California Supreme Court Gives California’s Unfair Competition Law More Coverage

The California Supreme Court, in Aryeh v. Canon Business Solutions, Inc., 2013 WL 263509 (January 24, 2013), resolved a split in the lower appellate courts over the applicability of common law rules of accrual to the statute of limitations in California's Unfair Competition Law (Cal. B&P Code § 17200, "UCL"). The UCL broadly prohibits all "unlawful, fraudulent or unfair" business acts or practices, and the statute provides that a UCL suit must be filed "within four years after the cause of action accrued." In a unanimous ruling, the Supreme Court rejected the theory that tolling doctrines are categorically inapplicable to the UCL and found that the UCL is subject to common law rules of accrual, including the common law theory of continuous accrual. Coupled with existing precedent allowing a plaintiff to use the UCL's four-year limitations period to effectively extend the limitations period for a predicate "unlawful" act, the ruling in Aryeh creates the opportunity for plaintiffs to prosecute claims that otherwise would be stale and subject to early dismissal.

Factual and Procedural Discussion of Aryeh

Mr. Aryeh's copy machine lease from Canon required him to pay a surcharge for all copies in excess of the monthly allowance. Canon serviced the copiers on a periodic basis, and Mr. Aryeh noticed discrepancies between the meter readings taken by Canon employees and the actual number of copies made on each copier. Mr. Aryeh concluded that Canon employees were running test copies over the course of 17 service visits between February 2002 and November 2004. These test copies resulted in Mr. Aryeh exceeding his monthly allowance and owing excess copy charges and late fees to Canon. Mr. Aryeh brought suit in January 2008 against Canon for violation of the UCL, alleging that Canon knew or should have known it was charging for excess copies and that the practice of charging for such copies was both unfair and fraudulent. Both the trial court and the appellate court concluded that Mr. Aryeh's complaint was barred by the UCL's four-year statute of limitations because the clock on a UCL claim begins when the first violation occurs.

Common Law Accrual Rules and Related Equitable Exceptions

Traditionally, under common law, a statute of limitations runs from the moment the last of three elements of a claim occurs - wrongdoing, harm, and causation. This concept is known as the "last element" accrual rule and it is generally subject to a series of equitable...