Friday, January 25, 2013

California Supreme Court Concludes That UCL Is Governed by Common Law Accrual Rules, Including Doctrine Of “Continuous Accrual”: Aryeh v. Canon Business Solutions

On January 24, 2013, the California Supreme Court issued its opinion in Aryeh v. Canon Business Solutions, Inc., __ Cal. 4th __ (2013) [2013 Cal. LEXIS 480], which – as previously discussed here – addressed the Second District’s finding that (1) the continuing violations doctrine does not apply to claims brought under the UCL, and (2) this required a UCL claim predicated on reoccurring conduct that commenced more than four years prior to the date of filing to be barred in its entirety.  The Court held that this was error, finding that “(1) the text and legislative history of the UCL leave UCL claims as subject to the common law rules of accrual as any other cause of action, and (2) continuous accrual principles prevent Aryeh's complaint from being dismissed at the demurrer stage on statute of limitations grounds.” See Slip Opinion, at 1, 12, 20.

With regard to the “continuous accrual” doctrine, the Court held that each breach of a continuing or recurring obligation must be treated as an independent claim, and as such, only those breaches falling outside of the UCL’s four year statute can generally be excluded based on statute-of-limitations grounds:
Generally speaking, continuous accrual applies whenever there is a continuing or recurring obligation: "When an obligation or liability arises on a recurring basis, a cause of action accrues each time a wrongful act occurs, triggering a new limitations period." (Hogar Dulce Hogar v. Community Development Commission (2003) 110 Cal.App.4th 1288, 1295.) Because each new breach of such an obligation provides all the elements of a claim-wrongdoing, harm, and causation (Pooshs v. Philip Morris USA, Inc., supra, 51 Cal.4th at p. 797)-each may be treated as an independently actionable wrong with its own time limit for recovery.
However, unlike the continuing violation doctrine, which renders an entire course of conduct actionable, the theory of continuous accrual supports recovery only for damages arising from those breaches falling within the limitations period. In Jones v. Tracy School Dist. (1980) 27 Cal.3d 99, for example, an employee sued for sex discrimination in her wages. The unlawful practice had gone on for six years. While the applicable two-year statute of limitations did not bar suit, because the obligation not to discriminate in setting  wages was an ongoing one, we concluded it limited the employee to recovery only of those lost wages owed during the preceding two years. (Id. at pp. 103-107; see also Green v. Obledo, supra, 29 Cal.3d at p. 141 [recovery limited to payments that accrued within the limitations period preceding suit]; Dryden v. Board of Pension Commrs., supra, 6 Cal.2d at p. 582 [same].) "[T]he continuing accrual rule effectively limits the amount of retroactive relief a plaintiff or petitioner can obtain to the benefits or obligations which came due within the limitations period." (Hogar Dulce Hogar v. Community Development Commission, supra, 110 Cal.App.4th at p. 1296.) n7 Consequently, if applicable here, the theory would permit Aryeh to sue, but only for those discrete acts occurring within the four years immediately preceding the filing of his suit.
See Slip Opinion, at 15-16.

Based on this construction, the Court concluded that the Second District erred in finding that the plaintiff’s UCL claim was barred in its entirety because the complaint had admitted that the reoccurring conduct commenced outside of the four year statutory period of the UCL:
To determine whether the continuous accrual doctrine applies here, we look not to the claim's label as a UCL claim but to the nature of the obligation allegedly breached. [] Canon billed Aryeh on a recurring monthly basis. Accepting the truth of the complaint's allegations solely for purposes of resolving Canon's limitations defense on demurrer, those bills periodically included test copy charges that 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. (Hogar Dulce Hogar v. Community Development Commission, supra, 110 Cal.App.4th at p. 1295 ["When an obligation or liability arises on a recurring basis, a cause of action accrues each time a wrongful act occurs, triggering a new limitations period."]; see also Armstrong Petroleum Corp. v. Tri-Valley Oil & Gas Co., supra, 116 Cal.App.4th at pp. 1388-1391 [treating each disputed monthly bill as triggering a new statute of limitations]; Tsemetzin v. Coast Federal Savings & Loan Assn., supra, 57 Cal.App.4th at p. 1344 [same].) Aryeh cannot recover alleged excess charges preceding the four-year limitations period, but is not foreclosed from seeking recovery for charges to the extent they fall within that period.  Because the complaint alleges excess charges within the four years preceding suit, it is not completely barred by the statute of limitations.
See Slip Opinion, at 17-18.