for relief may be partially time-barred as to older events but timely as to those within the applicable limitations period.” In considering whether this common law doctrine applies to UCL claims, the court first looked to the express language of the UCL: “‘Any action to enforce any cause of action pursuant to [the UCL] shall be commenced within four years after the cause of action accrued.’ Neither Section 17208 nor any other part of the UCL offers a definition of what it means for a UCL claim to accrue; this is not a limitations statute in which the Legislature has assumed the task of articulating the specific ways in which established common law principles may or may not apply.’” It concluded that “[t]his silence triggers a presumption in favor of permitting settled common law accrual rules to apply” and that it “may assume the Legislature intended the well-settled body of law that has built up around accrual, including the traditional last element rule and its equitable exceptions, to apply fully here.” It next found that the legislative history “indicates the Legislature intended the UCL’s limitations period to be subject to the usual judicial rules governing accrual, rather than to special legislatively declared accrual rules.”

The court looked, in part, to Broberg v. The Guardian Life Ins. Co. of Am., 171 Cal. App. 4th 912 (2009), in its analysis. Broberg involved a statute of limitations challenge to a UCL claim. The Broberg court reasoned that the underlying nature of the claim, not its form, should control. “[T]he nature of the right sued upon, not the form of action or the relief demanded, determines the applicability of the statute of limitations.” The court confirmed that the fact that “the cause of action was pleaded under the UCL should not preclude application of an equitable exception to the usual accrual rule; just like common law claims challenging fraudulent conduct, a UCL deceptive practices claim should accrue ‘only when a reasonable person would have discovered the factual basis for a claim.’” It found that Broberg is consistent with both precedent and the absence of anything in the UCL or its legislative history establishing a legislative desire to categorically limit or guarantee the application of the continuous accrual exceptions under the UCL.

Accordingly, the court concluded the UCL is governed by the common law theory of continuous accrual to the same extent as is any other statute. It also noted that simply labeling it a UCL cause of action is not dispositive; instead, “‘the nature of the right sued upon’ and the circumstances attending its invocation control the point of accrual.” It found that “[t]he common law last element accrual rule is the default, while exceptions to that rule apply precisely to the extent the preconditions for their application are met, as would be true under any other statute” (internal citation omitted). It further disapproved the holdings in Snapp & Assoc. Ins. Serv., Inc. v. Robertson, 96 Cal. App. 4th 884 (2002), and Salenga v. Mitsubishi Motors Credit of Am., Inc., 183 Cal. App. 4th 986 (2010), to the extent they are contradicted by Aryeh.

Click here to read Aryeh v. Canon Business Solutions, Inc., issued January 24, 2013.